Financial clone scams: How to spot dodgy products

Top investment firms warn cases of sophisticated fraudsters ‘cloning’ their legitimate operations and products to steal people’s cash have soared in the past few months.

Its industry body suspects organised criminals are behind a quadrupling of scams since the summer, while victims’ losses have mounted to more than £9million during the pandemic.

Fraudsters are using bogus websites, forged documents, fake adverts on social media and search engines, and the names and near-identical email addresses of people working in the finance industry to impersonate real companies, according to the Investment Association.

>>>How do you spot a ‘clone’ scam? Find out below

Financial fraud: Industry body suspects organised criminals are behind a recent quadrupling of cases where scammers impersonate real investment firms

Victims who were expecting interest or returns from fraudulent products are contacting the legitimate companies they originally believed they were dealing with, either seeking their money or to report the cloning scam.

The IA, which has a working group dealing with the problem, flagged the jump in such cases to raise awareness among investors of the risks of being duped.

‘Since the IA’s last warning of the risks posed by fraudsters to investors in July, the total number of reported incidents of these scams has nearly quadrupled from approximately 300 to 1,175 in October,’ it says.

‘The estimated total reported loss to savers from these scams has more than doubled from approximately £4million in July to £9.4millon in October with over 200 people affected.’

This is Money recently warned this type of investment scam was becoming more prevalent, after research by wealth management firm Quilter revealed ‘clone’ alerts by regulators have jumped 34 per cent to 401 so far this year, and by 261 per cent since 2015. 

Quilter points out that the burden is currently on individuals to protect themselves, by detecting copycat websites and reporting them to online platforms and the financial regulator.

This takes time, during which other people are exposed to the same scam.

‘Cloned’ firm fraud

It can be challenging to tell whether you are dealing with a well-known and trusted financial company or not, because scammers will make every effort to appear legitimate.

The Financial Conduct Authority says people should take the following steps to protect themselves.

* Only use financial firms that are authorised by the FCA – you can check its register here. The watchdog advises people to access the register direct from its website, rather through links in emails or on a firm’s website, as this might be part of the scam. 

* Always double check the ‘url’ – the website address you input to reach a homepage – and contact details of a firm to ensure they match those of the genuine one.

* Check the FCA’s warning list of cloned firms it has issued alerts against here.

Read more here about cloned firm fraud. 

If you spot a suspicious looking financial product, get in touch:

[email protected] 

The firm called on the Government to include financial scams within its forthcoming ‘online harms’ legislation, which is currently at the consultation stage, or to bring forward new legislation to protect consumers.

This is Money has also warned about cloning cases in recent times.

In November 2019, we warned that scammers had spoofed Shawbrook Bank – a name that regularly at the top of our best buy tables, in an attempt to trick people out of their money.

And in April 2019, we were tipped off by a reader about the existence of another group of fraudsters pretending to be from a legitimate financial firm, ABN Amro.

We later discovered that three people collectively lost more than £72,000 in the period between ABN Amro informing the FCA and the regulator putting the clone firm on its blacklist.

The IA is working closely with its members to get the Government to bring investment scams into the Online Harms Bill before it is passed through Parliament, it says.

It wants to ensure legislation covering the identification and closing down of investment scams is ‘robust’, the group adds.

Meanwhile, its members are reporting cases to police and regulators, sharing information with the Government and bodies like UK Finance, and placing warnings on their websites.

The IA advises victims of clone scams to contact their banks to see if they can be reimbursed under the ‘Contingent Reimbursement Model’ scheme, or if they made payments via credit card to contact their provider for help. 

Chris Cummings, chief executive of the IA, says: ‘In a year clouded in uncertainty, organised criminals have sought opportunity in misfortune by attempting to con investors out of their hard-earned savings.

‘The investment management industry is working closely with the police and regulators to stop these scams, and is collaborating with our partners in Government to close them down and prevent them being advertised in the first place.’

The IA says the advice of the National Crime Agency is to:

– Stop: Taking a moment to stop and think before parting with your money or information could keep you safe;

– Challenge: Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic;

– Protect: Contact your investment manager immediately if you think you’ve fallen for a scam and report it to Action Fraud. Speak to your bank as soon as possible if you believe you have transferred money to a scam.

scam

A government spokesperson says: ‘We recognise the concerns about the growth in scale and complexity of online scams and fraud.

‘With industry, regulators and law enforcement partners we continue to relentlessly pursue fraudsters, close down the vulnerabilities they exploit, and ensure people have the information they need to spot and report scams.’

The Government’s response to the online harms consultation is due soon, and this will set out final details of what will be included in the legislation.

Last year, the Department for Digital, Culture, Media and Sport announced it will consider how online advertising is regulated, and it is currently gathering evidence.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.