What is a Clone Firm Scam?

The Financial Conduct Authority (FCA) has released reports stating that clone firm scams have seen huge increases in recent years and it’s estimated that over £78 million has been lost to scams within a year. The Covid pandemic is what first say the increase in clone firm scams and these have continued to rise since. With people being more unsettled about money and worrying about losing money in some investments, clone firms are sweeping in and offering deals that seem too goo to be true under the pretence of being a legitimate business.

A clone firm scam is essentially when scammers take the name of a very reputable business and try to offer similar investments by using the genuine companies reputation to extort money from people. However, the scammers have no intention of investing your money and once they have it, you’ll never hear from them again or if you do it will likely be to say the investment went bad and you’ve lost your money.

I Won’t Be Scammed I’m Too Smart

The FCA recently carried out research which shows that 42% of investors are worried about their finances due to the pandemic and cost of living crisis and over 77% of those where looking at new investments to help improve their financial situation. Whilst many people are confident they can spot a scam and will say I’m too smart to be scammed, you’d be surprised how easy a trap a clone firm scam is to fall into. Nearly 75% of asked investors said they were confident they could spot a scam. However 77% of those investors also admitted they didn’t know what a clone investor scam or clone firm scam was.

Many clone scams involve companies taking the same name, and Firm Reference Number (FRN), of real companies that are authorised by the FCA. These companies will then use these details and legitimate websites and marketing materials to try and attract potential investors, even when they aren’t the real firm. The advice from the FCA is for any potential investor to check if then company is registered with the FCA and to then call the company via the number register on their website. If you call using this number and the company then hasn’t heard of you, then you know you have been approach by a scam company.

Many fraudsters and scammers will even send customers materials encouraging them to check them out on the FCA website and for some people this can be enough to instill trust even without actually checking them out. If you are approached by an investment company with an offer, then you should always check them out on the FCA website and give them a call using the details listed online and not the ones they give you or if you have a financial advisor speak to them as well.

Getting Help With Investments

If you need help with investments or are worried about being scammed and are looking for impartial advice then we can help. We work as financial advisors and can provide ethical investment advice for any type of financial investment. For more information or to book a consultation, then please don’t hesitate to get in touch with us.

Categorised in: Investments

This post was written by duodigitaluk@gmail.com