Fraudsters are increasingly using the details of legitimate investment firms to coax people to part with significant sums of money.
The Central Bank of Ireland has said it has seen an increase in the number of unauthorised firms 'cloning' the details of legimately authorised businesses.
The regulator has received more than 1,000 queries so far this year from members of the public wanting to know if firms that they are looking to invest with, are authorised by the bank. It has published 112 warning notices this year to date, 48 of which relate to fraudulent investment firms.
The perpetrators behind investment fraud are often extremely convincing, quoting authorisation numbers and links to seemingly legitimate websites and they even provide the real address and staff names of an authorised firm.
The crime is lucrative with €28 million stolen from victims of investment fraud last year, and a further €13.5 million stolen so far this year, according to garda figures.
Members of Banking and Payments Federation Ireland are reporting individual stolen sums of money starting from €5,000, "with some cases of between €50,000 and even €600,000".
"The victims are just regular people who have worked hard to build up a pension or their life savings, and are looking to top up their finances ahead of retirement," said Gillian Heffernan, BPFI, "so falling victim to scams can be absolutely devastating to the people involved."
The following is the account of a retired doctor who came close to falling foul of fraudsters:
I am a recently retired GP. Like many others, I took a serious loss when the Irish bank shares collapsed during the fiscal crisis. This resulted in a significant reduction in my pension 'pot'.
The extended period of low interest rates that followed resulted in reduced returns from my pensions investments.
An advert for an investment firm appeared on my phone, offering returns on Government Gilts, which were higher than what was available prior to this. This appeared legitimate.
I contacted the website, expressing interest in investing €100,000. A very pleasant man contacted me, and we discussed my wishes. He sent me paperwork, all of which looked fine.
I decided to make the investment but decided to check with the Central Bank, which I did by email. I did not receive a response.
As an alternative, I requested a meeting with the firm's representative to finalise matters, but when I requested a meeting, I was told he was busy.
I followed up with the Central Bank a number of weeks later, again by email. To my surprise the Bank informed me this was a scam and it was not a legimate firm at all.
I was quite taken aback by the lack of initial response from the Central Bank. I felt this put me at unnecessary risk.
I did not make the investment because my spouse expressed doubt about the whole deal and the failure of the representative to meet me.
I have told this story to a few experienced and successful business people…. their advice is to never give money to anyone, without first seeing the "whites of their eyes". Good advice!
"Without a doubt our members (banks and financial institutions) are very much seeing a continued and significant rise in these highly convincing and significant investment scams," said Ms Heffernan. "This account is very typical of the type of cases being seen by our members."
She said BPFI's FraudSmart initiative warns consumers to look out for red flags which include pop-up ads on social media which often give the name of a familiar institution or broker.
"We have even seen fraudsters going so far as to create copycat social media profiles of real broker' employees to convince people of their legitimacy, and what all of this underlines is how cautious and diligent consumers need to be, if and when they are considering any investment opportunities," Ms Heffernan said.
These scams are being targeted at people over 50 who are likely to be thinking ahead in terms of their retirement.
The BPFI advises consumers to never ever respond to pop-up social media ads or messages with claims about investment returns, no matter how convincing they may seem. It warns to be particularly wary of celebrity endorsements.
Offline, it recommends consumers avoid any unsolicited approaches or cold calls about investments.
"Really importantly, we would advice consumers to take their time," Ms Heffernan said. "The fraudsters might apply a sense of urgency in taking up an opportunity, but in reality a legitimate provider will never rush you into giving your money."
In the account of the retired doctor, Ms Heffernan noted the effort made by him to meet with a 'representative' of the firm and how the fraudster started stepping away. "That shows how important it is to check the individual or the firm for their qualifications and their credentials, and to contact the investment firm directly using numbers from their official website, and not just click into links through ads."
The BPFI also advises consumers to check all information through a third party such as a legal or financial professional, and if you do think you have fallen victim to an investment scam, contact your bank and the gardaí immediately.
RTÉ News asked the Central Bank about the delayed response to the doctor's initial email, and a spokesperson said the bank aims to respond to all queries as soon as possible but responses to queries about a potential clone may take longer than others.
He said, ultimately, it is the responsibility of each person who is considering making a financial investment to carry out appropriate due diligence.
