Businesses urged to stay ‘wary’ as investment fraud surges in Ireland

The number of investment fraud cases, where fraudsters pretend to be legitimate investment firms to scam people to invest large sums of money in fictional projects or schemes, has seen a sharp rise in Ireland. Warnings against the increasingly convincing investment scams and evolving fraud tactics have been issued by several organisations and government bodies including the Central Bank of Ireland, the Irish national police service An Garda Síochána, and the Banking and Payments Federation Ireland.

An Garda Síochána recently revealed a “staggering” rise in cases of investment fraud. More than €28 million was stolen from victims using investment fraud in 2023, which is more than the amount lost in 2021 and 2022 combined. The police expect the figure to be even higher in 2024. The statistics showed that almost half of reported investment fraud cases since 2020 related to bitcoin or cryptocurrency.

Fraud data by the Bank of Ireland for the first half of 2024 painted a similar scene. The bank said the volume of investment fraud attempts surged by 76% compared to the same period in 2023 and described the growth as the “most concerning trend”. Its research found that the majority of such fraud cases involved social media or sponsored search results, which led to customers receiving personalised phone calls and messages promising high returns for quick investments. There is also an increasing number of instances where fraudsters posed as bogus ‘recovery firms’ re-targeting customers who have been a victim of fraud.

Legal expert Sarah Twohig of Pinsent Masons said: “These sorts of fraudulent activities are growing in sophistication and prevalence, with fraudsters passing themselves off as legitimate business entities or ‘cloning’ the details of legitimately authorised businesses. So far this year, the Central Bank of Ireland has published 112 warning notices, with 48 of those relating to fraudulent investment firms – so it’s important that businesses bear this risk in mind and are wary of it when conducting business, as well as consumers on a day-to-day basis.”

Twohig added that there are also growing concerns about the potential for artificial intelligence (AI) to facilitate more sophisticated financial fraud, and banks and businesses should be aware of the concerns and risks when deploying AI tools to consumers. According to Permanent TSB’s latest Reflecting Ireland Report, 72% of the customers who responded to its survey are worried that the increased use of AI could lead to more advanced fraud techniques. It also found that only 24% of the respondents are comfortable with AI-generated financial advice.

This sentiment was previously echoed by the Central Bank of Ireland in its Regulatory & Supervisory Outlook for 2024, in which it warned that the increased sophistication of the market has led to a far greater risk of fraud, stating: “Fraud risk has increased exponentially in recent years with the rapid advances in technology and digitalisation. While technological innovation is welcome when it improves accessibility and choice for consumers, it does expose firms, consumers, businesses and the wider financial system to significant harm when malevolently exploited by criminals”.

The Central Bank also noted that fraud operates across borders which can make retrieval of funds extremely difficult, compounding the risk.