Such is the skill of these criminals in imitating real investment firms, “even the most experienced investor could be at risk,” said Action Fraud
The number of investors that have been lured into putting money in ‘clone firms’ that appear to be genuine investment outfits is on the up, according to new research.
Investment fraud victims lost an average of £45,000 after being tricked into investing in fake investment firms, said Action Fraud, the UK’s national reporting centre for fraud and cybercrime.
More than £78mln was lost in investment frauds across the whole of 2020, the research found.
This included a 29% rise in clone firm investment scams in April compared to March, when the UK first went into lockdown, with Action Fraud suggesting the ongoing financial impact of coronavirus may make people more susceptible to these types of clone scams.
Hard to spot scams
Such is the skill of these criminals, “even the most experienced investor could be at risk,” the organisation said, with 77% of investors surveyed admitting they would not know what to look for to identify a clone investment firm.
Superintendent Sanjay Andersen, from the City of London Police’s National Fraud Intelligence Bureau, said: “This new trend of ‘clone firms’ is particularly worrying as it makes it harder for people to spot a scam.”
He said there had been a spike in reports in the summer, after the first national lockdown was lifted, while the Financial Conduct Authority said it received 3,767 reports of clone scams to its consumer helpline.
The National Fraud Intelligence Bureau recommends people “take time to do their research”, visiting www.fca.org.uk/scamsmart and seeking independent impartial advice from an expert.
“If you think you’ve already invested into a fraudulent scheme, report it to Action Fraud,” he said.
Online platform Interactive Investor said it recent retirement survey of over 12,000 adults, revealed 13% of respondents have fallen victim to financial scams, with older investors more at risk, with 18% in the 72-77 age category and 20% of those aged over 77 having been defrauded.
Women are less likely to have experienced a financial scam than men, the survey found, at 9% versus 15%, while over a third of men admitted to having been the victim of investment fraud compared to just over a fifth of women.
In addition, while 42% of women and 43% of men said they got their money back, 17% of women said it had put them off attempting to put their financial affairs in order, for fear of being scammed again, compared to 9% among men.
“Financial scams tend to be indiscriminate in their targeting, and while we all have to be on our guard, the risks seem to increase with age, said Myron Jobson at Interactive Investor.
“Men might be more susceptible to investment fraud because, on average at least, they tend to invest more. Whatever the reason, it is important to take care with your money and look out for the warning…
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