‘CLONE FIRM’ INVESTMENT SCAMS RESULT IN £16MILLION THEFT FROM RESIDENTS IN HAMPSHIRE


Hampshire Constabulary is working with Action Fraud, the City of London Police and the Financial Conduct Authority (FCA) to issue a warning to the public, as reports of ‘clone firm’ investment scams increased by 29% nationally in April 2020 compared to March, when the UK went into its first lockdown. 

Action Fraud reporting data reveals that Hampshire residents recorded losses of more than £16.1 million between January-December 2020, with victims losing £31,9441 each, on average, when investing with fraudsters imitating genuine investment firms.

Those most likely to become victims of investment fraud in Hampshire were aged 70-79 (19%), closely followed by those aged 50-59 (16%). While 61% of victims in Hampshire were men.

Article continues below this advertisement

The ongoing financial impact of coronavirus may also make people more susceptible to these types of clone scams. 42% of investors say they are currently worried about their finances because of the pandemic, and over three quarters (77%) have, or plan to, make an investment within the next 6 months to help improve their financial situation.

However, even the most experienced investor could be at risk. Three quarters (75%) of investors said they felt confident they could spot a scam. However, 77% admitted they did not know, or were unsure, what a ‘clone investment firm’ was.

Detective Sergeant Marcus Mills, from Hampshire Constabulary’s Economic Crime Unit, said:

“We are aware that more and more people are spending time at home, and online, due to the ongoing global pandemic. This unfortunately leaves people vulnerable to acts of fraud – and specifically investment fraud on this occasion. Hampshire, like many other areas, seemingly saw a spike in activity during the summer months last year and this has continued, albeit rates have slightly dropped in recent months.

“It’s important to remind local residents of that age old saying that if something is too good to be true, it likely is. Fraudsters will use very sophisticated mechanisms – such as cloning official investment websites or spoofing email address to make you feel as if the investment is genuine. They are often incredibly charming and reassuring in their approach, using lots of expert financial literacy – yet the stark reality is that the scams are being run by organised crime groups.

Article continues below this advertisement

“As always, if you think that you’ve become victim to a fraudulent investment scam, please report this to Action Fraud via their website.”

What is a ‘clone firm’ investment scam?

‘Clone firms’ are set up by fraudsters using the name, address and ‘Firm Reference Number’ (FRN) of real companies authorised by the FCA.

The criminal gangs running these scams can engage with victims through a number of channels. Often they will take out adverts on social media platforms and search engines. Victims will then click on these adverts and be taken to exact replicas of websites belonging to genuine investment firms. The most sophisticated criminals will even clone the website domain name.

Once victims have registered their interest, they’ll be contacted by the fraudsters, who often obtain the names of genuine employees of investment firms and create seemingly legitimate company email addresses, but with very subtle changes.

There have also been instances of investors inputting their contact details into genuine price comparison websites and then being phoned by criminals purporting to be from a well-known, legitimate investment firm. Another tactic used by these criminals to dupe investors is to send victims sales materials linking to websites of legitimate firms.

The returns being promised by these criminal gangs are often modest so as not to arouse suspicion, but slightly better than the market rate, therefore appealing to those looking for long term, ‘safe’ investments.

In the end, victims will end up transferring their savings directly to criminal gangs, under the false belief that they are sending them to a legitimate investment firm. Often, victims will not realise that they’ve been scammed until months later, when they fail to receive quarterly returns or investment reports.

How to protect yourself 

Even though 2 in 5 (38%)3 investors said they would check the company’s Firm Reference Number (FRN), checking this alone isn’t 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.

Remember:

  1. Reject unsolicited investment offers whether made online, on social media or over the phone. Be wary even if you initiated contact.
  2. 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.
  3. 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.
  4. 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’ve 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.

Island Echo