France’s Financial Markets Authority (AMF) has issued a warning regarding an increasing number of clone entities, which abuse the details of regulated investment firms, in order to lure potential victims.

The regulator notes that it has seen a raft of attempts by fraudulent firms to misuse the name, address, logo and the authorization number of regulated firms. The phenomenon is spread among investment firms and asset management companies.

Last year, the authority noted a sharp increase in the number of reports of victims of financial scams linked to such abuse. These scams accounted for 44% of the losses reported to the AMF in 2020. The average loss declared by the victims of such scams amounts to around EUR 45,000.

The AMF recommends to investors not to respond to offers without having carried out careful checks to ensure the identity of the parties who offer these investments:

• contact by yourself the company of which your interlocutor claims to represent to verify that the contact actually comes from this firm;
• compare the email address of your contact person to that of an authorized professional;
• check with the professional association of which your interlocutor claims to be a member;
• check the AMF website for the summary table of unauthorized or usurping actors and sites from regulated actors.

Regulators in other jurisdictions have also recently issued warnings regarding clone firms. In January this year, for instance, the UK Financial Conduct Authority (FCA) cautioned that there is an “attack of the clone firms”.

The UK regulator noted 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.