9 February 2021
PIMFA calls on Government to include economic harm in Online Safety Bill as members report rise in increasingly sophisticated online scams
Attempts to defraud savers through online scams grew in January, evidence collected by PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, has revealed. PIMFA member firms reported numerous attempts to scam consumers including cloned websites, fake celebrity endorsements and social media influencer ‘Get Rich Quick’ scams, impersonation scams, new courier fraud and more besides.
On Safer Internet Day, PIMFA is warning all consumers to remain vigilant and ensure the investment firm they are dealing with is regulated and authorised by the Financial Conduct Authority (FCA). PIMFA is also urging the Government to include economic harm in its forthcoming Online Safety Bill. PIMFA and its members believe that, such is the extent of fraud, the only solution is to enshrine in law additional consumer protections that would tackle the growing threat from online fraudsters.
Action Fraud 2020 figures show there were 356,649 reported cases of fraud (1) and an estimated £2.1bn lost to fraudsters. Of the total, investment frauds that encourage consumers to buy unsuitable, or non-existent, investment products, pension liberation scams, Boiler Room scams and Ponzi or Pyramid schemes, accounted for less than 10% of all reported crimes (20,152 reports) but 25% of all financial losses at £501m.
This is in addition to recent figures from Action Fraud, which showed £78m was lost to cloned website fraud, where fraudsters copy an investment firm’s website in order to steal from unsuspecting consumers. Given that the National Crime Agency (NCA) believes that only 20% of frauds are ever reported, PIMFA believes the number of victims, and the amount of money lost, to fraud is far, far higher than currently being reported.
Among some of the examples of frauds found were online adverts masquerading as national newspaper articles that involved endorsements of unregulated investment products. One scam impersonated MoneySavingExpert’s Martin Lewis, even going as far as to create a fake tweet from the consumer campaigner. While Mr Lewis has made it abundantly clear he has never endorsed any financial product, and despite his consistent efforts to combat such scams, the scammers are persistent and find new approaches so these adverts were still publicly visible on online search platforms (2) in January.
Another fraud involved social media profiles claiming to be linked to a reputable FCA authorised firm that promised consumers they could turn a £100 investment into a £1000 profit in less than a day, in order to steal their money. Such frauds have become far more prevalent since the onset of the Covid-19 pandemic with the City of London Police even issuing warnings about social media hashtags consumers should be wary of.
Other scams reported in the last month included fraudsters persuading consumers to invest in unregulated schemes or products – often involving virtual currencies – with firms that are often listed on the FCA’s scam warning page. Meanwhile, dozens of fake bond comparison sites created to collect their victims’ data, were found, the majority of which promised high returns on non-existent unregulated bonds the fraudsters claimed were offered by high street banks or wealth managers.
Liz Field, Chief Executive of PIMFA, commented: “The impact of fraud on the financial and mental wellbeing of individuals and their families can be devastating and the figures show that it is becoming an ever-present danger in our daily lives. A large number of victims of fraud lose their entire life savings. We already know the Covid-19 pandemic is causing financial hardship for many people and the danger is that if we don’t act now, as an industry together with the Government and Regulators, online fraud will only get worse.
“Most online scams could be prevented with the cooperation of Domain Name Registration Services, Internet Service Providers and online platforms such as social media and search engines, but we need a legal framework and genuine enforcement procedures if we are stop online fraud becoming pervasive. To do that we must include financial harms within the Online Safety Bill.”
Notes for Editors
About PIMFA – the Personal Investment Management & Financial Advice Association
- PIMFA is the trade association for firms that provide investment management and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
- The sector currently looks after after £1.65 trillion in private savings and investments and employs over 62,000 people.
- PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families, to charities and pension funds, all the way to trusts and companies. Associate members provide professional services to the PIMFA community.
- PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
- PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
- Further information can be found at www.pimfa.co.uk
For further information on this release or other press matters please contact:
- Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376 / +44 (0) 7843 903258
- Sheena Gillett, PIMFA Communications & PR Director – email@example.com, +44 (0)20 7011 9869 / +44 (0)7979 493225.