The Investment Association (IA) has sounded the alarm over a surge in “cloning scams,” a sophisticated form of fraud where criminals impersonate legitimate investment firms by creating nearly identical websites, emails, and social media profiles to trick consumers into transferring funds.
According to the IA’s latest report, there were 478 cases of investment firms being cloned in the second half of 2024 alone, with 23 percent of these scams successfully defrauding victims to the tune of £2.7 million ($3.5 million).
The IA also warned against other cyber threats such as card fraud and account takeovers. The report cited 132 cases where criminals manipulated account information to misappropriate investments during the same period.
The alarming trend is linked advancements in artificial intelligence (AI), which have made it easier for fraudsters to produce highly convincing digital impersonations.
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Adrian Hood, the IA’s regulatory and financial crime expert, warned that with AI, scams are getting more sophisticated, urging consumers and firms to stay alert.
“The growth of AI is likely to see increasingly sophisticated scams, with criminals better able to mimic legitimate firms. This requires both firms and consumers to remain vigilant,” Hood said.
These warnings come amid growing cybersecurity challenges worldwide. PYMNTS Intelligence reported that 90 percent of U.S. companies faced attempted cyberfraud in 2024, while business email compromise attacks surged by 103 percent compared to 2023.
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Hood urged investors to exercise caution to double check the authenticity of firms and emails before executing any transaction.
“Consumers must take extra steps to verify the authenticity of websites and emails before making any financial transactions, especially in an era where deepfake and AI technologies have already enabled multi-million dollar fraud schemes,” he added.
