Scammers are making investment scams hard to spot; the Financial Conduct Authority warns. The FCA is working with Action Fraud and City of London Police to warn the public to be vigilant when dealing with investment firms. They say there has been a sharp increase in reports of Clone scam companies appearing since the first lockdown began in March last year.
The figures are very alarming and an estimated £78 million has been stolen by cunning con artists between January to December 2020. The average loss to a victim was calculated at a staggering £45,000. Officials warn that even seasoned investors are falling victim as clone firms are incredibly sophisticated and spotting one is hard to do.
What is a clone scam?
They are run and operated by criminal gangs and use names, addresses and even a firms reference number of real companies authorised by the FCA. They lure victims in by taking out adverts on social media and search engines, a victim may click on the link and be directed to a scam company that looks exactly like a legitimate one. Once a victim has registered their interest a scammer will contact the individual using the real companies, logo’s and even names of people who work there to create legitimacy. The scammers are also very subtle in the way they operate, they will promise only slightly higher returns on real investments to seem appealing, however what then happens is once the fraudster has access to personal details and bank account information, they will use this to transfer money out of victim’s accounts. Unfortunately for victims, they will not know for some time they have been scammed, until it is too late, and their money has been taken from their investment accounts.
Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said:
“Clone investment scams are sophisticated and extremely difficult to spot. Last year we received over 3767 reports of clone scams to our consumer helpline. Fraudsters use literature and websites that mirror those of legitimate firms, as well as encouraging investors to check the Firm Reference Number (FRN) on the FCA Register to sound as convincing as possible.
“If you are considering an investment, visit the FCA Register to make sure the firm you’re dealing with is authorised. Use the contact details on our FCA Register, not the details the firm gives you, and check for subtle differences to avoid ‘clone firm’ scams. And if you are still unsure, call our consumer helpline for further information. When it comes to clones, I cannot emphasise enough how important it is to double check every detail.”
Advice from Action Fraud on how to protect yourself:
Even though two in five (38%)3 investors said they would check the company’s Firm Reference Number (FRN), checking this alone is not enough. Criminals carrying out ‘clone firm’ investment scams will often copy FRN numbers and encourage victims to check the number on the FCA Register to prove their legitimacy.
Anyone considering an investment opportunity should double-check all the details of a firm, not just the FRN, on the FCA register. This includes the telephone number, and it is important you only use the number on the FCA Register to make contact with the firm.
Reject unsolicited investment offers whether made online, on social media or over the phone. Be wary even if you initiated contact.
- Always check the FCA Register to make sure you’re dealing with an authorised firm and check the FCA Warning List of firms to avoid.
- Only use the telephone number and email address on the FCA Register, not the contact details the firm gives you and look out for subtle differences.
- Consider seeking impartial advice before investing.
Investors can test if they can spot an investment scam from a smart investment by taking the Scam or Smart quiz, visit www.fca.org.uk/scamsmart to find out more.
If you think you have fallen victim to an investment fraud, report it to Action Fraud as soon as possible online at www.actionfraud.police.uk or by calling 0300 123 2040.