Scammers are impersonating genuine investment firms in an attempt to deceive people into handing over their hard-earned money.
The latest available data shows consumers lost a total of £36.2m to ‘clone firm’ investment scams in the first six months of 2021, with an average loss of £47,000 each1.
The Financial Conduct Authority (FCA) has warned that even the most sophisticated of investors could be at risk of falling victim to a clone scam2.
Here, we explain what clone firms are and how to protect yourself.
What is a clone investment firm?
A clone investment firm is a fake firm set up by fraudsters using the name, address and firm reference number (FRN) of real companies authorised by the FCA. This includes wealth managers like Brewin Dolphin, pension providers and investment platforms.
The criminals behind these scams typically try to engage with victims by taking out adverts on social media platforms and search engines. Victims click on these adverts and are taken to an exact replica of a website belonging to a genuine investment firm. Some criminals will even clone the legitimate firm’s website domain name. More recently, scammers have been using fake comparison sites which list, for example, companies offering the best interest rate savings accounts. In reality, those companies are clone firms.
Once the victim has registered their interest, the fraudsters will contact them and use a range of tactics to convince them they are the real firm. This may include sending sales materials linking to the legitimate firm’s website, encouraging the victim to check the FRN on the FCA Register, using the names of genuine employees at the real firm, and/or creating authentic looking email addresses but with very subtle differences.
How can I protect myself from clone firms?
Clone firm investment scams are sophisticated and very difficult to spot. However, there are steps you can take to protect yourself:
- Reject unsolicited investment offers and be wary even if you initiated contact.
- Don’t simply rely on checking the company’s FRN, as this may have been copied.
- Visit the FCA Register to ensure the firm is authorised.
- Double check all the details of the firm, not just the FRN, on the FCA Register.
- Use the phone number and email address on the FCA Register to contact the company so that you can be sure you are dealing with the real firm.
- Look out for any subtle differences in the contact details, such as letters replaced with numbers (e.g. O and 0), additional words or spelling errors.
- Consider seeking impartial advice before investing.
If you think you’ve fallen victim to an investment fraud, report it to Action Fraud as soon as possible at http://www.actionfraud.police.uk or by calling 0300 123 2040. For more information on avoiding investment and pension scams, visit the FCA’s dedicated ScamSmart website: https://www.fca.org.uk/scamsmart
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