Retail fund investors increasingly targeted by sophisticated scams

Retail investors in investment trusts and funds are increasingly the target for sophisticated fraudsters, resulting in £9mln of losses in the last month alone.

There have been more than 1,100 incidents of investment scams reported as of mid October, nearly quadrupling from around 300 in July, the Investment Association said.

A typical scam will use the logos and product information from genuine investment management firms to build fake websites and documentation, with these scams promoted through fake price comparison websites and adverts on social media and search engines.

Those affected by the scams lost an estimated £47,000 each on average, according to the IA data.

The IA urged retail investors to “be extra vigilant in order to protect themselves from these scams”.

Anyone who suspects fraudulent activity to follow the advice of the National Crime Agency, which is:

• Stop: Taking a moment to stop and think before parting with your money or information could keep you safe.
• Challenge: Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.
• Protect: Contact your investment manager immediately if you think you’ve fallen for a scam and report it to Action Fraud. Speak to your bank as soon as possible if you believe you have transferred money to a scam.

The IA is among several organisations calling on the government to bring online investment scams within the scope of the Online Harms Bill before it is passed through parliament, to ensure the legislative framework for identifying and closing down these investment scams is robust.

“In a year clouded in uncertainty, organised criminals have sought opportunity in misfortune by attempting to con investors out of their hard-earned savings,” said IA chief Executive Chris Cummings said.

“The investment management industry is working closely with the police and regulators to stop these scams, and is collaborating with our partners in Government to close them down and prevent them being advertised in the first place.

“Fraud and scams come in many different disguises. That’s why, as we approach the festive period, we urge savers and investors to be as vigilant as possible to protect their investments and think very carefully about the risks of fraud when making investment decisions.”