Subscribe to our newsletter

Fraud data reveals ‘clone firm’ investment scams total over £78m

More than £78 million has been reported stolen in 2020 as a result of individuals investing with fraudsters imitating genuine investment firms, according to Action Fraud data.

Fraud data reveals ‘clone firm’ investment scams total over £78m
smsfadviser logo
  • Staff Reporter
  • January 29, 2021
share this article

Throughout 2020, consumers reported average losses of £45,242 each on average when investing with such fraudsters, according to the data.

The data has been released as part of the Financial Conduct Authority’s ScamSmart campaign, alongside advice to help investors avoid fake firms and protect their hard-earned cash.

In response to the data, the FCA issued a warning to the public with regard to ‘clone firm’ investment scams amid reports that such scams increased by 29 per cent in April 2020 compared with March, when the UK went into its first lockdown.

The ongoing financial impact of COVID-19 may also make people more susceptible to these types of clone scams, with 42 per cent of investors say they are currently worried about their finances because of the pandemic, and over three-quarters (77 per cent) have or plan to make an investment within the next six months to help improve their financial situation.

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.

“Clone investment scams can look real and sophisticated but anyone can spot them by following our advice,” said FCA executive director of enforcement and market oversight, Mark Steward.

“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.”

Receive the latest Financial Accountant news,
opinion and features direct to your inbox.

related articles