We talk to a man who lost more than £60,000 to cloned firm scammers. We reveal how the con works, how the victim got his money back and top tips to help you stay safe if you’re targeted.
Fraudsters can trick people out of their cash by pretending to be from, or mimicking, an established financial services company authorised by the Financial Conduct Authority (FCA).
These fake companies are known as clone firms.
According to the FCA, a clone firm tends to cold call people to promote ‘shares, property or other investment opportunities that are non-tradable, worthless, overpriced or even non-existent.’
We reveal how one man was targeted by a clone firm, how he got his money back and what the FCA says it is doing to clamp down on the terrifying practice.
When "Mark" (the victim’s name has been changed for anonymity) received several calls about fixed bonds and gilts, he wasn’t surprised as he entered his details into a comparison site* when he was looking for better returns.
Editor's note: Mark can't recall the name of the site in question, but suspects this is where the scammers obtained his details.
He was put off by volatility in the stock market as the coronavirus pandemic resulted in prolonged lockdowns worldwide and rising unemployment.
Due to the situation, Mark decided to move thousands of pounds from a Stocks & Shares ISA to an arguably safer investment – fixed-rate bonds and gilts.
“I thought I would put my money somewhere else,” said Mark, who researched different bonds via a comparison site, which is no longer active.
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‘They didn’t pressure me’
When Mark received a few calls from some companies offering fixed bonds, he decided to talk to the FCA and even check its register.
“It all seemed good,” he commented.
“They [the scammers] said they charged 1% in fees in the secondary market – thinking about it now, maybe that was too low."
The fraudsters didn’t offer any incentives but did offer a chat with the ‘compliance team’ to check that he was happy for the deal to go ahead.
Mark was also asked to send a picture of his driving licence and utility bill, and even had a login and password set up with the clone firm to view his investments, adding some authenticity to the scam.
He waited a few weeks while he talked to scammers at the clone firm, who said they were from ML Capital Asset Management, about what they offered and checked they were on the FCA register.
ML Capital Asset Management Limited was (and is) on the official register – a company that is regulated in another European Economic Area country, according to the FCA.
That subtle difference in name between a legitimate firm and a bunch of scammers would soon have huge repercussions, but for now everything seemed above board.
“I thought about it for a while – they didn’t pressure me in any way,” revealed Mark.
Fraudsters tend to pressure people into acting quickly without thinking, so this is an unusual tactic on the part of the scammers.
No scam warnings
There were no warnings about 'ML Capital Asset Management' on the FCA register and the scammers tried to appear legitimate by sending over documents with its rates and using a ‘compliance team.’
So, Mark decided to put some money into a Lloyds bond and a gilt, which offered 6.75% and 6% interest, respectively.
Unfortunately, these rates were too good to be true as savings rates have plummeted rapidly this year. For example, one of the top three-year fixed rate bonds at the time of writing offers 1.3%.
When Mark called his bank, Santander, to transfer £30,000 for the Lloyds bond at the beginning of June, he was asked whether he was sure of the transaction and whether he checked the FCA register.
There was no suggestion from Santander that he might have been targeted by scammers.
“I wouldn’t have just ignored it if clone firms were mentioned,” said Mark.
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Clone firm exposed on FCA register
Two weeks later, he transferred £32,000 to a different bank account via Santander and was asked by the bank to confirm the recipient details.
When Mark asked the clone firm why he had to send money to a different account, he was told a different person dealt with this product.
Unfortunately, he received a nasty shock when ML Capital Asset Management was added to the FCA register in late June and was flagged as a clone firm.
The only difference in the name compared to the legitimate firm was the use of ‘limited’ at the end.
But it was too late for Mark to act as he already transferred £62,000.
When he suspected that he may have been scammed, he contacted Santander and a few days later, got in touch with loveMONEY.
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What happened?
We got in touch with Santander, stressing how Mark did his research to try and avoid getting scammed.
Also, we flagged that the bank could have done more to warn Mark about the possibility of clone firms posing as genuine, regulated companies and how the scammers acted unusually.
Santander were extremely quick to investigate Mark’s case and refunded him £62,000 in less than 24 hours.
“Santander has the utmost sympathy for Mark and all who fall victim to the criminals who carry out these scams,” commented a spokesperson for Santander.
“Having reviewed Mark’s claim, we can confirm that we have provided a full refund of £62,000.”
We also got in touch with the FCA about what happened. While they don’t comment on individual cases, they did issue a statement.
“Last year, the FCA received over 20,300 reports of potential unauthorised business activity from consumers, firms, and other sources,” commented a spokesperson for the FCA.
“We analyse and assess all of these reports. Last year, we published 522 warnings about potentially fraudulent firms.
“Before we publish a warning about a cloned firm, we must be certain that the information we publish is accurate.
“We would be interested to hear from any consumer who has lost money as a result of this scam.
“If consumers are unsure about a firm, they should check on our register and contact the firm on the details provided to verify that they are dealing with the regulated firm.
“They should also check our ScamSmart pages.”
How to stay safe
If you want to avoid getting scammed by a clone firm, compare the rates on offer with those included in best buy lists and tables by trusted sources such as loveMONEY and MoneySavingExpert.
If the rates vary significantly and look too good to be true, don’t transfer any money as it’s likely to be a scam.
As the FCA mentioned above, check this register to make sure the company in question is authorised – don’t use links in emails to access the register as it they could be fake.
Of course, as in Mark’s case, there’s a chance that a clone firm hasn’t been flagged by the FCA yet.
The FCA recommends verifying the identity of an authorised form by asking for their FRN and contact details. You should always call them from the number on the register.
If there are no details or they are out of date, call the FCA Consumer Helpline on 0800 111 6768.
There are some flags the FCA has mentioned that could help you identify a clone firm.
For example, if a scammer gives their own phone number or uses different contact details to the site they directed you to (which could be a genuine firm), you may be dealing with a fraudster.
Are you unable to get a refund after being scammed or feel that a company has treated your unfairly? Contact the loveMONEY team at uknews@lovemoney.com. We may be able to help resolve your issue.