More action required to protect people from online fraud

According to fraud reporting centre Action Fraud, 85% of all fraud in the year to June 2020 was cyber-enabled.

Hacker attacking internet

New government measures to protect people from online fraud were unveiled in the Queen’s Speech, although many claim they don’t go far enough.

Advertisement

According to fraud reporting centre Action Fraud, 85% of all fraud in the year to June 2020 was cyber-enabled.

The Queen announced at the opening of Parliament on May 11 that a new Online Safety Bill would ‘lead the way in ensuring internet safety for all’. However, although the Bill aims to tackle fraud via user-generated content on social media sites, such as posts by people on Facebook or Instagram promising fake investment opportunities, it won’t cover cloned websites and fake online adverts. This means that criminals will still be able to target victims using websites posing as legitimate investment firms, which often look so like the real thing they can be very difficult to identify.

Debbie Barton, financial crime prevention expert at wealth management business Quilter, said “We are delighted to see the government take the first step in tackling online investment scams by including user-generated fraud within scope of the Online Safety Bill. For the first time, social media sites will have a duty to prevent sham investment schemes from appearing on their sites and this will have a big impact on protecting investors, particularly young investors, from financial harm.

“But while this is a big step forward, there is still much further to go. The government should now consider including fraud facilitated through advertising, emails or cloned websites. With each day that passes, around £214,000 is lost to UK consumers from clone firm fraud, so the government should not kick the can even further down the road and should take action with this Bill.”

Action Fraud says that the number of ‘clone firm’ investment scams reported increased by 29% as UK went into first lockdown last year. Its reporting data reveals losses of more than £78m between January and December 2020, with victims losing £45,242 each on average, when investing with fraudsters imitating genuine investment firms.

Mark Steward, executive director of enforcement and market oversight at the city regulator the Financial Conduct Authority, said: “Clone investment scams are sophisticated and extremely difficult to spot. Last year we received over 3,767 reports of clone scams to our consumer helpline. Fraudsters use literature and websites that mirror those of legitimate firms, as well as encouraging investors to check the Firm Reference Number (FRN) on the FCA Register to sound as convincing as possible.

“If you’re considering an investment, visit the FCA Register to make sure the firm you’re dealing with is authorised. Use the contact details on our FCA Register, not the details the firm gives you, and check for subtle differences to avoid ‘clone firm’ scams.”
Beware other scams

It’s not only investment fraud you need to be on your guard against Experts are warning that the next few weeks are likely to see an increase in holiday booking scams, with fraudsters launching fake websites offering ‘travel deals’ which are used to obtain your money and information. These websites can look almost identical to those of the organisations they are pretending to be, but there are often small changes in the URL which show they are fake.

Katy Worobec, Managing Director of Economic Crime at UK Finance, said: “Criminals have been capitalising on the pandemic to commit fraud, and the easing of lockdown restrictions provides another opportunity for them to target victims.  As you start booking holidays and planning social activities, don’t let criminals take you for a ride. Be wary of any requests to pay by bank transfer when buying or booking services online, and instead use a credit card or the secure payment options recommended by reputable websites.”

Advertisement

If you think you’ve fallen victim to an investment or any other type of fraud, report it to Action Fraud as soon as possible online at www.actionfraud.police.uk or by calling 0300 123 2040.