Attack of the clones and other investment stories

Criminals have been quick to exploit the current pandemic and economic situation with ever more sophisticated scams. These include a significant number of frauds targeting investment clients.

In a recent report, the UK’s Financial Conduct Authority (FCA) recognised the connection between the COVID-19 pandemic and the increase in scams, with 42% of its surveyed investors stating they are worried about the safety of their income in the current economic crisis. As people are forced online looking for a better return on their savings, the fraudsters have developed increasingly convincing ways to exploit the economic anxiety and demand for better investment opportunities

The rise of the clone

One particular trend the FCA identified during 2020 is the rise of clone firms. UK citizens have reportedly lost over £78 million to these scams, with an average loss of £45,242 per victim.

Clone firms are companies that appear to be legitimate by impersonating a genuine organisation. They can appear to be very convincing as, in the UK, they often use the licence details of the cloned organisation, so they look to be licensed by the FCA.

Once they have set up a clone firm, scammers use a variety of ways to entrap the unsuspecting. In addition to their well-established tactic of approaching investors directly by phone, email or text, they are getting bolder and buying up advertising spots on social media and search engines. These can appear authentic when they pop up in your search listings, with the names and styles of familiar firms, but they are often fronts for clone firms run by organised crime groups. Clicking on any links will take you to clone company websites or spoof email addresses.

Firm under investigation

In another scheme, fraudsters contact existing investment clients claiming to be from the FCA, or a law enforcement agency, and tell them that their firm, or specific investment manager, is under investigation. The investor is warned not to speak to anyone about the investigation, to avoid tipping them off, and then advised to encash their portfolio and move the proceeds into their bank account for safety. Once the fraudster knows they have cash readily available, they recommend an alternative investment opportunity, which will be the scam.

How to stay safe

Despite these bleak statistics, you can protect yourself by keeping vigilant and taking a few simple steps to outwit the scammers.

1. Prevent fraudsters hacking into your email or mobile phone accounts by keeping your security protection up to date.
2. Treat all unexpected calls, emails and text messages about investments with caution, even if they appear to be from a genuine source and to know some of your personal details.
3. Be particularly wary of any calls or messages that emphasise urgency, secrecy, or require your immediate attention.
4. Never use links or attachments in an unsolicited email to submit personal details or to log in to a website. Always check the details given against the official email or web addresses of the firm it purports to be from.
5. Before making any investment, check whether the firm, or the individual, is authorised by the FCA on its financial services register.
6. Verify whether the proposed action is a known investment scan by looking at the FCA’s warning list.
7. Make sure you take independent and impartial advice, such as that offered by Nedbank Private Wealth, before making any investment decision.

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how the bank is working to protect our clients’ assets, or call +44 (0)1624 645000 to speak to our Client Services team.

If you would like to find out more about how we can help you with your wealth, please contact us on the number above or via our Contact us page.