Cloning scams top fraud concern for investment managers and their customers

To mark “Take Five” fraud prevention week, the Investment Association (IA) – the trade body for the investment management industry - is warning consumers to remain vigilant, particularly in the face of cloning scams.

Publishing its H2 2024 fraud figures today, the IA revealed that brand cloning scams were the leading source of fraud impacting consumers looking to invest. This is when a criminal creates a nearly identical duplicate of a genuine website, or email, or even creating a fake WhatsApp group, using a company’s brand and logo, to trick people into parting with their 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 £2.7 million.  

The IA highlights three main types of scams that consumers should be alert to: 

• Cloning:  A firm has been impersonated by fraudsters mimicking their website or emails, to trick people into thinking they are making a genuine investment. 
• Card fraud: When a criminal uses false or stolen debit card details to make an investment. In H2 2024 there were 17 reports of this type of fraud. 
• Account takeover: Where the fraudster uses 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 gain the proceeds for themselves. In H2 2024 there were 132 reports of this type of fraud.

People can however protect themselves by taking the following steps: 

• 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 – criminals often use addresses that look like legitimate ones but may have slight differences. 
• Challenge: Ask yourself, could it be fake? It’s ok to reject, refuse or ignore any requests.
• Protect: If you think you’ve been scammed, contact your investment provider or platform immediately, ensuring these are the genuine contact details, and report it to Action Fraud.

The IA’s data also shows how firms and consumers are reducing the financial impact of fraud by remaining vigilant. Losses due to fraud decreased by 29%, falling from £7.6 million in the first half of 2024 to £5.4 million in the second half of 2024. The value of losses prevented also increased, from £10.2 million to £11.9 million, a 17% increase - while the amount of losses recovered increased to £1.7 million. 

Adrian Hood, Regulatory & 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. 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.”