Sussex Police is raising awareness of investment fraud after seeing a significant rise in cases, with a total of 192 reports involving victims who are elderly or vulnerable in 2020. This represents a 71 per cent increase in reports from 2019, and £9.5million in losses were recorded in total.
Typically, fraudsters cold-call their victims and pretend to be from a legitimate or well-known investment company. They try to sell investments in emerging markets, claiming it will lead to financial gains. In reality, the item offered does not exist or is worthless. The scammers will then ask the victim to transfer funds to an account or ask for personal information. They may call multiple times to build a relationship and may sound very convincing about finance and investments.
‘Clone firm’ investment scams are when criminals imitate legitimate investment companies, and even clone their website, to trick people into thinking they are investing with the genuine company. Nationally, these types of scams have increased by nearly 30 per cent since the first national lockdown when people may be more vulnerable to scams.
In May 2020, a woman in her 60s from Rustington nearly lost a large sum of money to a scam after she was called by a fraudster pretending to be from Allianz UK. The fraudster offered her investment opportunities after she had been researching for information online. After a series of convincing calls with individuals who asked for ID and to run verification checks, she transferred £20,000. Fortunately she was able to get her money back with assistance from the Financial Ombudsman.
She said: “When I realised I had been a victim of fraud I was so shocked and beside myself, very tearful and in disbelief. I didn’t know where to turn and was panic-stricken, very distressed and I felt so, so foolish and very alone. I couldn’t eat or sleep for weeks and couldn’t face contacting my family or any friends. I was too ashamed! It was on my mind day and night and the follow up with agencies never ending.
“Going through the whole scenario over and over again with different agencies I needed to contact and also writing reports was very stressful even after months as the experience all flooded back. My stress levels were so high for the six months that it resulted in me being diagnosed with high blood pressure and put on medication.
“The tactics, documents and procedures they were all very convincing. Upon my online enquiry they phoned and told me all about the company and offered good rates. It’s a large international company so this was very convincing. The rest of my communication was all done via email and they sent all the authentic Allianz UK information, documentation and procedures.
“I’d advise anyone considering making an investment not to do anything online without making significant checks about the company you are intending to invest with by contacting the Financial Conduct Authority (FCA) who have up to date information about current frauds. If the deal looks good check it out and don’t engage with it unless completely satisfied. If you want to go ahead and need to do a bank transfer go to the bank and ask them to do it. Also ask them to check the recipient’s bank account details before sending any money.”
PC Bernadette Lawrie, Financial Abuse Safeguarding Officer for Sussex and Surrey Police said: “Investment fraud not only can have a devastating financial impact on victims, but it can cause significant psychological distress as this case demonstrates.
“These cold-callers can appear very convincing and to be highly knowledgeable about investments. Remember, scammers do their homework and make it their business to know as much as possible.
“If you’re looking to make an investment always ensure you have carried out as many checks as you can to ensure people are who they say they are – and if something sounds too good to be true then it probably is.”
Detective Chief Inspector Andy Richardson, Head of Regional Cyber Crime, Digital Forensics and Economic Crime for the South East Regional Organised Crime Unit (SEROCU), said: “These scams can have a devastating impact on the victims who invest, believing they are legitimate websites.
“This is in no way a victimless crime and can have catastrophic, wide reaching consequences.
“Unfortunately, anyone can become a target of fraud or scams and clone investment fraud can look genuine. Our advice is always stop, challenge and protect.
“Thousands of pounds have been lost due to clone investment fraud and the only way to be sure is to check every detail.
“Responsible businesses would not have any issue with you carrying out due diligence and we recommend you carry out substantial research to ensure your money is going where you want it to go.
“If you have suspicions about a website and think it could be cloned, please send any emails to firstname.lastname@example.org and suspicious text messages should be forwarded to 7726.
“If you believe you are a victim of clone investment fraud, you can make a report by contacting your local police force on 101 or make a report through their online systems.
“Fraud of any type is a serious crime and SEROCU is dedicated to investigating reports and taking those found responsible through the court process.”
Protect yourself from investment fraud:
– If you’re cold-called, get a text, email or similar approach that you haven’t invited regarding finance and investment, be careful, even if it sounds like a familiar or reputable company. Always check people are who they say they are by researching their official contact details.
– Scammers may say they’re from a reputable investment company; some say they’re stockbrokers or consultants. Always seek independent financial advice before you invest in anything and check with the FCA to see if the company is registered. Don’t just rely on information from Company’s House.
– Never make a decision based on phone calls, glossy brochures or pushy salespeople. How often do you buy from a doorstep salesperson? So why trust someone you’ve never met, contacting you from a company you’ve never heard of, with your savings?
– Always seek advice from an expert who has no connection with the ‘sales pitch’. If possible, research the company. A genuine financial adviser should be registered with the FCA. Never feel rushed into making a decision about your finances, and if in doubt take a step back and discuss the decision with a trusted family member or friend.
How to protect yourself from clone investment firms:
- Reject unsolicited investment offers whether made online, on social media or over the phone. Be wary even if you initiated contact.
- Always check the FCA Register to make sure you’re dealing with an authorised firm and check the FCA Warning List of firms to avoid.
- Only use the telephone number and email address on the FCA Register, not the contact details the firm gives you and look out for subtle differences.
- Consider seeking impartial advice before investing.
Investors can test if they can spot an investment scam from a smart investment by taking the Scam or Smart quiz, visit www.fca.org.uk/scamsmart to find out more
To find out about Operation Signature, Sussex Police’s initiative to protect and identify vulnerable victims of fraud, please see the Force website here.