Fraudsters imitating firms stole £78 million

CONSUMERS reported more than £78 million of losses to investment and pension scams involving fraudsters imitating genuine firms in 2020.

The figures are from Action Fraud, the UK’s national fraud reporting centre.

The data has been released as part of the Financial Conduct Authority’s ScamSmart campaign.

Throughout 2020, consumers reported average losses of £45,242 when investing with fraudsters imitating genuine investment firms.

Scammers set up clone firms using the name, address and firm reference number (FRN) of real companies authorised by the Financial Conduct Authority (FCA).

They then send out sales materials linking to the websites of legitimate firms, to trick potential investors into thinking they are dealing with the real firm.

To thwart the scammers, people should check the FCA’s “warning list” of firms and not deal with firms that are not authorised by the regulator, the FCA said.

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.

People can use firms’ contact details on the FCA’s register to make sure they are dealing with the real firm.

Reports of “clone firm” investment scams jumped around the start of the initial coronavirus lockdown in 2020.

They increased by 29 per cent in April 2020 compared with March.

The ongoing financial impact of Covid-19 may make people more susceptible to clone scams, the FCA said.

Two-fifths (42 per cent) of investors said they are 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.

Mark Steward, executive director of enforcement and market oversight, FCA, said: “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.”