Cumbria Police back national warning over investment scams

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Cumbria Police are backing a warning issued nationally about the need to be vigilant against “clone firm” investment scams.

These are set up by fraudsters using the name, address and Firm Reference Number (FRN) of real companies.

The returns promised are often modest to appeal to people looking for “safe” investments.

Often victims will not realise they’ve been scammed until months later, when they fail to receive reports or returns.

From December 2019 until December 2020, 19 reports were made in Cumbria.

Detective Sergeant Stephanie Goulding said: “Clone firm investment scams see criminals imitate legitimate investment companies and even clone their websites and other details to trick people.

“These are often very sophisticated scams, so we would ask people making any such investment to check as thoroughly as possible first.

“As we can see from the figures, Cumbria is not immune to this.

“So please check all the details you can and follow all the advice from organisations such as Action Fraud.”

Action Fraud and the City of London Police are working with the Financial Conduct Authority (FCA) to issue the warning to the public.

Nationally, Action Fraud reporting data reveals losses of more than £78m between January and December 2020, with victims losing £45,242 each on average, when investing with fraudsters imitating genuine investment firms.

The ongoing financial impact of coronavirus may also make people more susceptible to these types of clone scams.

Cumbria’s Police and Crime Commissioner, Peter McCall, said: “It’s so important that we do not underestimate the skillset of online fraudsters.

“Many criminals can create near-identical emails, websites etc. to scam trusting and vulnerable people out of money.

“It’s imperative that we question every unexpected email, advert and phone call and always reach out to the trusted companies that are being imitated separately.  

“Never be embarrassed to double check direct with the company you think you’re dealing with, any reputable business would welcome it; be suspicious.

“If the offer is too good to be true, it probably is."

Exactly 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 criminals 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.

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.

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 it is 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.”

Mark Steward, executive director of Enforcement and Market Oversight, FCA, said: “Clone investment scams are sophisticated and extremely difficult to spot. Last year we received over 3,767 reports of clone scams to our consumer helpline.

“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.

“If you’re considering an investment, visit the FCA register to make sure the firm you’re dealing with is authorised.

“Use the contact details on our FCA Register, not the details the firm gives you, and check for subtle differences to avoid ‘clone firm’ scams.

“And if you’re still unsure, call our consumer helpline for further information. When it comes to clones, I cannot emphasise enough how important it is to double check every detail.”

How to protect yourself

Even though two in five 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:

Reject unsolicited investment offers whether made online, on social media or over the phone. Be wary even if you initiated contact.

Always check the FCA register at  make sure you’re dealing with an authorised firm and check the FCA Warning List

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. 

Consider seeking impartial advice before investing.

If you think you’ve fallen victim to an investment fraud, report it to Action Fraud as soon as possible online, or by calling 0300 123 2040.

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