The ‘Clone Firm’ Scam

By Nick Adamthwaite

YOU CAN NEVER BE TOO CAREFUL...

Following a recent warning from the Financial Conduct Authority (FCA), the BBC and a number of different police forces across the country, it’s time for us to contribute to increasing the awareness about a new investment scam referred to as 'the Clone Firm scam'.

The FCA warning states ‘clone firm’ investment scams have increased by 29% since April 2020, when the UK first went into national lockdown. This warning explains that one man lost £75,000 after liaising with someone posing as Aberdeen Standard Investments. Action Fraud data shows that consumers reported losses of more than £78 million between January and December 2020, with an average of £45,242 being lost to fraudsters imitating genuine investment firms.

What is a ‘clone firm’ investment scam?

‘Clone firms’ are set up by fraudsters using the name, address and ‘Firm Reference Number’ (FRN) of real companies authorised by the FCA. The criminal gangs running these scams can engage with victims through a number of channels. Often they will take out adverts on social media platforms and search engines. Victims will then click on these adverts and be taken to exact replicas of websites belonging to genuine investment firms.

The most sophisticated criminals will even clone the website domain name. Once victims have registered their interest, they’ll be contacted by the fraudsters, who often obtain the names of genuine employees of investment firms and create seemingly legitimate company email addresses, but with very subtle changes.

The returns being promised by these criminal gangs are often modest so as not to arouse suspicion, but slightly better than the market rate, therefore appealing to those looking for long term, ‘safe’ investments. Unfortunately, the result has been that victims have transferred their savings directly to criminal gangs, under the false belief that they are sending them to a legitimate investment firm. Often, victims will not realise that they’ve been scammed until months later, when they fail to receive quarterly returns or investment reports.

Despite the positive news we had at the beginning of this week, the ongoing financial impact of Covid-19 may make people more susceptible to these types of clone scams and tips to prevent yourself from being targeted can be found below:

  1. Reject unsolicited investment offers whether made online, on social media or over the phone. Be wary even if you initiated contact.
  2. Always check the FCA Register to make sure you’re dealing with an authorised firm and check the ‘FCA Warning List’ of firms to avoid.
  3. Only use the telephone number and email address on the FCA Register, not the contact details the firm gives you and look out for subtle differences.
  4. Consider seeking impartial advice before investing.

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 (register.fca.org.uk). The FCA also warns consumers to use the phone number on the FCA Register to make contact with an FCA authorised firm so as to be sure they are dealing with the real firm.

If you think you might have fallen victim to investment fraud, it can be reported directly to Action Fraud as soon as possible by calling 0300 123 2040. If you have any paperwork you’re unsure about, don’t hesitate to get in touch with your Adviser or our office and we’ll be happy to put your mind at ease and talk you through everything.

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