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Consumers are warned to keep an eye on the so-called cloning scams after discovering that the UK investment and trade agency had won £2.7 million from its member clients through practice in late 2024.
Criminals who commit fraud will create near identical copies of legal company websites, emails, or fake WhatsApp groups and convince consumers to send payments.
Such scams were “top the list of threats” facing consumers who wanted to invest, the Investment Association’s report found. The investigation was published to commemorate the Five Takes 5 Fraud Prevention Week.
According to the report, there were 478 reports of impersonation by investment management companies in the second half of 2024. Less than one in four people succeeded.
Adrian Hood, the association’s regulatory and financial crime expert, said criminals use “a variety of measures” to trick people into letting go of money. They can impersonate real investment managers, steal card details, and fraudulently log in to someone’s account.
The IA advised consumers to “be vigilant” and double-check the sender’s email and web addresses, due to slight differences from legal companies.
Hood said the risks have become more severe as fraudsters use new AI (AI) technology.
“The growth of AI is likely to see more and more refined fraud, allowing criminals to better mimic legal companies,” he said.
There were 1,014 cloning scams for IA member companies detected in 2024, an increase of 57% the previous year despite an overall decline in the number of other scams detected.
However, the association said efforts to combat fraud have generally been successful, with member clients’ fraud losses falling 29% between the first and second half of 2024 to £5.4 million.
Approximately £1.7 million was scamned by member clients.
Account acquisitions have decreased. This scammer controls the account with investments ranging from 142 to 132 between the two halves of the year. Over the same period, reports of card fraud in which detectives open investment accounts from 36 to 17 using stolen card details.
The UK finances said that criminals have already put in considerable effort to look legal, and that AI tools could make it easier for them to do so.
“People can check the Financial Conduct Register of Lists of Regulated Companies and use only the contact details listed on the Register to make sure they are dealing with real companies before they let go of their money or information.”
Customers who believe they have been fraudulent are encouraged to contact their investment platform or provider immediately and report the incident to the UK Police’s Action Fraud Centre.
