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Consumers have been warned to remain on the lookout for so-called cloning scams after a UK investment trade body found fraudsters took £2.7mn from members’ customers through the practice in the second half of 2024.
Criminals perpetrating the scams create a nearly identical duplicate of a legitimate company’s website, email or a fake WhatsApp group to persuade consumers to send them payments.
Such frauds were “topping the list of threats” facing consumers who wanted to invest, a report by the Investment Association found. The study was published to mark “Take Five” fraud prevention week.
There were 478 reports of impersonation of investment management companies in the second half of 2024, according to the report. Just under one in four was successful.
Adrian Hood, a regulatory and financial crime expert at the association, said criminals would use “a variety of means” to trick people into parting with their money. They could impersonate genuine investment managers, steal card details or fraudulently log into a person’s account.
The IA advised consumers to “stay vigilant”, double-checking senders’ email addresses and web addresses for slight differences from those of legitimate companies.
Hood said the risk was growing more acute as fraudsters used new artificial intelligence (AI) technology.
“The growth of AI is likely to see increasingly sophisticated scams, with criminals better able to mimic legitimate firms,” he said.
There were 1,014 cloning scams against IA member firms detected in 2024, a 57 per cent increase on the year before, despite an overall fall in the number of other scams detected.
However, the association said efforts to counter fraud generally were succeeding, and that losses from fraud for its members’ customers fell by 29 per cent, to £5.4mn, between the first and second halves of 2024.
Some £1.7mn scammed from members’ customers was recovered.
There was a drop in the number of account takeovers, in which fraudsters take control of an account to cash in an investment, from 142 to 132 between the two halves of the year. Over the same period, there was a decline in reports of card fraud, in which a criminal uses stolen card details to open an investment account, from 36 to 17.
UK Finance said criminals already went to great lengths to appear legitimate and AI tools could make it easier for them to do so.
“People can check the Financial Conduct Authority’s register for lists of regulated firms and only use the contact details listed on the register to confirm you’re dealing with the genuine firm before parting with your money or information,” it said.
Customers who believe they have been scammed are advised to contact their investment platform or provider immediately and report the incident to UK police forces’ Action Fraud centre.
