Amid a rise in investment scams perpetrated by “clone” firms — scammers imitating legitimate firms to dupe investors — the U.K.’s Financial Conduct Authority (FCA) is warning investors about the growing threat.
The FCA reported that investors in the U.K. lost over £78 million to clone-firm investment scams in 2020, and it said the number of reports of this type of scam are on the rise.
Last year the FCA issued alerts in relation to more than 1,100 firms including clones — more than double the number issued in 2019.
The regulator said the disruption caused by the Covid-19 pandemic may make some investors more vulnerable to clone scams, as 42% of investors say they’re worried about their finances because of the pandemic.
It also warned that experienced investors may be at risk, as a recent survey found that 77% of investors admit they aren’t sure what constitutes a clone firm.
“Clone investment scams can look real and sophisticated,” said Mark Steward, executive director of enforcement and market oversight at the FCA.
“Fraudsters use literature and websites that mirror those of legitimate firms,” he said.