Gangs are using fake sites to steal from investors, warns crime expert

Clone fraud: Criminals are luring investors to fake comparison sites touting bogus products in order to steal their cash

Phil Rolfe is a financial crime expert and the chief executive of P2 Consulting.  

During the coronavirus pandemic and lockdowns, investment scams have soared.

Criminal gangs have taken advantage of the fact that people have lost jobs, or are under financial pressure, and that we are living in an environment of rock bottom interest rates.

All of these factors have conspired to provide these gangs with an opportunity.

Online investment fraud fits the bill nicely. The Financial Conduct Authority reports that throughout 2020, consumers lost just over £45,000 each on average when investing with fraudsters imitating genuine investment firms.

There is big money to be made. The profit margins far outweigh those for other crimes and there is less risk when compared to drug dealing or people trafficking. 

How does clone fraud work?

The scam looks completely legit. Criminals – acting alone or as part of a wider organised crime network – create fake versions of investment company websites.

They pay significant money for digital advertising on search engines or social media channels.

Their ads lead to fraudulent sites that offer a slightly above ‘standard’ return for investment or pension products currently on offer, so a 2.75 per cent return, for example, rather than 2.5 per cent, and they might claim this is ‘guaranteed’.

It looks marginally better, but not enough to set alarm bells ringing.

One of the problems is that when you search for products or providers on search engines, these fake websites appear alongside the legitimate companies.

Crime expert: A former head of anti money laundering operations at NatWest Group, Phil Rolfe is trying to raise public awareness of clone fraud to help people protect themselves

Crime expert: A former head of anti money laundering operations at NatWest Group, Phil Rolfe is trying to raise public awareness of clone fraud to help people protect themselves

Investors who are being diligent and doing their research to find a good deal think they are real.

And scam comparison sites have also proliferated – fake aggregator sites that house the websites of these criminal gangs.

Unsuspecting customers think they are getting an impartial overview of legitimate providers, only to be duped

Once you click through from a search engine or social media site, if you give your details you get a phone call from a slick salesperson encouraging you to sign up.

They mirror legitimate conversations and will even follow up with a brochure that looks like the real thing.

The investor really believes they are dealing with a legitimate company, and then decides to transfer their Self-Invested Personal Pension, Isa or investment portfolio to the fraudster with the intention of increasing their return slightly – only to lose everything. 

What is being done to fight clone fraud?

Many of us in the business of combating these scams were disappointed that the Online Harms Bill, which the Government published before Christmas, failed to include online fraud.

But the Financial Conduct Authority and organisations like Action Fraud are working hard to raise awareness, as are financial service providers.

Aviva, for example, has an up-to-date dedicated fraud portal on its main website.

And it is time for search engines and social media platforms to acknowledge the problem and work with finance firms, crime agencies and the Government to figure out a solution.

Search engines often act as the ‘shop window’ for online investment fraud – and payment platforms house the ‘mule’ accounts that allow the transfer of funds.

How prevalent is clone fraud? 

According to Action Fraud, the UK’s national centre for reporting fraud and cybercrime, it received over 17,000 reports of investment fraud between September 2019 and September 2020.

The amount lost totalled £657.4million, an uplift of 28 per cent compared to the year before.

Financial service firm Aviva says that over 90 per cent of fraud it has witnessed during the pandemic has involved cloned investment scams.

Collaboration to combat this is critical.

What can you do to protect yourself against financial fraud?

This is the important bit – how do you detect the wolf in sheep’s clothing? It isn’t easy. Here are some tips.

1. Take great care when you follow financial ad links on social media

Be aware if you are searching for a new financial product that these platforms can be classic phishing routes for investment fraud, so you have to be certain the financial ad you might be clicking on to is a legitimate one. 

2. Do not respond to inbound phone calls

This is another classic – a phone call out of the blue purporting to be your bank or investment manager, or a sales call trying to sell you a financial product is going to be fake.

A proactive call to a known investment provider or independent financial adviser from you – once you have established the credibility of the provider – is the way to do it.

3. Use the FCA website

The FCA has done its due diligence and all providers listed on its register will be above board and credible, or you will be warned they are unauthorised or are a clone.

If you want to be sure you are dealing with the legitimate version of a financial company, the details such as the telephone number and website address can be verified on the FCA register – use those to make contact with a firm to be sure you are dealing with the real one.

You can call the FCA consumer helpline on 0800 111 6768 if you need help.

MPs press for action on pension scams

MPs say global tech firms like Google should be ‘held to account for hosting pension scam adverts’ by using legislation to stop them profiting from them.

The Work and Pensions Committee called on the Government to ‘act quickly and decisively‘ to protect pension savers, and to include financial harms in the forthcoming Online Safety Bill.

