Cornwall Council is warning the public and groups working with young people about a new scam where social media users are tricked by con artists pretending to play the stock market.

Cornwall Council’s Public Protection Service has issued a warning over fraudsters using social networks to encourage young people to invest in binary options, also known as Forex trading, in which an investor bets on commodity value changes.

In real Forex trading, which can take just a few minutes, an investor 'calls' or 'puts' an option, respectively betting on it rising or falling, and like in gambling, if the investor predicts incorrectly they will lose all the money they have placed.

However scammers are targeting young people online, and are believed to be taking money without even investing, leaving people out of pocket and with no recourse to the investment watchdog or compensation.

Julia Groves, trading standards authorised officer with Conrwall Council, said: “Although binary options are being advertised as an investment, they are actually a form of gambling on the markets. “Whilst a traditional investment can take months or years to mature, a legitimate binary options trade can see a return in a matter of minutes. Fraudsters are using this fact to attract people that would otherwise not normally consider investing.”

Binary options trading is not regulated by the Financial Conduct Authority and as such anyone believing they have invested will not have access to the Financial Services Compensation Scheme.

Research carried out by the National Fraud Investment Intelligence Bureaux (NFIB) has shown that fraudsters are using social media sites such as Instagram and Facebook and apps to target younger people to defraud them.

Julia added: “The NFIB has seen a dramatic rise in binary options trading fraud, with 33 per cent of victims under the age of 30, and 9 per cent under the age of 20.

“This is extremely unusual in investment fraud and shows that the use of social media is enabling fraudsters to target a whole new section of society.”

The scam involves fraudsters setting up fake profiles on popular social media websites, where they pose as successful binary options traders, often adding photographs of themselves in exclusive locations such as high class restaurants or posing with luxury items and goods such as valuable cars, clothes and watches in order to give the appearance of wealth and success.

Sometimes the fraudsters will include testimonials - believed to be faked - from happy customers in the form of text message or email conversations. The fraudsters then seek out potential victims and offer them the chance to invest by sending money. Frequently the fraudster will tell the victim that their trading has been successful and then request more money be sent. In some instances the fraudsters also demand further funds in order to release the victim’s money.

No trades are believed to actually take place, and victims are asked to pay either via a bank transfer, direct to another bank account controlled by the fraudster, or via a money transfer agent such as MoneyGram or Western Union.

As soon as a victim becomes suspicious and asks for their money back, the fraudster will block them on social media. No money has ever been recovered.

Julia said: “We would advise people to be suspicious of any approach which is made via social media as no reputable brokers would do this.

“People should also make sure they do not give out personal details and never agree to anything or send money up front, without making their own enquiries into the company or individual first.”

If you have been contacted by a suspicious firm or have been affected by this, or any other scam, report it to Action Fraud by calling 0300 123 2040, or visiting www.actionfraud.police.uk