Top investment firms warn cases of sophisticated fraudsters ‘cloning’ their legitimate activities and products to steal people’s money have skyrocketed in recent months.
The trade association suspects that organized criminals have been behind a fourfold increase in scams since the summer, while the victims’ losses during the pandemic have reached more than £ 9 million.
According to the Investment Association, fraudsters use fake websites, forged documents, fake ads on social media and search engines, and the names and nearly identical email addresses of people working in the financial sector to impersonate real companies.
>>> How do you recognize a ‘clone’ scam? Read it below
Financial fraud: trade association suspects organized criminals are behind a recent quadruple of cases where scammers impersonate real investment firms
Victims expecting interest or proceeds from fraudulent products contact the legitimate companies they originally thought they were dealing with, either in search of their money or to report the clones.
The IA, which has a working group dealing with the issue, in such cases, signaled the leap to raise investors’ awareness of the risks of cheating.
“Since the IA’s last warning in July about the risks posed by fraudsters to investors, the total number of reported incidents of these scams has nearly quadrupled from about 300 to 1,175 in October,” he says.
“The estimated total reported loss to savers as a result of these scams has more than doubled from around £ 4m in July to £ 9.4m in October, with more than 200 people affected.”
This is Money recently warned that this type of investment scam is on the rise, after research by asset manager Quilter revealed that “ clone ” warnings by regulators have increased 34 percent this year to 401, and 261 percent since 2015.
Quilter points out that the burden currently lies on individuals to protect themselves by tracking down copycat websites and reporting to online platforms and the financial regulator.
This takes time in which other people are exposed to the same scam.
‘Cloned’ company fraud
It can be challenging to determine whether you are doing business with a well-known and trusted financial company or not, as scammers will do everything they can to appear legitimate.
The Financial Conduct Authority says people should take the following steps to protect themselves.
* Only use financial companies authorized by the FCA – you can consult the registry here. The watchdog is recommending that people access the registry directly from its website, rather than through links in emails or on a company’s website, as this may be part of the scam.
* Always check the ‘url’ – the website address you enter to reach a home page – and a company’s contact information to make sure they match the real one.
* Check the FCA’s alert list of cloned companies it issued alerts against here.
Read more here about fraud with cloned firms.
If you discover a suspicious looking financial product, please contact us:
The company called on the government to include financial scams in upcoming ‘online damages’ legislation, which is currently in the consultation phase, or to propose new legislation to protect consumers.
This is Money has also been warning of case cloning in recent times.
In November 2019, we warned that scammers had forged Shawbrook Bank – a name that regularly tops our best-buy tables, in an effort to trick people into their money.
And in April 2019, we were tipped off by a reader about the existence of another group of fraudsters posing as belonging to a legitimate financial firm, ABN Amro.
We later found that three people collectively lost more than £ 72,000 in the period between when ABN Amro notified the FCA and the regulator that blacklisted the cloning company.
The IA is working closely with its members to ensure that the government brings investment scams into the online Harms Act before it is passed by parliament.
It wants to ensure that legislation on identifying and ending investment scams is ‘robust,’ the group adds.
Meanwhile, its members report cases to police and regulators, share information with government and agencies such as UK Finance, and post warnings on their websites.
The IA recommends that victims of clone scams contact their bank to see if they can be reimbursed under the ‘Contingent Reimbursement Model’ scheme, or if they have made credit card payments to contact their provider for help.
Chris Cummings, chief executive of the IA, said: “In a year of uncertainty, organized criminals have sought opportunities for adversity by trying to defraud investors of their hard-earned savings.
“The asset management industry is working closely with law enforcement and regulators to stop these scams, and is working with our partners in the government to shut them down and prevent them from being advertised at all.”
The IA says the National Crime Agency’s advice is to:
– Stop: Taking a moment to stop and think before parting with your money or information can keep you safe;
– Challenge: Could it be fake? It’s okay to decline, deny, or ignore requests. Only criminals will try to rush or panic;
– Protect: Contact your investment manager immediately if you believe you have fallen for a scam and report it to Action Fraud. Contact your bank as soon as possible if you think you have transferred money to a scam.
A government spokesperson said, “We recognize concerns about the growth in scale and complexity of online scams and fraud.
“Together with industry, regulators and law enforcement partners, we continue to chase fraudsters, close the vulnerabilities they exploit and ensure that people have the information they need to spot and report scams.”
The government’s response to the online claims consultation is planned soon, and will set out the final details of what will be included in the legislation.
Last year, the Department of Digital, Culture, Media and Sports announced it would consider how online advertising would be regulated, and it is currently gathering evidence.
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