The FCA keeps pounding away on “Clone Firms” – Why do they persist?

The Financial Conduct Authority (FCA), the UK’s watchdog regulator with oversight responsibility in the forex arena, has task forces in many worthy venues, but they are the one regulator that has a penchant for ferreting out “Clone Firms”, those fraudulent websites that closely imitate the real thing. Clones continue to reel in unsuspecting consumers, steal their personal information and private login credentials, or install malware robots that will report back keystroke information to criminal servers. In the past few days, the FCA sent out warnings on no less than six look-alike clones in the market. What is going on in the UK to attract such fraudsters and why do they persist?

Let’s get right to the gory details – here is a list of the websites cited by the FCA as clones, along with direct commentary from the regulator about fraudulent actions:

• Red Arc Global Investments plc is a “clone” of a registered firm by the name of: Red Arc Global Investments (Ireland) plc. This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities, which require authorization. This recognised collective investment scheme that fraudsters are claiming to work for has no association with the ‘clone firm’.
• Scrilliy is a “clone” of a registered firm by the name of: Serpable Ltd, trading as Scrilliy. This is what we call a ‘clone firm’; and fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called. Be aware that the scammers may give out other false details or mix these with some correct details of the registered firm.
• Square Global Ltd t/a Square Global Enterprise is a “clone” of a registered firm by the name of: Square Global Ltd trading as Square Global Markets. This is what we call a ‘clone firm’; and fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called. Be aware that the scammers may give out other false details or mix these with some correct details of the registered firm.
• Marcel Miller is a “clone” of a registered firm by the name of: Marcel Miller whose correct address is Mostecka, 3183 Kladno, CZ-272 01, Czech Republic. This is what we call a ‘clone firm’; and fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called. Be aware that the scammers may give out other false details or mix these with some correct details of the registered firm.
• Padmar Investments Limited is a “clone” of a registered firm by the name of: STAR Capital Partnership LLP. This is what we call a ‘clone firm’; and fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called. Be aware that the scammers may give out other false details or mix these with some correct details of the registered firm.
• Global Wealth Asia is a “clone” of a registered firm by the name of: Global Wealth Ltd. This is what we call a ‘clone firm’; and fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called. Be aware that the scammers may give out other false details or mix these with some correct details of the registered firm.

For more details, be sure to visit the “Warnings” section of the FCA.org website. These clones have been designed to be mirror images of registered firms, but the devil is in the details. The clones may have fake website and office addresses, along with phone numbers and other criteria, as well.

Read more about forex scams

What other advice does the FCA offer regarding clones?

Since London is the financial center of the world for foreign exchange, crooks try their very best to persuade their marks that they are London-based, purely for credibility reasons. This tactic has frequently occurred for the past decade or two, but new technology has allowed criminals to get more creative in their deception methods. We began writing about “cloning” fraud as far back as 2015, and the FCA quickly jumped upon this scenario the following year, when its list of victims began to soar.

From that point on, the FCA has published warnings, similar to the ones for the above clones, on its website, along with helpful advice as to how the fraud can be detected and what to do if you encounter one of these fraudulent websites or are cold called by them with an offer too good to be refused. Here is a quote from their website on what to expect:

“Fraudsters look for new ways to scam consumers, but one scam increasingly reported to us involves scammers pretending to be from firms we authorise. These scammers typically cold-call investors to promote shares, property or other investment opportunities that are non-tradable, worthless, overpriced or even non-existent. A new tactic has seen fraudsters using the name, ‘firm registration number’ (FRN) and address of firms and individuals authorised by us to suggest they are genuine. This is what we call a ‘clone firm’.

The scammers then give their own phone number, address and website details to possible victims. We have also heard of fraudsters claiming that a firm’s contact details on the Register are out of date, but this is unlikely as we update the Register each evening. The scammers often claim to be from overseas firms that appear on the Register as these firms do not always have their full contact and website details listed. They may even copy the website of an authorised firm, making subtle changes such as to the phone number listed. We have even seen fake versions of our website and Register that include the fraudsters’ contact details rather than those of the genuine, authorised firm.”

The FCA also publishes a list of registered firms, along with details for addresses for websites, offices, and phone numbers, which you can then check against the firm that may be soliciting you. As noted in their warning verbiage above, you need to be wary when speaking with a fake representative that claims that the registered information is somehow out of date, a common ploy used to sink the hook deeper. Also be aware that giving money to an unauthorized firm will not be covered by the national compensation scheme for consumer losses. Please report any suspicious activity directly to the FCA.

How have the tactics of “Clone Wars” morphed over the past few years?

Back in February of 2015, we wrote: “It is difficult to attribute the shear abundance of hacking attempts taking place on a daily basis to just a bunch of restless geeks looking to have fun at someone else’s expense. The majority of these efforts are well funded and well organized, perhaps, dedicated wings of some international crime family, looking to modernize their fraudulent activities. The latest rage to hit the forex world and other financial arenas, as well, has been labeled “Clone Wars” – the act of replicating a legitimate website to attract unwary customers with the intent to defraud.”

The cloning of legitimate websites began in earnest in late 2014. The attacks generally had four objectives:

• Attempt to sell you worthless or overpriced products;
• Trick you into giving away personal information via a Contact Form request;
• Dupe you into believing that something was wrong with your account, and then requesting that you log in to your account, thereby handing over the “keys” to your account; or
• Having you access a link that would take you to a server that would install malware on your computer, which would report back your keystroke information for further analysis and eventual usage down the road.

Not much has changed in that regard, but the websites are more sophisticated, the selling is more aggressive, and the crooks have focused more on what is hot in the market, namely cryptocurrencies, binary options, and CFDs. The vast majority of this type of fraud is domiciled offshore in a jurisdiction far from the regulator’s eyes and, more importantly, its reach. Much of the focus has also shifted to Asia, “where local prohibitions against forex trading have been lifted and where an eager group of newcomers are unaware of the pitfalls of fraudulent online schemes.” In any event, be skeptical of any unsolicited approach by email, phone, or Internet link, especially the flashing kind that promises immediate riches with very little risk.

What are the “red flags” to be wary of for this type of fraud?

One thing to look out for is a clumsy misspelling or mispronunciation of the legitimate company’s name in either the website address or within the text of the website pages. Be skeptical of a firm that highlights their connection with another, better-known partner, especially if they are located in London or another financial center of the world. In this case the crook is using the credibility of another company’s name and regulation to gain your trust and secure your initial deposit, which will never be returned.

Another give-away is to be asked for confidential information (i.e., passport data, payment information, personal ID details) to gain access. Such information should only be required when setting up a trading account in order to facilitate a quick withdrawal down the road. Lastly, be sure to check with your local regulator’s website from time to time for any warnings or announcements regarding fraudulent activity. The CFTC and the FCA are ever vigilant at exposing criminal activities as soon as they come to light.

Concluding Remarks

Looks can be deceiving, as the old adage goes, but even more so on the Internet, where glitzy graphics software can emulate and improve upon even the most secure website on the web. Clones persist because they work. Fraud, however, is one crime that, by necessity, requires a positive response on your part before the “hook” can ever be set. If any seller of products or services on the Internet visually impresses you, step back a moment and give yourself time to compose your mind, be skeptical, and begin asking questions. Is this site or offer too good to be true? Is the firm registered in my country? Do addresses and phone numbers match up with official records?

Get good answers, or report suspicious activity to the proper authorities. Be cautious!

Chris Lee

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