Read responses from Google and the Government below. 

4. Use legitimate comparison websites

They are out there and – like the FCA – they have done their due diligence.

Websites such as Compare Wealth Managers (www.comparewealthmanagers.com) or Find a Wealth Manager (www.findawealthmanager.com) are investment specific comparison sites – but type their names carefully as fraudsters will have misspelled sites set up to capture investors who make an error. 

>>>Find the best and cheapest Isa investment platforms: This is Money’s comparison with legitimate links

5. If in doubt, wait, check and validate

If you have any misgivings, do not act. Once you do and click on ‘confirm’ to transfer your pension or Isa to a criminal, you are highly unlikely to get it back.

If the salesperson is too pushy, hang up – it is your money and you have a choice where you invest. A pushy salesperson is a good sign that you are dealing with a fraudster. 

Be careful, and raise awareness by warning friends and family

Clone fraud is an awful crime with potentially life changing ramifications. The lovely retirement you had in mind could be in jeopardy. And you will be kicking yourself in perpetuity if you fall into the scammer’s trap.

So it’s worth doing your homework, getting a second opinion from a friend, relative or professional adviser, and figuring out if the financial product you are eyeing up is what it says it is.

Fraudsters are exploiting the pandemic 

Peter Hazlewood, Aviva’s group financial crime risk director, is working with Phil Rolfe to raise awareness of investment clone fraud and to galvanise action to combat it.

He says 90 per cent of the fraud that Aviva has witnessed during the pandemic is cloned investment fraud and that pension-age people are particularly vulnerable.

Hazlewood explains Aviva did some online research for ‘good Isa returns’ and a hefty 30 per cent of the ads that popped up were fraudulent.

‘Across 26 well-known industry brands, the industry has seen average losses of just over £45,000 per fraud. This amounts to hundreds of millions of pounds of savings lost by vulnerable, pension-age investors,’ he says.

Hazlewood adds the fraudsters are exploiting the pandemic by taking advantage of people who are spending more time at home, often in isolation. and using the internet to search for financial services and products.

The tech sector, financial service providers and the government need to work together to protect consumers, and ‘intelligence sharing is crucial’, he says.

What is the response to Phil Rolfe’s views on fighting clone fraud? 

A Government spokesperson said: ‘We recognise the concerns about the growth in scale and complexity of online scams and fraud, and we continue to work closely with industry, regulators and law enforcement partners to pursue fraudsters, close down the vulnerabilities they exploit and make sure people have the information they need to spot and report scams.’ 

Regarding the report by MPs on the work and pensions committee, the Government added: “The Minister for Pensions has been very clear that some tech companies are failing pension savers, that they must do more to crack down on scam adverts and should use their existing powers to stop online scammers using their site to promote fake adverts.’

Katy Worobec, managing director of economic crime at banking industry body UK Finance, said: ‘Criminals are cruelly preying on ‘Generation Covid’ and those struggling to find work at this difficult time, by using fake job adverts online to recruit people as money mules.

‘We would urge everyone to remain cautious about any offers of quick and easy money and remember that if it sounds too good to be true, it usually is.

‘At the same time, online platforms must take swift action to detect and take down content being used to promote money muling activity. Organised criminal gangs use money mules to launder the profits of their devastating crimes, including fraud, drugs smuggling and people trafficking. We all have a duty to stop them.’ 

A Google spokesperson said: ‘Protecting consumers and credible businesses operating in the financial sector is a priority for us. 

‘We take dishonest business practices and misleading ads very seriously and consider them to be a violation of our policies and we have recently updated our policies to enable verification of businesses promoting financial services in the UK. 

‘When ads do not comply with our policies; we take action. Last year, our team blocked or removed over 3.1 billion ads for violating our policies, of which 123 million ads were ads for financial services.’ 

Facebook did not respond to a request for comment.

This is Money is helping to battle clone fraud 

This is Money frequently reports on stories of investment scams and clone firms that affect our readers.

We have recently highlighted the stories of two readers who collectively lost £80,150 to clone investment scams.

Often we’re contacted by readers who have themselves been contacted out of the blue by fraudsters offering inflation-busting returns to check if they are too good to be true, the answer to which is normally yes.

We found in December that Allianz, Aviva, JP Morgan and Royal London had all been impersonated by fraudsters last year, with 425 alerts issued by the Financial Conduct Authority about clone firms.

However, the FCA’s blacklist is not comprehensive.

In 2019 we reported on how victims lost more than £70,000 to scammers who impersonated Dutch bank ABN Amro, which hadn’t been blacklisted despite us reporting it to the regulator.

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