How to Avoid Land Banking Scams?

These days' scammers use sophisticated internet-based scams to get life-changing amounts of money from the victims. They start with fraudulent adverts on websites where bogus schemes offer to invest the pension money from bonds to bitcoins. 

Most victims of such scams are old and approaching retirement, and they suffer from devastating losses, which means they have to work longer or sell their homes to pay back the loss. 

At the start of the pandemic, online financial scams increased significantly. As a result, the government proposes introducing an Online Safety Bill to regulate online adverts and bring such offers under the rule.

In most such scams, the victims are promised by the firms that they will get decent returns, which may not be realised for months – until they know that they have been duped and are persuaded to hand over their hard-earned money through bank transfer.

The tricksters are experts in using various tactics to sell their plans to the clients. The government is preparing to pressure banks to block dodgy transactions and warn clients about fake schemes. 

The financial industry is also preparing to hold internet-based social media platforms like Facebook and search engine Google responsible for posting fake adverts and ask them to impose restrictions on such ads. 

Banks and regulatory bodies are creating awareness and changing authentication methods, adopting complex algorithms based on machine learning and AI to check transactions and spot anomalies.

What is a Land Banking Scam?

Investment firms offer opportunities in agricultural plots or other types of land advertised online or offline. The scheme promises to get higher returns on investment as it shows how there will be a huge demand for land in future. 

It claims once the planning permission is granted, developers can buy the land for a much higher price, and the investor can gain enormous easy profits.

Investors should be aware that no such land investment is accessible to gain huge profits quickly. Instead, you will block money in a piece of undesirable land area and may not get buyers for it in future.

What is the Plan?

• Most schemes offer overseas land, which is often unfamiliar and inaccessible to the victim. However, plenty of schemes are offered even in the home country, and the caller uses high-pressure tactics to sell the land to people for a higher rate.

• Some of the sorts are cold calls that flag once-in-a-lifetime opportunities. The investors may be asked to pay the initial cash instalment to grab the opportunity immediately.

• The investors often get a call out of the blue to buy small plots to get them huge returns once the planning permission is granted and development starts.

• The permission is not given or not applicable in most cases, and the investors are left with a practically worthless piece of land in a remote location.

• The scammers may also make follow-up calls to extract more money from the investors by claiming they will settle the holdings in exchange for a small fee.

How to Protect Yourself?

• Beware if you are contacted out of the blue to buy land in unauthorised areas and pressured into buying in schemes where they promise huge returns that appear too good to be true.

• Some land banking opportunities are offered in a pooled investment where a host of different investors put their cash into one fund, and the fund manager invests the money on behalf of all. The government regulates collective investment schemes, but the firm must be authorised to promote and operate them in the UK. The government may act against the land banking schemes if it is operated or promoted by unauthorised CIS.

• Many land banking operators avoid CIS because the government allows selling plots without it, and it can be a complex legal issue to deal with through a CIS scheme.

The rules associated with a CIS are – 

• The investors do not have control over the day-to-day activities related to the plot.

• The scheme offers a pool of funds, and the operator is responsible for managing the scheme.

If you suspect any such fraud, contact the Consumer Helpline, and if you get a follow-up scam call where you are offered to pay some money to get your investment money back – notify the authorities about it.