Victims of sophisticated investment scams have questioned how Britain’s biggest banks are allowing fraudsters to set up bank accounts to harvest tens of thousands of pounds by posing as representatives of legitimate financial firms.
Clone scammers peddling fake investment products stole close to £213,700 a day from Britons in 2020, with victims losing £45,242 on average, according to the fraud reporting service Action Fraud.
Well-known investment companies including Aberdeen Standard Investments and Aviva are among those which have been impersonated by fraudsters, with two readers of This is Money collectively losing £80,000 to such scams in December and January.
Open season: Warnings of scammers impersonating the likes of Aberdeen Standard Investments more than doubled in 2020
Janet Christie, not her real name, 68, from Shropshire, transferred £20,000 to fraudsters posing as ASI in early December after being duped by marketing materials which could ‘easily have been mistaken as coming from ASI’, according to its own company secretary.
Meanwhile another reader from West Yorkshire, who asked to be referred only by his initials, CM, sent £60,150 to Aviva impersonators.
His money was returned after he contacted NatWest asking for the funds he transferred in two lots of £30,000 to be frozen.
In both cases, the victims were asked to transfer money to third-party accounts claiming to be legitimate brokerages operating on behalf of investment companies.
Mrs Christie was told to transfer money to ‘JJ West Ltd’, described by the scammers as ‘a regulated clearing agent and escrow facility’.
Meanwhile Mr M was told to send money to a company called ‘Bond Swift’.
In both cases, the scammers had set up accounts with high street banks, Lloyds Bank and NatWest, respectively.
Mr M told This is Money after his money was returned on 5 March: ‘The key to the scam is in the recipient bona fide company name, harboured by a mainstream bank.’
Mrs Christie said: ‘I cannot get over the fact that Lloyds Bank can just say they are not liable even though they allowed a cloned account to be set up.’
This is Money was told by one high street bank that the use of third-party ‘handling’ accounts was becoming an increasingly common tactic of fraudsters who were using it to get around Confirmation of Payee.
This system is designed to alert potential fraud victims if account details don’t match the name they were given.
Seven ways to spot a scam email
Seven ways to spot a scam email
1) The sender’s address doesn’t match the website address of the organisation it says it’s from. Roll your mouse pointer over the sender’s name to reveal its true address
2) The email doesn’t use your proper name. It might use something like ‘Dear customer’ instead
3) There is a sense of urgency, asking you to act immediately
4) There’s a prominent website link which may seem like the proper address, but with one character different
5) The email makes a request for personal information
6) There are spelling and grammatical errors
7) The entire text of the email is within an image, rather than the usual text format, and the image contains an embedded hyperlink to a bogus site. Again, roll your mouse pointer over the link to reveal its true destination
However, in the case of Mrs Christie the Confirmation of Payee check came back all-clear as a recognised account provided by Lloyds Bank.
Lloyds told Santander, her bank, on 6 January no money remained in the account after she finally realised and reported the fraud a day earlier.
Meanwhile Mr M said he felt his bank did little to protect him from initially losing £60,150 after he attempted to get them to ‘either assure or unnerve’ him over the money.
He said he had transferred an initial £150, described by the fraudsters as a non-refundable broker’s fee, to ‘Bond Swift’ on 4 February, and called NatWest.
‘I explained my concern, that nowhere on the credentials did there appear to be a mention of Aviva. I was prepared to back out at this stage, but I was assured the NatWest recipient was a bona fide business account.
‘I was relying on my bank to either assure me or unnerve me to cancel the impending huge transactions over the next 48 hours. The man on the phone gave me the green light.’
Afterwards, he sent two instalments of £30,000 on 4 and 5 February, before calling them late that night to get them to freeze the funds.
He said he felt the bank ‘let him down’ but was grateful for the recovery of the monies.
NatWest said in a statement: ‘Criminals are using increasing sophisticated techniques to scam customers. We are glad that our fraud prevention systems were able to prevent Mr M’s money from being lost in this case.
When making an investment we would recommend reviewing the Financial Conduct Authority Scam Smart site and contacting the investment provider on an independently found number.’
A spokesperson for Bank of Scotland, part of Lloyds, said: ‘Helping to protect people’s money from getting into the hands of fraudsters is our priority and we have a great deal of sympathy for Mrs Christie as victim of a scam.
‘We have sophisticated and multi-layered account opening procedures in place to prevent fraudulent applications – some of these are visible to the applicant, while others are not. Whilst we cannot talk in detail about the specific beneficiary account in this case, we can confirm it was not opened fraudulently, and passed all the relevant identity and verification checks.’
It said very few handling accounts were opened fraudulently and there was nothing suspicious about the account when it was opened.
‘We also complete checks against national fraud databases including CIFAS, which provide information on whether an individual has been associated with fraudulent applications and where customers have been victims of fraud.’
Investment scam warnings double in 2020
The two cases also reveal the minefield Britons face when trying to work out whether propositions found online are legitimate ones or scams.
A survey of 200 investment scam victims by the consumer group Which? found 39 per cent had been targeted by email, search engines, Facebook or other online advertising.
Mrs Christie told This is Money she had been contacted by ASI impersonators after she gave her details to a fake comparison site masquerading as MoneySupermarket.
This document looks like it has been carefully designed to copy the Aviva style. Comparing it to our genuine Aviva Investors website, you will see that the colour scheme, font, graphics, and format are consistent. In addition, this document contains some genuine details.
