It was a Saturday afternoon in April when, scrolling through Instagram, Sarah, 48, came across what appeared to be an advert featuring the stocks expert Peter Hargreaves, the co-founder of the UK’s biggest investment platform, Hargreaves Lansdown.

The post said that he would share selected “explosive” stock tips with group members. Sarah, an office manager who does not wish to be identified, was invited to provide her mobile number so she could join an exclusive WhatsApp group.

Soon afterwards she had a message inviting her in and another with a link to download software on her phone so that she could make trades. She was told that she would be guided by a “mentor”, learning when to buy and at what price and when to sell, keeping the profit. Within weeks she had lost nearly £4,000.

From 2023 to 2024 there was a 57 per cent surge in what are known as cloning scams — where scammers use AI-generated images and videos of well known personalities to lure victims. These frauds cost consumers about £2.7 million in the second half of 2024, according to the Investment Association, a trade body.

Investment club scams, like Sarah’s, are a specific type of cloning scam which involve fraudsters inviting investors into exclusive clubs on WhatsApp (owned by Meta, which also runs Facebook). Victims are offered investment tips then persuaded to make payments to a scammer’s account.

Experts who have been cloned include Anthony Bolton, a former star fund manager for Fidelity International, and Stephanie Flanders, a former economist for JP Morgan Asset Management. Along with Hargreaves, their images were cloned without permission and used on social media to promote scam investment services.

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More than 600 adverts and 22 pages from scam social media accounts were taken down in May after Hargreaves Lansdown reported them for trademark infringement.

The investment firm said: “Social media adverts promoting WhatsApp groups run by Hargreaves Lansdown, its founders or other financial institutions are scams. We don’t have any association with any WhatsApp groups, and our founders are not on social media. We’ve been running a campaign on how to avoid these scams and to clarify what our genuine content is.

“We’ve been actively monitoring and reporting fake accounts and have engaged extensively with regulators and the government to ensure that we’re all doing what we can to protect consumers.

“We would like to see social media platforms taking greater responsibility, acting more swiftly and for the UK to consider introducing tighter rules on those seeking to advertise financial services, like those that are in place in Australia.”

Popular fund managers, such as Nick Train and Terry Smith, have also been impersonated by scammers on WhatsApp groups.

At first Sarah invested £50, but soon began pouring more of her life savings into assets that had been suggested in the WhatsApp group. She invested £100 at a time, then increased it to £500. “I couldn’t believe how easy it all seemed,” she said.

She thought she was investing in small, growing companies and she appeared to be making quick gains. Within two weeks she had banked about £300 in her trading account from investments worth a total of about £2,000.

She continued to invest, spending a further £2,000 over the next three weeks.

It was only when she wanted to withdraw all her gains to her bank account that things started going wrong. Soon, requests for tax payments, withdrawal fees, and regulatory charges were being made.

“I kept paying, believing I was so close to getting my money back, plus a huge profit. It was a vicious cycle,” she said.

By the time she realised that she was entangled in a sophisticated scam, every penny was gone. The group vanished, and her mentor stopped responding. Her trading app stopped working and her £4,000, as well as the profits she thought she had made, disappeared.

She immediately contacted her bank, but the money had already been moved to other accounts. Following their advice, she reported the crime to Action Fraud, the UK’s crime reporting agency. She has also reported the scam to the police.

The Investment Association said that criminals are using WhatsApp groups, emails and professional-looking websites to mimic legitimate financial firms.

There are two types of investment scam — the first are those that trick you into sending money to a scammer, or persuade you to pay fees or commission in return for “tips”.

The second kind encourage you to invest in cheap penny stocks to push up their price. These are sometimes called “pump and dump” schemes, where criminals invest in a low-value stock then put victims under pressure to invest too — and thus inflate the price. Once the value has risen, the criminals sell up and run, leaving investors with big losses and, in some cases, worthless stocks.

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Both scams usually involve contact through messaging apps such as WhatApp. An initial approach could be an individual message or a link on advertisements on social media platforms such as Facebook or Instagram, also owned by Meta.

Once a level of trust is established, victims are invited to join WhatsApp groups, which are crafted to appear legitimate and bustling with activity. They are often populated by automated responders or other members of the scamming syndicate who post fake success stories, with screenshots of high profits and effusive testimonials.

This creates the illusion of a thriving, successful investment community. A charismatic mentor, coach, or crypto adviser will lead the group, dispensing what appears to be expert advice and trading signals. Victims are then directed to open accounts on professional-looking but fraudulent investment platforms, complete with faked real-time market data.

At first victims may be encouraged to invest a small amount, then the scammers will manipulate the platform to show immediate, significant profits, sometimes allowing small withdrawals by the victims.

The moment of truth comes when the victim tries to withdraw larger sums, at which point, the scammers introduce a litany of unexpected fees, as in Sarah’s case.

Adrian Hood from the Investment Association said: “Criminals will use a variety of means to trick people into parting with their money. This includes impersonating genuine investment management firms and high profile individuals via fraudulent websites, adverts, and increasingly through social media platforms and WhatsApp groups. The growth of AI is likely to see increasingly sophisticated scams, such as deep fake videos, with criminals better able to mimic individuals or legitimate firms.”

Any unexpected message about investment opportunities, regardless of who it appears to have come from, should be treated with extreme caution because legitimate financial firms do not cold-call or give investment advice on WhatsApp.

Always independently verify the legitimacy of any firm or person offering investment services by checking with the Financial Conduct Authority (FCA), the City watchdog, to confirm that they are authorised to provide financial services. The FCA register can be found at register.fca.org.uk.

Resist pressure tactics because scammers thrive on creating a sense of urgency, pressuring victims to act quickly to avoid missing out. Legitimate financial advisers should not put pressure on you to make immediate decisions.

Never share sensitive information such as bank account numbers, passwords, PINs, or one-time passcodes in response to unsolicited messages or on unverified platforms. Don’t click on links or download attachments from suspicious messages, as these can lead to websites designed to steal your credentials or install malware on your device.

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If you suspect that you have been a victim of an investment group scam, act immediately. Stop all contact with the scammers and do not send any more money. Report the fraudulent group or contact to the messaging platform using the in-app reporting function.

Be aware that once you’ve been scammed, you might be targeted by “recovery scams,” where fraudsters claim that they can help you get your money back for an upfront fee.

Legitimate investment clubs were hugely popular in the early 2000s with some estimates suggesting that there were as many as 10,000. They aim to provide investors with tips that mainstream media and investment firms may have missed.

They often bring together “angel” investors who are looking for new opportunities with businesses who are trying to find new sources of funding because banks may consider them too risky. They are typically aimed at wealthy investors, are not regulated by the FCA and those who join are asked to verify that they understand the risks of the investments.

The Investment Association said it was not aware of any of its members running WhatsApp investment clubs or making use of WhatsApp to drum up business.

Meta said: “We want to make WhatsApp the safest place for private communication, which is why we protect conversations with end-to-end encryption. However, just like regular SMS or phone calls, anyone who has your phone number may attempt to contact you. WhatsApp provides interlocking layers of protection to protect you from unwanted contact. We also provide information on what suspicious messages might look like online.