Unprecedented Rise In Personal Finance Scams

Unprecedented Rise In Personal Finance Scams

£480 million has been lost to bank transfer fraud in 2020, up 5% on the previous year, according to banking trade body UK Finance. Scammers have been taking advantage of peoples increased money worries, largely due to the financial pressure the Coronavirus pandemic has put on consumers.

“Clone Firm” Investment scams

In January the Financial Conduct Authority (FCA) issued warnings after reports of “clone firm” investment scams showed losses of more than £78 million in 2020. Last year consumers reported average losses of around £45,000 each from fraudsters imitating genuine investment firms.

The FCA believes that the ongoing coronavirus pandemic has left many people more susceptible to these types of scams, and claim that 42% of investors say they are currently worried about their finances, and over three quarters planning to make an investment within the next 6 months to help improve their financial situation.

As described by the FCA:

“Clone firms are fake firms set up by scammers using the name, address and ‘Firm Reference Number’ (FRN) of real companies authorised by the FCA. Once set up, these fraudsters will then send sales materials linking to websites of legitimate firms to dupe potential investors into thinking they are the real firm when they are not.”

According to research by loveMONEY, the majority of consumers affected by this type of scam were caught out by using unknown comparison sites found on Google. Once they had submitted their information on these sites, they started receiving calls offering investment opportunities from seemingly legitimate companies.

It’s worth noting that these scams do not always happen over the phone, some fraudsters also set up websites that look identical to those of genuine investment companies, often having copied the content of the site completely. These fake firms are also known to take advantage of paid ads, landing these fraudulent sites at the top of the SERPS, making it easy for consumers to be duped.

Cryptocurrency scams

With the rising popularity and interest in cryptocurrencies, such as bitcoin, comes an apparent 40% increase in cryptocurrency-related scams in 2020; with an increase of 75% predicted for 2021 according to Bolster – a fraud prevention company.

According to Action Fraud – the National Fraud & Cyber Crime Reporting Centre – fraudsters will cold call victims and use social media platforms to advertise investments in cryptocurrencies as a way to “get rich quick”.

“Fraudsters will convince victims to sign up to cryptocurrency investment websites and to part with their personal details such as credit card details and driving licences to open a trading account. The victim will then make an initial minimum deposit, after which the fraudster will call them to persuade them to invest again in order to achieve a greater profit.”

This is not the only way that consumers fall victim to cryptocurrency scams, similarly to the clone firm investment scams, fraudsters will often duplicate legitimate websites, and make use of paid ads to trick potential investors into handing over huge sums of money. They will also create and upload fake mobile apps to the Google Play and Apple App store, often posing as real companies, using their logo, name and even linking to the real website. According to Bitcoin News, thousands of people have already downloaded these fake cryptocurrency apps.

Impersonation fraud

UK Finance have reported a 94% increase in “impersonation scams”, which often target banking customers. Fraudsters often use a technique called number spoofing to convince victims they are calling from a trusted organisation, such as a bank.

These types of scams are one of the most common around, with victims receiving calls, texts and emails from seemingly legitimate sources. These fraudsters will ask for personal details, or even pose as a bank telling consumers to transfer money to a “secure account” to protect from “suspicious activity”.

These scams can have a detrimental impact on the impersonated companies, and the wider industry. In our article Personal Finance Scams – How to Protect your Business, we have taken a look at some simple steps you can take to protect your business and your customers.