Watchdog warnings about fraudsters impersonating financial firms to trick people out of cash have soared this year, sparking concern this type of scam is becoming more prevalent.
‘Clone’ alerts by regulators have jumped 34 per cent to 401 so far, and 261 per cent since 2015 – and they currently make up two fifths of all fraud warnings issued by the City regulator.
It can be challenging to tell whether you are dealing with a well-known and trusted financial company or not, because scammers will make every effort to appear legitimate.
Watch out: Financial sharks are masquerading as legitimate firms to trick people out of money, and known cases of this scam are on the rise
‘Sophisticated organised criminals impersonate a reputable financial services firms to market non-existent investment products to consumers, predominantly through fake websites and paid adverts on search engines,’ explains wealth management firm Quilter.
It points out that the burden is on individuals to protect themselves, by detecting copycat websites and reporting them to online platforms and the regulator.
This takes time, during which other people are exposed to the same scam.
>>>What checks can you make to avoid being fooled? Find out below
Quilter says 1,031 general scam warnings have been issued in 2020 to date, an 80 per cent increase on the amount in 2019, and 301 per cent more than 2015.
But it says there is no legally enforceable system to compel search engines and social media platforms to remove fake websites and adverts which clone financial services firms.
Quilter is calling on the Government to consider including financial scams within its forthcoming ‘online harms’ legislation, which is currently at the consultation stage, or to bring forward new legislation to protect consumers.
The Government has banned cold calls, emails and texts about pensions to combat fraud, and to make people more suspicious about any approaches they continue to receive afterwards.
Previous research suggests people can detect a pension scam touting investments that seem too good to be true, but fewer can spot more subtle approaches.
Impersonating real firms: ‘Clone’ alerts currently make up two fifths of all fraud warnings issued by the City regulator.
‘Modern technology has allowed scammers to become much more sophisticated in the methods they use to entice their victims, and we are seeing more and more scammers stealing the brands of well-known financial services firms to trick people into parting with their cash,’ says Debbie Barton, financial crime prevention expert at Quilter.
‘It is becoming much harder to spot the difference and separate fact from fiction. These scams are becoming increasingly prevalent.’
A government spokesperson says: ‘We recognise the concerns about the growth in scale and complexity of online scams and fraud.
‘With industry, regulators and law enforcement partners we continue to relentlessly pursue fraudsters, close down the vulnerabilities they exploit, and ensure people have the information they need to spot and report scams.’
The Government’s response to the online harms consultation is due soon, and this will set out final details of what will be included in the legislation.
Last year, the Department for Digital, Culture, Media and Sport announced it will consider how online advertising is regulated, and it is currently gathering evidence.
Some we’ve warned about in the past
Last November, we warned that scammers had spoofed Shawbrook Bank – a name that regularly at the top of our best buy tables, in an attempt toi trick people out of their money.
Last April we were tipped off by a reader about the existence of another group of fraudsters pretending to be from a legitimate financial firm, ABN Amro.
We later discovered that three people collectively lost more than £72,000 in the period between ABN Amro informing the FCA and the regulator putting the clone firm on its blacklist.
How do you protect yourself against fraudsters pretending to be a real business?
It is unclear why clone fraud appears to be on the rise but it could be because it is working, which means people should be on their guard.
Taking the cautious approach might mean you do extra checks on firms that eventually turn out to be legitimate, but this is a worthwhile exercise.
Debbie Barton of Quilter gives the following tips, and the Financial Conduct Authority offers its own checklist on the right.
‘Cloned’ firm fraud
The FCA says people should take the following steps to protect themselves.
* Only use financial firms that are authorised by the FCA – you can check its register here. The watchdog advises people to access the register direct from its website, rather through links in emails or on a firm’s website, as this might be part of the scam.
* Always double check the ‘url’ – the website address you input to reach a homepage – and contact details of a firm to ensure they match those of the genuine one.
* Check the FCA’s warning list of cloned firms it has issued alerts against here.
Read more here about cloned firm fraud.
1. Ask yourself how you found out about an investment opportunity? If you have been contacted by phone, email or text out of the blue without even looking for an investment then it’s highly likely it is a scam.
2. If you put your details into an investment comparison site, was it legitimate, well-known and trustworthy? Be incredibly wary of any comparison site that tries to get your attention with an advert on a search engine and asks you to input your details.
‘You have no control over where your details go, and to whom they are sold to,’ says Barton.
3. If you are contacted, be wary of anyone who puts you under time pressure, as a genuine financial services firm won’t mind giving you time to think.
4. Be wary if someone tries to downplay the risks of an investment, or say that your money will be protected and potentially even guaranteed if things go wrong.
5. Check for any unexpected words in domain names, email addresses or on brochures. In an email look at who it has come from, as if it’s a scam the email address may be filled with random numbers or be misspelled.
‘There could be even more subtle additions, including words relating to the sector such as bonds,’ adds Barton.
6. If it is too good to be true, then it probably is, so watch out for unrealistically high levels of return, and claims that they are guaranteed or protected.
7. Ask yourself whether you know exactly what the product is and who is responsible for looking after your money.
8. Check what protection you would have if things go wrong. See the box above for how to check if a firm is registered with the FCA.