Consumers reported more than £78 million of losses to investment and pension scams involving fraudsters imitating genuine firms in 2020.
The figures are from Action Fraud, the UK’s national fraud reporting centre.
The data has been released as part of the Financial Conduct Authority’s ScamSmart campaign.
Throughout 2020, consumers reported average losses of £45,242 when investing with fraudsters imitating genuine investment firms.
Scammers set up clone firms using the name, address and firm reference number (FRN) of real companies authorised by the Financial Conduct Authority (FCA).
They then send out sales materials linking to the websites of legitimate firms, to trick potential investors into thinking they are dealing with the real firm.
To thwart the scammers, people should check the FCA’s “warning list” of firms and not deal with firms that are not authorised by the regulator, the FCA said.
The specific details of a firm, such as the telephone number and website address can be verified on the FCA register – register.fca.org.uk.
— Financial Conduct Authority (@TheFCA) January 22, 2021
People can use firms’ contact details on the FCA’s register to make sure they are dealing with the real firm.
Reports of “clone firm” investment scams jumped around the start of the initial coronavirus lockdown in 2020.
They increased by 29% in April 2020 compared with March.
The ongoing financial impact of Covid-19 may make people more susceptible to clone scams, the FCA said.
Two-fifths (42%) of investors said they are worried about their finances because of the pandemic, and over three quarters (77%) have or plan to make an investment within the next six months to help improve their financial situation.
Just because a company has a glossy website and glowing reviews from ‘high net worth’ investors does not mean it is genuine.
Fraudsters will go to great lengths to convince you their investment opportunity is legitimate. pic.twitter.com/HTnmEGolDo
— Action Fraud (@actionfrauduk) January 11, 2021
Mark Steward, executive director of enforcement and market oversight, FCA, said: “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.
“Last year we issued alerts in relation to over 1,100 firms including clones, which has more than doubled since 2019 and we are working with the National Economic Crime Centre (NECC) and National Cyber Security Centre to take down clone sites when they are discovered.”
He said if people are still unsure about a firm after checking the FCA’s website: “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.”
The FCA highlighted the case of Janet from Chester, who said: “After searching the internet for high-return bonds, I received a call the next day about investing in student accommodation.
“I found legitimate details of the company online – everything seemed genuine, so I invested. A few months later, after a couple more investments, I started to get a bit worried – I still hadn’t received confirmation of the latest investment. I tried to call the contacts I had been speaking to, but the numbers were invalid. It was clear I had been scammed.
“I had lost £40,000.
“I really thought I’d be able to spot a scam, but now I know they can be far more sophisticated than I had ever imagined.”
The awareness drive is also backed by consumer champion and TV presenter Matt Allwright, who said: “It may seem appealing – particularly right now – to make some investments to boost your savings or income.
“However, it is more important than ever to tune into the finer print, spot the beartraps and triple check details before parting with your money.
“A clone firm scam can target anyone, they are usually smart fraudsters who often present opportunities which look very tempting indeed.
“When considering your next investment, make sure you only ever use the details listed on the FCA register, and think about getting impartial advice before going ahead.”
Graeme Biggar, director general of the NECC said: “Alongside our partners, the NECC is building an intelligence picture of organised criminals who are using cloned websites and fake comparison sites to carry out investment fraud. We will use every tool at our disposal to track down, disrupt and prosecute those responsible for this criminal activity.”
Paul Davis, retail fraud prevention director, Lloyds Bank said: “Never be rushed into transferring money or making a decision about an investment, and if you’re being told you need to act now, this should be a big red flag that it’s a scam.”
Pete Glancy, head of pension policy, Scottish Widows said: “If you get a call or email you’re not expecting asking about details of your pension, you should be on guard straight away.
“Even if they claim to be from an official government body, it’s likely to be a scam. A genuine pension provider will never cold call, email or text asking for your account details or tell you to move your money somewhere else.”
Here are some tips from the campaign to protect yourself from clone investment firms:
– 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 the firm is authorised 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 find out more at fca.org.uk/scamsmart.