IA warns of new fraud risk targeting investors

Fraudsters are targeting retail investors in new, sophisticated and large-scale scams, convincing some savers to purchase bogus investment products and disclose their personal details, according to a warning from the Investment Association (IA).

Investment managers have reported serious organised criminals are impersonating their products, in particular investment bonds, promoting them through fake price comparison websites, and cloning their brands to produce fake documentation. Fraudsters are using sophisticated targeting of victims through sponsored Google and Facebook links and harvesting personal details from fake call centres. 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. A number of firms across the industry have been affected and approximately 300 incidences of this fraud have been reported to date, with an estimated total loss to savers reported of approximately GBP4 million.

Three months after the start of the Covid-19 lockdown, reports of this scam activity have spiked as savers approached firms concerned about not receiving their expected quarterly interest payment. Only on contacting the genuine firms did those affected realise they had been the victims of fraud. Investment managers are now urging their customers and the public to be vigilant, and are working closely with regulators and law enforcement to tackle this fraud.

Chris Cummings, Chief Executive of the Investment Association, says: “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.”

Steve Hyndman, Director of Financial Crime Risk at Aviva Investors and Chair of the Investment Association Financial Crime Committee, says: “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.”

Retail investors should be particularly on the lookout for the details of the contracts offered to them, and instances of cold calls. Contact from people claiming to be from investment firms should be verified with the genuine investment firm involved. In some instances the bank accounts used are not in the names of the purported investment management firm and do not match the pre-sale literature. Investors should also be vigilant if they are placed under time pressure to invest - a common feature of fraud.

The IA is urging anyone who suspects fraudulent activity to follow the advice of the National Crime Agency, and:

• Stop: Taking a moment to stop and think before parting with your money or information could keep you safe.

• Challenge: Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.

• Protect: Contact your investment manager immediately if you think you’ve fallen for a scam and report it to Action Fraud. Speak to your bank as soon as possible if you believe you have transferred money to a scam.

Some investment managers are now outlining in more detail than ever the specifics of the frauds to watch out for on their websites, and the industry has recently come together through the IA’s TITAN platform (Threat Intelligence Alert Network) to tackle cyber security threats.