UK’s Financial Conduct Authority (FCA) has issued a warning to the public as reports of ‘clone firm’ investment scams increased by 29% in the first month of UK’s first lockdown in 2020. Clone firms are fake firms that scammers create using the credentials of real, FCA-authorised companies. By linking fake companies to the websites of real ones, fraudsters are able to scam potential investors. Notably, consumers lost more than £78 million ($107m) in 2020, losing £45,242 ($62,051) each on average when investing with fraudsters posing as real investment companies.
The economic impact of the COVID-19 pandemic is likely to make people more vulnerable to such clone scams. In fact, the FCA has pointed out that even the most experienced investor could be at risk. Indeed, while 75% of investors feel confident about being able to recognize a scam, 77% do not adequately know what a ‘clone investment firm’ is.
The FCA is advising all potential investors to check its Warning List of companies and to not engage with companies that are not authorised by the FCA. The authority has also advised the stakeholders to verify and use only the true company details (like telephone number and website address) found on the FCA Register.
Source: Financial Conduct Authority, UK