Fraudsters Create ‘Clone’ Investment Accounts To Dupe Consumers

Retail investors have been succumbing to “impersonation fraud,” where fraudsters pretend to be famous brands and thus are able to con millions of Euros from them, Financial Times (FT) reported.

The Investment Association (IA), the trade body for U.K. asset managers, reported that there had been around £4 million lost so far in about 300 incidents where organized criminals pretended to be established companies to scam funds.

A lot of the scams have to do with fake investment bonds, FT reported. The bonds are promoted through falsified price comparison websites, with the scammers reproducing the work of already-established brands, putting out fake documentation.

The Financial Conduct Authority refers to those firms as “clone firms” because the criminals use the exact same name, registration number and address of real companies.

According to the IA, the scammers did their work by targeting people based on sponsored links on social media sites and search engines, and using personal details from fake call centers. Sometimes, the scammers had set up fraudulent emails and used names of real people at investment management firms, FT wrote.

Most of the incidents reported by The Investment Association have been reported since the pandemic started in March, FT wrote, with IA chief executive Chris Cummings saying the criminals had taken advantage of the pandemic’s chaos and “have ratcheted up their operations and are increasingly ruthless.”

Steve Hyndman, director of financial crime risk at Aviva Investors, said criminals “will always try to take advantage of uncertainty.”

“Fake comparison sites are a clever way to hook in savers, particularly during the uncertain times we are living through now,” he said, according to FT.

The pandemic’s chaos and confusion have been a birthing ground for fraud, with more reports of fraud all over the world in response. Sherif Samy, chief growth officer at Entersekt, spoke with PYMNTS recently about the need for banks and companies to implement strict safety standards with more rigid identity requirements to snuff out fraud.