UK retail investors lost nearly £10M to 'cloning' investment scams since March, says trade body

Fraudsters are increasingly targeting retail investors in the United Kingdom, according to new data released by the Investment Association, a trade body.

They say that sophisticated fraudsters have ramped up operations targeting retail investors. They report that incidents of large-scale investment scams have nearly quadrupled since July. “The scams clone genuine investment management firms through impersonated products, websites and documentation, and then promote the fake products through fake price comparison websites and adverts on social media and search engines,” the trade body explained.

The total number of the reported incident of such scams have increased from 300 in July to 1,175 in October. These scams have affected over 200 people, and accounts for an estimated total reported loss of £9.4 million in October. The loss has doubled from almost £4 million in July.

‘Be vigilant’

Chris Cummings, Chief Executive of the Investment Association, said, “In a year clouded in uncertainty, organised criminals have sought opportunity in misfortune by attempting to con investors out of their hard-earned savings. The investment management industry is working closely with the police and regulators to stop these scams, and is collaborating with our partners in Government to close them down and prevent them being advertised in the first place.”

“Fraud and scams come in many different disguises. That’s why, as we approach the festive period, we urge savers and investors to be as vigilant as possible to protect their investments and think very carefully about the risks of fraud when making investment decisions,” added Cummings.

Earlier his month, UK's national fraud and cyber reporting centre, Action Fraud had warned of a rise in investment fraud reports as the country entered its second lockdown.

Between September 2019 and September 2020, Action Fraud had received just more than 17,000 reports of investment fraud, amounting to £657.4 million in reported losses. This was a 28 per cent increase when compared to the same period last year. These reports spiked in May, June, July, August and September 2020, as per an official release.