FCA warns over attack of ‘clone firm’ investment scams
The UK Financial Conduct Authority (FCA) today issued a warning over what the watchdog dubbed as an “attack of the clone firms”.
The regulator notes Action Fraud data revealing consumers reported losses of more than £78 million between January-December 2020. Throughout 2020, consumers reported average losses of £45,242 each when investing with fraudsters imitating genuine investment firms.
The ongoing financial impact of Covid-19 may also make people more susceptible to these types of clone scams, the FCA says, adding that 42% of investors 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, the FCA highlights 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.
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 FCA 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 that is not authorised by the FCA. The specific details of a firm, such as the telephone number and website address can be verified on the FCA Register.
Even though 2 in 5 (38%) 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.
Graeme Biggar, Director General of the National Economic Crime Centre said:
‘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.’