UNDERSTANDING THE IMPACT OF BRAND IMPERSONATION ON

Investment Firms

Impersonation isn’t just a cybersecurity or fraud problem – it’s a direct threat to investment firms’ reputation and resilience.

Impersonation fraud is a growing problem for investment firms

Investment banking, private equity, and venture capital firms rely on reputation, trust, credibility, and strong relationships. However, the rise of online brand impersonation fraud puts these foundations at risk.

Both the FBI and SEC have recently issued warnings about the rise in scams impersonating investment professionals and firms. Fraudsters impersonate investment firms, employees, and spokespeople to deceive investors, scam customers and clients, siphon funds, and undermine trust in the industry.

According to the LexisNexis True Cost of Fraud Study, investment firms face more scams and higher fraud costs than ever before:

60% of financial services organizations reported an increase in scams

More than a third of fraud losses are now attributed to scams

For every $1 lost directly to fraud, investment firms incur an additional $4.40 in indirect costs – a 9% year-over-year increase, higher than that of banks and mortgage lenders

Beyond Direct Fraud Losses:
Hidden Costs of Brand Impersonation

Impersonation fraud doesn’t only cause immediate financial losses–it creates long-term business consequences affecting consumer and investor trust, brand value, and operations efficiencies.

Top Business Impacts of Impersonation Fraud on Investment Firms

Reduced customer satisfaction

Victims often blame the impersonated firm when they’re financially harmed by fraud

Increased churn

Fraud victims may opt for competitors they perceive as more secure and trustworthy

Reputation damage

A single impersonation scam can undermine years of brand-building efforts

Difficulty establishing trust with customers

Existing and potential investors may hesitate to engage due to fraud concerns

Higher fraud management costs

Incidents of fraud strain investor relations and support teams and require greater cybersecurity investments

Difficulty acquiring new customers due to reduced conversion rates

Reputational damage from impersonation fraud increases the time and cost of attracting new investors and clients

How Cybercriminals Exploit Digital Channels to Impersonate Investment Firms

As highlighted in the Financial Industry Regulatory Authority (FINRA) Annual Regulatory Oversight Report, investment professionals and firms are seeing an increase in the variety, frequency, and sophistication of cybersecurity threats. FINRA noted that driving this increase is generative AI-powered fraud and cybercrime-as-a-service which both allow even low-skilled criminals to execute far-reaching scams targeting the public and private investment industry.

Common Investment Fraud Channels

Fraudsters exploit multiple digital channels to impersonate investment firms, their employees, and their spokespeople.

(Select a fraud channel to view the definitions)

Phishing Emails

Fake messages impersonating firms and employees to steal credentials or money

Fake Websites

Spoofed investment firm sites that collect sensitive data or solicit funds

Fake Online Ads

Paid search and social media ads directing to scam websites

Fake Social Media Profiles

Impersonation of investment firms, executives, or spokespeople on LinkedIn, Facebook, YouTube, X, and more

Messaging & Chat Apps

Scams carried out via Telegram, WhatsApp, and other encrypted chats.

Phone / Vishing

Callers posing as employees, advisors or executives to pressure investors into fraudulent transactions

QR codes / Quishing

Malicious QR codes leading to phishing sites

SMS / Smishing

Deceptive text messages directing recipients to click malicious links

Common Investment Fraud Types

Cybercriminals will combine multiple communication channels to execute a number of different scams that exploit trust in investment firms.

(Select a fraud type to view the definitions)

Account Takeover

Stolen credentials used to gain unauthorized access to accounts

New Account Fraud

Fake accounts created using stolen or synthetic identities for money laundering or scams

Romance Scams

Scammers pose as romantic partners to lure victims into fake investments

Pig Butchering Scams

Long-term scams tricking victims into contributing increasing amounts to an investment scheme

General Impersonation Fraud

Scammers posing as a firm or its executives or advisors to convince victims to invest

Tech Support Scams

Adversaries impersonating fake IT support to steal credentials

Cryptocurrency Scams

Fraudsters use fake content to promote fake cryptocurrency investments

Task and Job Scams

Fake job listings under reputable firm names steal applicants’ data and money

Combatting Impersonation Fraud in the Investment Industry

During a panel discussion, IT leaders from top investment firms outlined crucial steps they take to defend their organizations and clients against brand impersonation. Their recommendations included:

Proactively monitor websites, social media, mobile app marketplaces, the dark web, and other online platforms for impersonations to identify and remove fraudulent content before anyone is exposed

Secure brand and executive identities by registering brand names, executives, and spokespeople on all major social media platforms – even if they remain inactive – to prevent fraudsters from hijacking them for scams

Use domain blocking to prevent scammers from registering lookalike domains that can be used to deceive investors and facilitate fraud

Educate investors, clients, and employees on how to recognize scams and impersonations, and clearly explain what official communication channels you will use to communicate with them

Strengthen industry and law enforcement collaboration to share threat intelligence on emerging fraud techniques and improve collective response efforts

Want to Learn More?

Read our summary or watch the full webinar recording below

READ SUMMARY

WATCH WEBINAR