Fraudsters are imitating genuine investment firms, says the UK financial services regulator the Financial Conduct Authority (FCA) in its ScamSmart campaign.
Covid-19 may make people more susceptible to these types of clone scams, the FCA suggests; some 42pc of investors say they are worried about their finances because of the pandemic, and over three quarters (77pc) have or plan to make an investment within the next six months to help improve their finances.
However, the FCA says that even the most experienced investor could be at risk. Three quarters (75pc) of investors said they felt confident they could spot a scam. However, 77pc admitted they did not know, or were unsure what a ‘clone investment firm’ was.
Clone firms are fake firms set up by scammers using the name, address and ‘Firm Reference Number’ (FRN) of real companies authorised by the FCA. Once set up, these fraudsters will then send sales materials linking to websites of legitimate firms to dupe potential investors into thinking they are the real firm, when they are not.
The regulator is advising anyone considering an investment opportunity to check the Warning List of firms, which is updated daily, and not to deal with a firm not authorised by the FCA. The specifics of a firm, such as the telephone number and website address can be verified on the FCA Register. The FCA also warns consumers to use the phone number on its register to make contact with an FCA authorised firm so as to be sure they are dealing with the real firm.
Even though some 38pc investors said they would check the company’s Firm Reference Number (FRN), checking this alone isn’t enough. Scammers will often copy FRN numbers and encourage victims to check the FCA Register to prove their legitimacy.
Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said: ‘Clone investment scams can look real and sophisticated but anyone can spot them by following our advice. 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.
‘If you’re considering an investment, visit the FCA Register to make sure the firm you’re dealing with is authorised. Check our Warning List of firms you should avoid, 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.’
And Graeme Biggar, Director General of the National Economic Crime Centre, part of the National Crime Agency (NCA), said: ‘The National Economic Crime Centre (NECC) and partners including the City of London Police, Serious Fraud Office and Financial Conduct Authority are working with the National Cyber Security Centre (NCSC) to tackle the fraudulent and cloned websites behind investment fraud schemes. Consumers should be wary of investment websites that may appear genuine and I would ask anyone who is thinking of investing their money to check the contact details on FCA’s Financial Services Register first, or contact the FCA’s consumer helpline for advice. In one specific initiative targeting FCA-identified fake firms and cloned websites, we worked with the NCSC to remove over 90 cloned websites, plus 134 UK scam phone lines and 105 associated email addresses.
‘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.’
