"These scams are becoming increasingly prevalent, and just under half of all scam warnings reported by the FCA since 2015 involve the impersonation of a financial services firm."
Of these, 401 were scams involving a ‘clone’ of a legitimate financial services firm, usually to market non-existent investment products to consumers 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. Scams involving an impersonation now constitute 45% of all FCA warnings issued since 2015.
There is no legally enforceable system for compelling search engines and social media platforms to remove fake websites and fake adverts which use the ‘clone’ of a financial services firm. Quilter is now calling for new legislation to protect consumers from the dangers of online investment scams, and urges the government to consider including financial scams within scope of their 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 new duty of care should ensure they react quickly to brand impersonation scammers and prevent them from causing further harm by leaving the scam adverts online.
Debbie Barton, financial crime prevention expert at Quilter, commented: “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 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.
“These scams are becoming increasingly prevalent, and just under half of all scam warnings reported by the FCA since 2015 involve the impersonation of a financial services firm.
“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.
“This is why we are calling on the government to act to create a legally enforceable system to prevent search engines and social media platforms from hosting scam adverts on their sites, and to force these online platforms to act quickly by removing suspected scams as soon as they are notified. This can be achieved through the Online Harms legislation scheduled to be introduced to Parliament next year."