FCA scam warnings increase over 300% in five years

Financial scams are still one of the major problems for the advice sector, but research has found one area that needs a crackdown.

The Financial Conduct Authority’s (FCA) warning lists shows that 401 impersonation scams were reported by the UK regulator this year, according to an analysis by Quilter.

Scams involving an impersonation constitute 45% of all FCA warnings issued since 2015.

So far in 2020, the FCA has issued 1,031 general scam warnings involving individual attempts to defraud consumers.

This already shows an 80% increase on the number of warnings in 2019, and a staggering 301% increase on the total warnings published in 2015.

Clones

Some 401 were scams involving a ‘clone’ of a legitimate financial services firm.

This is where organised criminals impersonate a reputable business to market non-existent investment products to consumers, predominantly through fake websites and paid adverts on search engines.

There have been 34% more ‘clone’ warnings so far in 2020 than 2019, and 261% more than in 2015.

Source: Quilter

There is no legally enforceable system for compelling search engines and social media platforms to remove fake websites and adverts which use the ‘clone’ of a financial services firm.

Quilter is calling for new legislation to protect consumers from the dangers of online investment scams, and urged the government to consider including financial scams within scope of its forthcoming Online Harms legislation.

This will ensure that search engines and social media platforms are given legal responsibility for preventing scams from appearing on their sites, and a duty of care should ensure they react quickly to brand impersonation fraudsters and prevent them from causing further harm by leaving the scam adverts online.

Spot the difference

Debbie Barton, financial crime prevention expert at Quilter, said: “It used to be relatively easy to spot a scam coming from a mile off. This could have been a suspicious call saying you have won a prize, or a dubious text from HM Revenue & Customs (HMRC) saying you are due a tax rebate.

“But now modern technology has allowed scammers to become much more sophisticated in the methods they use to entice their victims, and we are seeing more and more scammers stealing the brands of well-known financial services firms to trick people into parting with their cash. It is becoming much harder to spot the difference and separate fact from fiction.

“Every year, more people are using the internet in their daily lives, and while the use of search engines has increased considerably, the rules governing how investment products are advertised on these platforms have remained stationary, and consumer protection is lacking.

“The burden is on the individuals to protect themselves, but with so many impersonation scammers out there this is becoming much more challenging.

“Once more, the current framework is too reactionary and relies on firms and diligent individuals finding these scams and reporting them to the online platforms and the regulator. This process takes time, all the while internet users are exposed to the same scam.”