Title: Fraudsters Thrive in France’s Covid-19 Economy: A Look at Real-Life Financial Crimes

Surge in Financial Fraud during Covid-19 and Record-low Interest Rates in France

In the midst of the Covid-19 crisis and record-low interest rates, financial fraud has surged in France, leveraging citizens’ desperation for investments yielding higher returns. A recent joint press conference by the Parquet de Paris, Autorité des Marchés Financiers (AMF), Autorité de Contrôle Prudentiel et de Résolution (ACPR), and the General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) highlighted the latest developments, actions taken, and prevention measures against this escalating issue.

The Allure of Riskier Investments

The Covid-19 crisis and its ensuing financial turmoil have led to a resurgence of various fraudulent investment, savings, and credit offers. A BVA survey conducted by the AMF revealed that 97% of French people consider investment scams to be high or very high risk (BVA survey). Although 64% of the respondents believe that non-risky investments offering higher returns than savings accounts exist, investing in such potential scams can result in significant losses.

Types of Financial Scams

Financial scams encompass a wide variety of deceitful activities aimed at the general public. Some of the most common scams include:

False consumer loan buyback offers
Misrepresented investment schemes in structures like car parks or nursing homes
Ponzi schemes

These fraudulent activities have caused significant losses, costing victims around €500 million annually, according to the Paris Public Prosecutor’s Office.

Emergence of New Trends and Modus Operandi

Deceptive offers to invest in airport parking spaces and nursing home rooms have generated even higher losses. Two-year-old savings account and loan scams, averaging €72,000 and €12,000 in losses respectively, have led to an increase in fraudulent activity involving Forex and crypto-assets. Trading scams in the unregulated currency market and on crypto-assets caused losses amounting to €38,000 and €20,000 per victim, respectively.

Criminal activity thrives on the internet and social media platforms, with offenders employing banner ads and fake advisors to establish trust and extract large investments from unsuspecting victims. In some cases, identity theft, forged documents, and fraudulent use of registered products and professionals are incorporated to enhance the legitimacy of deceitful schemes.

A new and concerning trend has emerged in which social media and influencers serve as the entry point for young, vulnerable audiences, particularly in the trading industry involving Forex and cryptocurrencies. The sharing of false investment deals on these online platforms exponentially increases the scope of financial scams.

The DGCCRF, a department of the Ministry of the Economy, Finance and Recovery, has identified the alarming rise of misleading online commercial practices in the financial services sector, especially by influencers, and has made it a top priority for 2022 to combat unfair influence marketing practices.

Collaboration and Prevention

Collaboration between authorities has intensified to detect and prevent fraudulent offers and alert the public and professionals as early as possible. The ACPR and the AMF established a joint working group in 2021 to monitor and combat these fraudulent activities. They regularly publish subject-specific warnings and update blacklists of unauthorized actors on their joint site with the Banque de France.

Success Stories in Combating Fraud

The effectiveness of these efforts was demonstrated in a notable case involving a digital fundraising campaign for the creation of a crypto-currency ticket-purchasing app. The company, found to have used forged documents and fraudulently solicited investors without authorization, was swiftly identified by the AMF and the Paris Public Prosecutor’s Office, limiting potential losses for retail investors.

International cooperation and the extradition of suspects from non-EU countries like Israel and the United Arab Emirates (Dubai) have also led to successful outcomes.

New Powers Granted to Authorities

Additional powers have been granted to authorities since the December 2020 law to fight online offerings and websites selling non-compliant or dangerous products. The DGCCRF can now demand that warning messages be displayed to consumers regarding illegal content, order its removal from search engines and comparison services, or even block, transfer, or delete a domain name.

Conclusion

The AMF, ACPR, and DGCCRF remain dedicated to protecting consumers and maintaining the integrity of French financial markets. To learn more, visit their websites:

Stay informed and be vigilant to protect yourself from financial scams.