‘clone firm’ investment scams within Hampshire results in £16 million being stolen from residents

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, when the UK went into its first lockdown.

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.

Those most likely to become victims of investment fraud in Hampshire were aged 70-79 (19%), closely followed by those aged 50-59 (16%). While sixty one percent of victims in Hampshire were men.

The ongoing financial impact of coronavirus may also make people more susceptible to these types of clone scams. Forty two percent of investors say they are currently worried about their finances because of the pandemic, and over three quarters (77%) have, or plan to, make an investment within the next six months to help improve their financial situation.

However, even the most experienced investor could be at risk. Three quarters (75%) of investors said they felt confident they could spot a scam. However, 77% admitted they did not know, or were unsure, what a ‘clone investment firm’ was.

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.

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:

“We are aware that more and more people are spending time at home, and online, due to the ongoing global pandemic. This unfortunately leaves people vulnerable to acts of fraud – and specifically investment fraud on this occasion. 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. Fraudsters will use very sophisticated mechanisms – such as cloning official investment websites or spoofing email address to make you feel as if the investment is genuine. They are often incredibly charming and reassuring in their approach, using lots of expert financial literacy – yet the stark reality is that the scams are being run by organised crime groups.

“As always, if you think that you’ve become victim to a fraudulent investment scam, please report this to Action Fraud via their website.”

Superintendent Sanjay Andersen, from the City of London Police’s National Fraud Intelligence Bureau, said:

“The coronavirus pandemic has caused many people to feel financial worry and uncertainty - something which criminals will feel no remorse about capitalising on. We have sadly seen an increase in the number of investment fraud reports in 2020, compared to the previous year, with a spike in reports in the summer, after the first national lockdown was lifted.

“This new trend of ‘clone firms’ is particularly worrying as it makes it harder for people to spot a scam. Investing any amount of money comes with an element of risk and its important people take time to do their research by visiting www.fca.org.uk/scamsmart and seek independent impartial advice from an expert.

“If you think you’ve already invested into a fraudulent scheme, report it to Action Fraud.”

Detective Chief Inspector Andy Richardson, Head of Regional Cyber Crime, Digital Forensics and Economic Crime for the South East Regional Organised Crime Unit (SEROCU), said:

“These scams can have a devastating impact on the victims who invest, believing they are legitimate websites.

“This is in no way a victimless crime and can have catastrophic, wide reaching consequences.

“Unfortunately, anyone can become a target of fraud or scams and clone investment fraud can look genuine. Our advice is always stop, challenge and protect.

“Thousands of pounds have been lost due to clone investment fraud and the only way to be sure is to check every detail.

“Responsible businesses would not have any issue with you carrying out due diligence and we recommend you carry out substantial research to ensure your money is going where you want it to go.

“If you have suspicions about a website and think it could be cloned, please send any emails to [email protected] and suspicious text messages should be forwarded to 7726.

“If you believe you are a victim of clone investment fraud, you can make a report by contacting Action Fraud, the UK’s national fraud and cybercrime reporting centre.

“Fraud of any type is a serious crime and SEROCU is dedicated to investigating reports and taking those found responsible through the court process.”

How to protect yourself

Even though two in five (38%) investors said they would check the company’s Firm Reference Number (FRN), checking this alone isn’t enough. Criminals carrying out ‘clone firm’ investment scams will often copy FRN numbers and encourage victims to check the number on the FCA Register to prove their legitimacy.

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.

Remember,

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 to Action Fraud as soon as possible online at www.actionfraud.police.uk or by calling 0300 123 2040.