Investors lost £78m in investment and pension ‘clone’ scams in 2020, according to the latest figures from Action Fraud.
There has been a surge in this activity since the Covid crisis hit, with fraudsters purporting to be financial companies, including pension providers.
Action Fraud’s figures show this activity increased by almost 30 per cent In April 2020 when compared to the previous month, as scammers took advantage of fears about the sharp market correction, job insecurity and the first lockdown.
Action Fraud, which is working with the FCA and City of London Police found that during the year victims lost an average of £45,000 each.
It said the ongoing financial impact of coronavirus may also make people make people more susceptible to these types of clone scams.
A total of 42 percent of investors say they are currently 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.
However, even the most experienced investor could be at risk. Three quarters (75 per cent) of investors said they felt confident they could spot a scam. However, 77 per cent admitted they did not know, or were unsure, what a ‘clone investment firm’ was.
Action Fruad said these clone firms typically 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.
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.
The People’s Pension director of policy Phil Brown says: “These latest figures are further evidence of how far ruthless scammers will stoop to get their hands on the hard earned pension savings of others.
“We’ve called on the Government to provide trustees, pension providers and regulators with the powers to stop risky pension transfers.
“We’re pleased to see the Pensions Minister has made assurances that such measures would be included in regulation. Pension fraud is the cruellest of financial crimes and has a devastating impact on its victims, and it’s vital that this issue remains a priority.”
Canada Life technical director Andrew Tully says: “While falling prey to scams hits victims financially, there are also quite severe hidden costs to mental health as people’s ability to trust is shattered overnight.
“Despite the public message campaigns and the ban on cold-calling, the scammers are either simply ignoring the law or looking to sophisticated campaigns over social media in order to con people out of their savings.”