Don’t make pour decisions that leave your finances on the rocks: City of London Police urges people to stay vigilant over misleading whisky investment ads
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City of London Police is urging people to take proper measures online, after whisky investment advertisements on social media left people high and dry.
The lure for potential investors is that you buy a cask of whisky when it is first produced and as the whisky ages in the barrel, it becomes something worth more to the consumer and as such, your initial investment becomes more valuable.
Claiming that potential investors of whisky could expect to see modest returns of between eight – 12 per cent a year, paid advertisements on social media sites for one company have now been found to be misleading.
Detective Inspector Nichola Meghji, from the Fraud Operations team at the City of London Police, said:
“As we approach the run up to Christmas, we would like to remind people of the potential risks associated with investment opportunities, especially around whisky.
“Much like gin, the interest in micro-breweries and independent distilleries has grown exponentially over the last decade as the British consumer has become more interested in home grown spirits versus imported beers and wine.
“An investment of a cask of whisky may seem like a wise choice, and perfect as a Christmas present to some, but we would encourage everyone to stay vigilant and to not be sucked in – especially if adverts guarantee you will get year-on-year returns. Certain companies prey on peoples lack of knowledge around investing, which is then exploited at a great cost to the consumer.”
The City of London Corporation’s Port Health and Environmental Services Committee oversees the Square Mile’s Trading Standards operations. Its Chair, Mary Durcan, said:
“City Corporation Trading Standards team has serious concerns over the whisky investment schemes that have sprung up over the last couple of years.
“Casks are being sold as a long-term investment because whisky takes time to mature in the cask, consumers are being told. This means that it could be several years before investors realise their investments aren’t performing.
“It is vitally important to remember that whisky investments are not regulated by the Financial Conduct Authority which means that there is no recourse to the Financial Services Compensation Scheme if anything goes wrong.”
The investigation by the Advertising Standards Authority (ASA) found that these risks were not highlighted in advertisements on social media, with some claiming that whisky cask investment was a suitable means to fund early retirement.
The terms and conditions provided in some advertisements also didn’t state that fees would be incurred, meaning that some investors were stung with a charge later down the line.
In one particular case, complaints were raised regarding the misleading advertisements of Blackford Casks Ltd. Subsequent investigations upheld these complaints, determining that although no fraudulent activity occurred in this case, the ads needed to be revised and not to quote average returns without adequate evidence. This was found by the ASA to be irresponsible as the adverts were not easy to understand and took advantage of consumers’ lack of experience and credulity.
In 2023, there were 89 reports made to Action Fraud about alcohol investments, with losses totalling over £3 million. This shows that aside from misleading advertisements, fraudulent activity is taking place with whisky investments proving to be an enticing opportunity for unsuspecting investors.
Whisky investments, like any investment, are never a sure thing when it comes to seeing a profitable return. External factors, mostly out of the investor’s control, play a part in either a dip or a rise in the market.
To prevent becoming a victim of investment fraud:
Take your time considering investment opportunities:don’t be rushed into making an investment. Remember, legitimate organisations will never pressure you into investing on the spot.
Seek advice first:before making significant financial decisions, speak with trusted friends or family members, or seek professional independent advice.
Check the FCA register:use the Financial Conduct Authority’s (FCA) register to check if the company is regulated by the FCA. If you deal with a firm (or individual) that isn’t regulated, you may not be covered by the Financial Ombudsman Service (FOS) if things go wrong and you lose your money.
Lastly, if you aren’t an expert in a certain field of investment, or feel that you don’t know enough of the markets, then it’s probably best not to invest. If it sounds too good to be true, then it probably is.
City of London Police would also urge the public to follow the Take Five to Stop Fraud advice.
Stop: taking a moment to stop and think before parting with your money or information could keep you safe
Challenge: could it be fake? It’s ok to reject, refuse or ignore ant requests. Only criminals will try to rush or panic you.
Protect: contact your bank immediately if you think you’ve fallen for a scam and report it to Action Fraud.
If you think you have invested money into a fraudulent investment, or you have been contacted about an investment that doesn’t seem right, report to Action Fraud at actionfraud.police.uk. Reports can also be made by calling 0300 123 2040. In Scotland, reports of fraud should be made directly to Police Scotland on 101.