Data from the National Fraud Intelligence Bureau (NFIB) at the City of London Police has revealed that over £373million was lost by repeat victims of fraud in the financial year 2019/20, with the average repeat victim losing £21,121. However, when someone was reporting at least one investment fraud, this figure jumped 300 percent to £84,604.
As part of a national campaign raising awareness of investment fraud, involving the City of London Police, Financial Conduct Authority and the National Economic Crime Centre, staff at the NFIB undertook analysis of the huge dataset they received from the national fraud and cyber crime reporting centre, Action Fraud.
The NFIB discovered that the average loss by a repeat victim of fraud who reported at least one investment fraud, was 14 times the average loss by all victims of fraud.
Worryingly, over 50 percent of investment fraud victims decline victim support during the reporting process.
Pauline Smith, Head of Action Fraud, said:
“The victim support service offered by Action Fraud is vital in preventing people falling victim to a second, third or even fourth fraud. Since its inception in 2014, our specialist victim advocates have engaged with over 102,000 victims and only 17 of these individuals have gone on to report another fraud.
“When you consider these findings from the National Fraud Intelligence Bureau, it’s clear we need to do more to engage victims of investment fraud, so they can receive our specialist advice and support to prevent them falling victim to further fraud.”
Analysing the data from repeat victims who had reported at least one investment fraud, the NFIB were able to establish links between certain at-risk age groups and fraud types, which they say could help police better protect victims of economic crime.
Their research found men were twice as likely to report being victim to at least one investment fraud, and lost three times as much as women.
However, women were twice as likely to report falling victim to both an investment fraud and a dating fraud. Out of both men and women in this dataset, 24 percent were aged 40-49 years, but accounted for 58 percent of the reported losses.
The NFIB also discovered that individuals who first fell victim to an advance fee fraud, were at an increased likelihood of falling victim to an investment fraud. Over half of the victims in this dataset reported an incident of Fraud Recovery Fraud, a type of investment fraud where the victim is contacted by someone claiming to be able to help them retrieve the money they have lost from their initial fraud. This is a common tactic used by organised crime groups to inflict further losses on victims of fraud.
What is Fraud Recovery Fraud?
Fraud Recovery Fraud is when criminals contact victims purporting to be from their bank, a law enforcement agency, solicitors or “specialist recovery” firm. They will already have some knowledge of the victim’s case and will claim to be able to help the victim get their money back, or some amount of compensation, for a fee. This is often because it is the same criminal targeting the victim again, or the victim’s details have been sold on the dark web to other fraudsters.
Once the fee is paid, the criminals will keep requesting further costs, claiming this has to be paid before the money can be returned. They may claim these “fees” can’t be taken from the money that has been recovered because that money is under the control of a court and can only be paid directly to the victim. In some cases they will ask the victim for their bank account details, so they can send them the recovered money. This is another scam, and they will use the information to empty the victim’s bank account.
Police take action
In June 2020, the NFIB’s system linked several similar reports of Fraud Recovery Fraud which had been submitted by members of the public to Action Fraud. The victims had reported losing money to an investment fraud, and then receiving a call from a business claiming it would be able to get the original funds lost back, for a fee. The victims lived all over the country, but intelligence suggested the suspects were based in South Yorkshire. The case was sent by the NFIB to South Yorkshire Police who swiftly launched an investigation. Yesterday, (Thursday 18 March 2021), two suspects were arrested on suspicion of fraud by false representation and money laundering.
Chief Inspector Leanne Dean, South Yorkshire Police’s lead for Economic Crime, Fraud and Asset Recovery, said:
“Investment fraud – and subsequent fraud recovery frauds – are particularly distressing. Not only has the victim lost what can be a substantial amount of money, but the fraudsters then stoop low enough to target the same person yet again, making empty promises that fake companies can get their money back for them. The impact, both financially and emotionally, can be significant.
“Here in South Yorkshire we take reports of this type of offending extremely seriously and will always take action when we are able to do so. The warrants we executed yesterday demonstrate our determination to track down suspected perpetrators and our enquiries into this particular investigation will continue.
“If you think you have been a victim of this sort of scam or any type of fraud, it is so important that you report it to Action Fraud so that valuable information and intelligence can be shared and circulated. Your information may just prevent somebody else from becoming a victim too.”
If you’ve been the victim of a fraud in the past, you should be alert to fraud recovery scams and be suspicious of any calls, letters or emails you receive from people you don’t know, or companies you’ve never contacted. If someone claims to be able to help you but you’re asked to pay a fee, or provide your bank account details, end all contact. Genuine agencies never ask for fees to recover money lost to fraud.
Graeme Biggar, Director General of the National Economic Crime Centre, said:
“There is something deeply cynical and cruel about criminals who target those who have already been a victim of fraud. If you are offered the opportunity to get your money back by a person or organisation that knows the details of your initial fraud experience, it is likely that they have this information because they are the same criminals that scammed you in the first place, or have links to them.”
Mark Steward, Executive Director of Enforcement and Market Oversight at the Financial Conduct Authority said:
“Consumers should always be wary of cold calls and promises to recover funds lost to a scam, as these are often signs of an attempted recovery fraud taking place. If you’re under pressure to make a quick decision or a payment, there’s a very good chance you’re talking to a scammer.
“Be ScamSmart and check the FCA Register to make sure that the firm you are dealing with is authorised to perform the service they are providing for you, and use the contact details on the FCA Register.”