Aviva investigator to Mr M
The fraudsters used email addresses ending ‘@aberdeenstandard-investments.com’, compared to the real company’s ‘@aberdeenstandard.com’.
Both the email addresses and the 22-page bond prospectus she and her partner were subsequently sent could ‘easily have been mistaken as coming from ASI’, according to the investment firm’s company secretary.
He also described it as a ‘very sophisticated scam.’
An investigator for Aviva who separately investigated Mr M’s case said the prospectus he was sent ‘looks like it has been carefully designed to copy the Aviva style’ and that ‘the colour scheme, font, graphics, and format are consistent’.
Mrs Christie was offered a one-year fixed-rate bond paying 1.89 per cent.
While higher than the 0.85 per cent top rate on offer at the time, she said she ‘checked the documents with my partner and we both thought it sounded plausible.
‘I looked at the official ASI website and checked the address, the company registration number in Scotland and they matched. I then went onto “Scam Smart” – a warning page run by the Financial Conduct Authority – and there was no indication this was a scam.’
She decided to invest, sending £20,000 in two £10,000 instalments to ‘JJ West Ltd’ on 6 and 8 December.
Aviva was cloned four times in 2020, according to the FCA’s warning list of suspected scams
Having not heard anything, she phoned the fraudster’s number back in early January but found the line had been suspended.
‘My heart sank’, she said. ‘I then found out neither of the staff I had been speaking to had worked for ASI and that I had been the victim of a scam.
‘Immediately I burst into tears, told my partner, then rang my bank within 10 minutes of finding out about the scam.’
Her bank, Santander, said clone warnings had been placed against both the companies she had been investing in before she sent the money, although Mrs Christie said she had checked the FCA’s website and confirmed the details of the ASI impersonator.
Mrs Christie was offered 1.89% on a one-year fixed-rate bond by the Aberdeen Standard investment fraudsters
She was told she would not be reimbursed by the bank on 23 January, but Santander failed to tell her at the time it had been informed by Lloyds Bank that no money remained in the fraudulent broker’s account.
It has offered her £100 compensation for this after being contacted by This is Money.
Santander said in a statement: ‘We have a great deal of sympathy for Mrs Christie, and all those who fall victim to the criminals who carry out scams.
‘Unfortunately, despite being provided with several warnings about the dangers of investment scams and the importance of checking with the FCA the details of the company she was paying, Mrs Christie confirmed she was happy to proceed with the payments.’
Investment fraud made up just 6 per cent of all authorised push payment scam cases last year, according to figures from HSBC, but customers lost £18million in total and £19,728 per case on average, with losses tripling between 2019 and 2020.
Separate data from Lloyds Bank found the over-55s, likelier to have more savings and be more vulnerable to investment fraud as a result, lost £25,000 on average, compared to £4,486 in cases involving those under 55.
Attack of the clones
This is Money frequently reports on stories of investment scams and clone firms that affect our readers.
Often we’re contacted by readers who have themselves been contacted out of the blue by fraudsters offering inflation-busting returns to check if they are too good to be true, the answer to which is normally yes.
We found in December that Allianz, Aviva, JP Morgan and Royal London had all been impersonated by fraudsters last year, with 425 alerts issued by the Financial Conduct Authority about clone firms.
However, the FCA’s blacklist is not comprehensive.
In 2019 we reported on how victims lost more than £70,000 to scammers who impersonated Dutch bank ABN Amro, which hadn’t been blacklisted despite us reporting it to the regulator.
‘Scams should be included in online harms crackdown’
The increasing regularity with which financial firms are cloned by fraudsters has also led to calls for a crackdown on search and social media firms which display them.
The number of FCA warnings about investment scam firms doubled from 573 in 2019 to 1,184 last year, Which? said, while the consumer group added that many adverts and websites stayed online weeks after the FCA had published details on its blacklist.
Aviva was cloned four times last year and ASI twice, according to the warning list, while one company was linked to 28 separate sites on the FCA warning list.
Mark Taber, a consumer campaigner who reports scam adverts to the regulator, said he had reported 130 so far this year.
He said he believed the number of warnings was higher than in 2020 but that the FCA had ‘become more proactive in identifying online adverts itself’, reducing his workload slightly.
Tech giants, banks, regulators and the government must all step up and do much more to stop victims from facing the devastating consequences of scams.
Google said it takes ‘dishonest business practices and misleading ads very seriously and consider them to be a violation of our policies and recently updated our policies to enable verification of businesses promoting financial services in the UK.
‘When ads do not comply with our policies; we take immediate action to remove them.’
Banks, other financial firms, consumer groups and opposition politicians have all called on the Government to include scams in its upcoming Online Harms Bill.
Gareth Shaw, head of money at Which?, said: ‘The financial strain of the last year and record-low saving rates are pushing more people than ever to look for investments online, just as fraudsters are looking to exploit the uncertainty and confusion caused by the coronavirus crisis – resulting in a perfect storm for scams.
‘Tech giants, banks, regulators and the government must all step up and do much more to stop victims from facing the devastating consequences of scams.
‘Scams must be included in the proposed Online Safety Bill so that online platforms have legal responsibility for preventing fake and fraudulent content posted by scammers from appearing on their sites, and are forced to do more to protect their users.’
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