Police are warning of an investment scam that has cost more than 300 people around £45,000 each in Worcestershire and Shropshire.
‘Clone firm’ scams are where fraudsters imitate genuine firms and offer slightly better than market rates to appeal to those looking for long term, ‘safe’ ways to invest their money.
Victims end up transferring their savings directly to criminal gangs, under the false belief that they are sending them to a legitimate investment firm.
Read more – Watch Fifth Gear’s Vicki Butler-Henderson make crime appeal for West Midlands Police
Often, victims will not realise that they’ve been scammed until months later, when they fail to receive quarterly returns or investment reports.
West Mercia Police has reported more than 300 victims have lost a staggering £6.9 million between December 2019 and December 2020.
And Action Fraud said data reveals losses of more than £78 million between January-December 2020 across the UK, with victims losing £45,242 each on average.
It is thought that the ongoing financial impact of the coronavirus pandemic may make people more susceptible to these types of clone scams.
Detective Sergeant Jon Cooper from West Mercia Police Economic Crime Unit, said: “This pandemic has caused a lot of people to feel financial worry and uncertainty – something which criminals and financial predators will feel no remorse about capitalising on.
“Sadly, there has been an increase in the number of investment fraud reports in 2020 compared to the previous year, with a spike in reports in the summer after the first national lockdown was lifted.
“Between December 2019 and December 2020, West Mercia Police has received over 300 reports from victims with an estimated loss to them of £6.9m. The age of victims is broad, with some in their teens and some in their late 80s however the vast majority are between 50 and 80 years old.
“If you think you’ve already invested into a fraudulent scheme, please report it to Action Fraud as soon as possible.”
The number of ‘clone firm’ investment scams reported increased by 29 percent when the UK went into its first lockdown.
Even the most experienced investor could be at risk. Whilst three quarters of investors said they felt confident they could spot a scam, 77% admitted they did not know, or were unsure, what a ‘clone investment firm’ was, according to research from Action Fraud.
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 Financial Conduct Authority (FCA), which is a financial regulatory body in the UK.
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.
How to protect yourself from investment scams
Anyone considering an investment opportunity should double-check all the details of a firm, not just the Firm Reference Number (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 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.
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’re 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’re 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.”
Keep updated on news near you by signing up to our newsletter