How crooks clone real companies to trick you into investing.
- Crooks steal the details of regulated firms and passing them off as their own
- When a customer checks the company's reputation it seems as if they are dealing with a well-known institution
- The number of warnings about clone companies is up 65% on June last year
Fraudsters are ripping off the names of genuine financial companies to win trust from potential victims – and the threat to UK consumers is rising.
Known as 'clone companies', the villains behind them trick people into believing they are dealing with a reputable business so they will hand over thousands of pounds of their savings.
They do this by spinning a web of lies – stealing the details of properly regulated firms and passing them off as their own.
So, when a customer checks the company's reputation – through an internet search, for example – it seems as if they are dealing with a well-known institution.
The number of warnings about clone companies issued by City watchdog the Financial Conduct Authority reached 56 last month.
This is a 65 per cent leap compared to June 2018, new analysis by The Mail on Sunday shows. And it is more than quadruple the 13 flagged up by the regulator in June 2017.
The number of warnings in the first half of this year jumped by a quarter compared to the same period last year, from 114 to 142. Among the companies cloned include wealth managers, investment banks – such as JP Morgan Chase – insurance brokers, loan providers and payday lenders.
The FCA adds notices about clone firms to its 'warning list', which features the names of companies that it does not authorise, but which have been caught targeting people in the UK.
Mark Steward, of the FCA, says: 'Investment scams are becoming more sophisticated and fraudsters are using fake credentials to make themselves look legitimate. If you are in any doubt – don't invest.'
Crooks often use cold-calling as a tactic – phoning victims 'out of the blue' – but as of January this year pension cold-calling was banned.
As the message for consumers to ignore cold-calls sinks in, criminals are increasingly relying on email approaches or are luring people to fake websites through promotions on social media. Around ten million adults receive unsolicited approaches each year about pensions and investments.
The vast majority of scams being reported involve invitations to invest in shares, bonds, foreign exchange trades and crypto currencies (such as Bitcoin).
Among all types of scams – including clone firms – pension fraud victims lose an average £91,000, while investment scam victims typically lose more than £29,000.
Forex and crypto cons have stripped an average of £14,600 from victims. Consumers considering handing money over to a business need to turn detective and carry out some basic background checks.
When searching for clues about the authenticity of a firm, sometimes the address is a giveaway.
For example, people claiming to work for a firm called Swiss Investment FX have recently contacted people in the UK. The address given is in Majuro, the Marshall Islands – out in the Pacific Ocean.
But the FCA-authorised firm it is thought to be imitating, Swiss Investment Corporation Limited, is headquartered in London.
This kind of inconsistency becomes apparent if you cross-check details given by a firm and those listed on the regulator's register at https://register.fca.org.uk/.
Other clones are trickier to spot. For example, wealth manager Baillie Gifford was recently cloned by fraudsters. The address given by the fake company matched that of the genuine firm. The main contact's email address also looked plausible. In a game of 'spot the difference', the only obvious one was the contact phone number, although the Edinburgh area code still matched.
Fraudsters will mix fake contact details with those of the genuine company to confuse victims. Often, they will quote the real company's 'firm reference number' with the Financial Conduct Authority.
The advice is to never trust unsolicited calls or emails and to spend time verifying any claims made on a legitimate-looking website.
Richard Wazacz, chief executive of financial advice company Octopus Wealth, says: 'Be wary of contact out-of-the-blue from companies you have never heard of and, above all, check that who you are speaking to is indeed who they say they are.
'Double-check their website and contact details against the FCA register and suggest meeting face-to-face at the office address shown. If something doesn't feel right, then simply walk away.'
Use the details listed on the register to contact the company concerned, rather than relying on information on their website or which they provide, so you can be sure you are calling – or emailing – the right firm.
Do not click on links provided in emails or on a website – visit the register's web page independently as the FCA says fraudsters have been known to clone its own website and register.
Anyone who is still uncertain can call the regulator's consumer helpline on 0800 111 6768. To wise up to the different types of pension and investments scams that exist, visit consumer website fca.org.uk/scamsmart.
Financial advisers can also help clients dodge scams. Find a regulated adviser using websites such as unbiased.co.uk and VouchedFor.co.uk. Wazacz adds: 'A regulated financial adviser will carry out thorough checks on all of the providers they work with.
'They will give you confidence that your money is actually going to the people you think it is.'
Source: This is Money