Investment scam victims are losing an average of £45,000 each to fraudsters and falling prey to a soaring number of 'clone' investment scams, latest figures from Action Fraud reveal.

Action Fraud released the figures - based on 2020 data - following a near 30% surge in ‘clone’ investment scams in 2020 since lockdown began.

Last year the FCA alone said it received 3,767 reports of clone scams to its consumer helpline.

Clone scams mostly occur when scammers set up a ‘clone’ or replica of a legitimate company’s website with the intention of luring unsuspecting consumers to hand over their money. Financial providers and Financial Planners, as well as consumers, have been hit in the past 12 months by clone scam attempts.

Action Fraud says its research found that 77% of investors do not know or are unsure what a ‘clone investment firm’ is.

The FCA and Action Fraud have launched a campaign to encourage investors to only use contact details on the FCA Register to avoid ‘clone firm’ scams.

Action Fraud and the City of London Police are working with the Financial Conduct Authority (FCA) on tackling investment and clone scams after figures showed a 29% rise in clone scams since last April. 

Action Fraud data revealed scam victims lost more than £78 million between January-December 2020, with victims losing £45,242 each on average.

The anti-fraud organisation believes the financial impact of Coronavirus may make people more susceptible to clone scams.

Some 42% of investors say they are currently worried about their finances because of the pandemic and over three quarters (77%) plan an investment within the next six months to help improve their financial situation.

Three quarters (75%) of investors said they felt confident they could spot a scam however 77% admitted they did not know, or were unsure, what a ‘clone investment firm’ was.

Superintendent Sanjay Andersen, of City of London Police’s National Fraud Intelligence Bureau, said: “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.”

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.”

He urged consumers to visit the FCA Register to make sure the firm they were dealing with are authorised, checking all details are correct and if still unsure to call the FCA consumer helpline.

He said: “When it comes to clones, I cannot emphasise enough how important it is to double check every detail.”

Action Fraud quoted the case of Janet, a finance officer from Chester, who lost £40,000 to a clone investment firm. She said: “I’m quite savvy minded when it comes to money – being a finance officer I thought I was a confident investor and thought I knew how to spot the warning signs of a scam. After searching the internet for high-return bonds, I received a call the next day about investing in student accommodation. 

“I found legitimate details of the company online - everything seemed genuine, so I invested. A few months later, after a couple more investments, I started to get a bit worried - I still hadn’t received confirmation of the latest investment. I tried to call the contacts I had been speaking to, but the numbers were invalid. It was clear I had been scammed. I had lost £40,000. I really thought I’d be able to spot a scam, but now I know they can be far more sophisticated than I had ever imagined.

Anthony Rafferty, CEO of Origo, said the problem was not just affecting consumers but also advice firms.

He said: “This not just an issue of scammers masquerading as trusted brands to draw people into fraudulent transactions resulting in these huge sums of money being stolen, but also of identity fraud, where firms are tricked into making transactions on behalf of clients who in fact are fraudsters impersonating the client. 

"A recent Financial Ombudsman Service ruling is case in point, where a financial advice firm was ordered to reimburse a client who lost money transferred from her SIPP, following receipt of an email seemingly from her email address but which was in fact from a fraudster impersonating the client.”

"Cybercriminals have been taking advantage of the necessity for firms to implement home working as well as the general increased use of online services, to put out a flood of phishing and scam emails, looking to capture individuals’ personal and financial details as well as penetrate companies’ security systems.”

“Unsecured email is vulnerable to hacking. Therefore, a first, simple and effective way for firms to protect themselves and their clients when communicating on financial transactions and confidential information, is to employ military-grade encryption which requires a challenge question to be answered through secure messaging.”

• Advice on spotting scams is available at www.fca.org.uk/scamsmart