Tag Archives: Investment Fraud

Research suggests up to 45% of fraud linked directly to organised crime

New research conducted by the Police Foundation and Perpetuity Research has found that between 31% and 45% of fraud may be linked to organised crime. This is up to three times higher than the 15% level found in previous studies.

The research, which was funded by The Dawes Trust, looked at a large sample of frauds taking place in the Midlands and the South West. It found that fraud linked to organised crime was more harmful to victims than other types of fraud. On average, individual victims of organised fraud were likely to lose significantly more money per fraud offence (£10,260) than victims of non-organised fraud (£3,982).

Professor Martin Gill CSyP FSyI, director of Perpetuity Research and one of the research report’s authors, said: “We know that fraud, and particularly online fraud, is the new volume crime. Our research shows that organised crime groups play a much larger role in fraud than has previously been estimated, and that fraud linked to organised crime causes much more harm than other types of fraud.”

Investment fraud was most likely to be linked to organised crime, with around 70% of this fraud type estimated to be perpetrated by organised crime groups. Between a third (38%) and over a half (59%) of mass-marketing fraud is estimated to be linked to organised crime.

stop fraud

The research also found that the police response to fraud was inadequate. Unlike traditional crime types such as burglary and vehicle crime, victims who report a fraud rarely receive a visit from a police officer or any other official.

Response to organised fraud

There are many agencies holding a wide range of powers which could bolster the local response to organised fraud. However, at present these agencies only work together on an ad hoc basis and systematic data sharing is virtually non-existent.

Given the complexity, the expense and the low success rate of fraud investigations, a more problem-oriented, multi-agency approach would, the researchers argue, be somewhat more effective.

Police Foundation director Rick Muir explained: “Despite its increasing scale across the UK, fraud doesn’t currently receive the recognition it deserves and tends to fall between the gaps of a number of agencies, including the police. While the offenders of organised fraud are difficult to prosecute, it’s clear there are vulnerable victims to safeguard, communities to protect and crimes to be prevented. It’s more important than ever to ensure that agencies and authorities don’t relinquish their responsibilities in tackling it.”

On average, Action Fraud receives details on 25,000 reported frauds per month. Based on the researchers’ estimates, this means that between 7,000 and 12,000 reported frauds could be perpetrated by organised criminals every month.

In practice, only a small proportion of these incidents are ever investigated by police forces. Furthermore, forces are not systematically recording the outcomes of fraud investigations, and are therefore not being properly held to account.

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Financial Conduct Authority launches ‘Scamsmart’ campaign to combat investment fraud

The Financial Conduct Authority (FCA) has launched a national campaign entitled ‘Scamsmart’ which is designed to warn of the dangers concerning investment fraud and how potential scams might be spotted.

A massive £1.2 billion is lost to investment fraud in the UK every year, with the victims of this criminality losing £20,000 each on average. The fraudsters use a number of tactics to entice their victims into investing in products which don’t exist (for example land-banking schemes, carbon credits and rare earth metals).

The FCA believes that those most at risk of investment fraud are people in retirement who are actively seeking to find a good return on their savings. One consumer told the FCA that he was called out of the blue by a firm that offered to buy the shares he held in a company. The deal sounded legitimate and the website looked professional. It wasn’t until the individual concerned was asked to pay a £5,000 bond to enable the deal to go through that they became suspicious.

Investment scams generally involve high-pressured selling using boiler room tactics for products which often don't exist (including land-banking schemes, carbon credits and rare earth metals)

Investment scams generally involve high-pressured selling using boiler room tactics for products which often don’t exist (including land-banking schemes, carbon credits and rare earth metals)

Martin Wheatley, CEO of the FCA, commented: “Those operating investment scams use very sophisticated techniques to build trust and can dupe even experienced investors out of their savings. With large numbers of people at risk, it’s important to know how to spot the signs of a potential scam. We would caution against anyone taking a risk on a firm or individual who isn’t authorised by the FCA. Our message is simple: don’t accept a cold call.”

City of London Police Commander Steve Head, who is also the Police National Co-ordinator for Economic Crime, added: “For many years now, tackling investment fraud has been a major priority for the City of London Police. It’s a crime that hits older people hardest, with the victims losing money they’ve worked hard to save their whole lives and often destroys retirement plans.”

Head continued: “The City of London Police is fully supportive of the FCA’s campaign and backs its call for people to always hang up on cold callers. If anyone does fall victim to an investment fraud, it’s vital they report the matter to Action Fraud in order to give law enforcement the best chance of tracking down those responsible and dismantling their criminal operations”.

Key signs of a potential investment fraud

There are several key signs that an investment fraud might be in play. These are as follows:

*You are contacted unexpectedly about an investment opportunity through a cold call, e-mail or a follow-up call after receiving a promotional brochure out of the blue
*You’re pressured to invest in a time-limited offer (or example a bonus or discount is promised if you invest before a set date)
*The risks to your money are downplayed (for example you’re told that you will own assets you can sell yourself if the investment doesn’t work as expected or legal jargon is used to suggest the investment is very safe)
*The returns sound too good to be true (ie better interest rates are stated than those offered elsewhere)
*You are called repeatedly and kept on the phone for a long time
*You’re told that the offer is only available for a limited time or to a limited group of people

For further information visit the FCA’s Scamsmart website

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