An estimated 300 incidences of organised criminals impersonating legitimate vehicles sold by investment management firms have occurred since late 2019, scamming savers out of approximately £4m, with the figure boosted significantly since the beginning of lockdown, according to the Investment Association.
The IA said on Tuesday (14 July) that fraudsters have increasingly been using “sophisticated targeting of victims” such as creating fake price comparison websites and cloning legitimate brands to produce fake documentation.
Professional Adviser’s sister title Investment Week understands the scams began in late 2019 with one firm’s brand targeted in particular, but the majority of these incidents have been since the lockdown began in March.
Fraudsters are also employing sponsored Google and Facebook links and harvesting personal details from fake call centres, while in some cases scammers have set up a range of email addresses and used the names of genuine members of staff in investment management firms.
The IA explained that the large-scale scams for bogus financial products had been particularly prevalent in the investment bond market, with victims only aware of the fraud upon contacting the genuine providers.
Investment firms are now urging the public to be vigilant, pointing to the National Crime Agency’s advice to “Stop, Challenge and Protect”, and are working closely with regulators and law enforcement to tackle this fraud. Some firms are also now outlining the specifics of the frauds to watch out for on their websites, and the industry has recently come together through the IA’s Threat Intelligence Alert Network to tackle cybersecurity threats.
The Financial Conduct Authority (FCA) has repeatedly warned about the growth of investment scams, with ActionFraud estimating that £970,000 had already been lost as a result of coronavirus-related fraudulent activity in early March.
In April, the IA first noted it had seen growing numbers of scammers using techniques such as phishing and “smishing”, in addition to more extreme and “aggressive” tactics such as posing as a police officer, in efforts to defraud savers.
Coronavirus-related attacks come at a time of increasing cybercrime, with the number of such offences reported to the National Fraud Office jumping from 273,598 to 306,126 between 2017 and 2018.
Similarly, there is a growing trend of cyber attacks on UK financial services firms, with FCA reporting last year a 480% year-on-year increase in the number of regulated firms targeted.
According to email fraud security specialist Proofpoint, cybercriminals have also been using coronavirus as a means of manipulating users through fraudulent activity. From 29 January to mid-March, Proofpoint recorded 500,000 messages, 300,000 malicious URLs and 200,000 malicious attachments with coronavirus themes across more than 140 campaigns.
Chief executive of the IA Chris Cummings said: “During this time of great uncertainty, serious organised criminals have ratcheted up their operations and are increasingly ruthless in their mission to steal from investors.
“Our industry is determined to counter this threat and will continue to work closely with the police and regulators to bring an end to these scams.
“Fraud and scams come in many different disguises. That’s why today we urge savers and investors to be as vigilant as possible to protect their investments and think very carefully about the risks criminals pose to their financial wellbeing.”
Director of financial crime risk at Aviva Investors and chair of the IA Financial Crime Committee Steve Hyndman added: “Fraudsters will always try to take advantage of uncertainty.
“Fake comparison sites are a clever way to hook in savers, particularly during the uncertain times we are living through now. As with all types of fraudulent activity, we would urge members of the public to remain as vigilant as they can.”
This article was previously published on Professionaladviser.om