The Investment Association (IA) has warned of the high risk currently posed by so-called ‘cloning scams.’
In publishing its second half of 2024 fraud figures, the IA revealed that brand cloning scams were the leading source of fraud impacting consumers looking to invest. It also noted AI is being used to make scams more sophisticated.
The scams involve a criminal creating a nearly identical duplicate of a genuine website or email, or even a fake WhatsApp group, using a company’s brand and logo.
They will then use this to trick retail investors, or even their advisers, into sending them money.
In the second half of 2024, there were 478 reports of investment management firms being impersonated by fraudsters, just under a quarter of these attempts were successful (23%), with consumers losing £2.7m.
Card fraud and account takeover were two other commonly seen scams recorded by the IA.
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Account takeover involves fraudster using information they have gained about an individual to change the address or payment details of an account, in order to cash in the investment and take the proceeds. In the second half of 2024 there were 132 reports of this type of fraud.
The IA said people can protect themselves by taking three steps. Firstly, stop. Take a moment to stop and think if someone asks for your money or information about you. Double check a sender’s email address or website URL. Second, challenge. Ask yourself, could it be fake? Thirdly, protect. If you think you have been scammed, contact your investment provider or platform immediately, ensuring these are the genuine contact details, and report it to Action Fraud, the IA said.
Adrian Hood, regulatory and financial crime expert, at the IA said: “Criminals will use a variety of means to trick people into parting with their money, whether that’s impersonating genuine investment managers, stealing card details, or fraudulently logging into a person’s account.
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“That’s why we’re urging consumers to stay vigilant. With cloning scams topping the list of threats, consumers should double check whether websites or emails are legitimate before transferring any money.
“The growth of AI is likely to see increasingly sophisticated scams, with criminals better able to mimic legitimate firms.”
