Hampshire Constabulary is working with Action Fraud, the City of London Police and the Financial Conduct Authority (FCA) to issue a warning to the public, as reports of ‘clone firm’ investment scams increased by 29 percent nationally in April 2020 compared to March.
Action Fraud reporting data reveals that Hampshire residents recorded losses of more than £16.1 million between January-December 2020, with victims losing £31,9441 each on average, when investing with fraudsters imitating genuine investment firms.
‘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 subtle changes.
There have also been instances of investors inputting their contact details into genuine price comparison websites and then being phoned by criminals purporting to be from a well-known, legitimate investment firm. Another tactic used by these criminals to dupe investors is to send victims sales materials linking to websites of legitimate firms.
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.
In the end, victims will end up transferring 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.
Detective Sergeant Marcus Mills, from Hampshire Constabulary’s Economic Crime Unit, said: “Hampshire, like many other areas, seemingly saw a spike in activity during the summer months last year and this has continued, albeit rates have slightly dropped in recent months. It’s important to remind local residents of that age old saying that if something is too good to be true, it likely is.”
Anyone considering an investment opportunity should double-check all the details of a firm, not just the FRN, on the FCA register. This includes the telephone number and it is important you only use the number on the FCA Register to make contact with the firm.
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.
Investors can test if they can spot an investment scam from a smart investment by taking the Scam or Smart quiz, visit www.fca.org.uk/scamsmart to find out more.
If you think you’ve fallen victim to an investment fraud, report it at www.actionfraud.police.uk or by calling 0300 123 2040.