UK to Ban Cold Calling for Crypto, Insurance Deals to Zero Down on Fraud Activities Draining Billions

The UK has recorded billions in losses owing to an alarming rise in incidences of financial fraud. To curb these regular instances, the country is looking to now ban the marketing technique of ‘cold calling' for merchants dealing with cryptocurrencies and insurances. In cold calling, sellers of a product or service acquire the contact details of their target customers and reach out to them incessantly. Sometimes, cold calling advertisers end up coercing their potential customers, or luring them into investing in their offerings. This poses a large risk of the customer being scammed, resulting in a loss of funds.

UK's National Crime Agency (NCA) has estimated that UK citizens could be losing up to GBP 7 billion (roughly Rs. 71,648 crore) annually to these telecom-powered financial frauds.

The UK government, in order to combat financial crimes, has decided to expand its intelligence-led policing efforts with at least 400 new members and entities, CoinTelegraph reported on Wednesday.

Its biggest challenge is to curb financial frauds reaching out to potential victims on their phone numbers, pretending to be insurance or crypto brokers. Through number spoofing, criminals impersonate licenced brokers or government employees to gain the trust of their victims.

According to NCA data, 3.4 million incidents of fraud were recording in the UK in 2016-17. The NCA, however, mentions that only 20 percent of fraud cases are actually reported and thus the real number is likely much higher. “The 2017 Annual Fraud Indicator estimates fraud losses to the UK at around GBP 190 billion (roughly Rs. 19,45,153 crore) every year, with the private sector hit hardest, losing around GBP 140 billion (roughly Rs. 14,33,527 crore). The public sector may be losing more than GBP 40 billion (roughly Rs. 4,09,520 crore),” NCA's blog says.

Rishi Sunak, the Prime Minister of the UK, also recently addressed the issue of financial frauds become increasingly common. In a statement, Sunak reportedly said that scammers “ruin lives in seconds, deceiving people in the most despicable ways in order to line their pockets.”

One reason why many notorious firms are swarming to the UK to set up their illegal businesses is because registering a company in the UK is a cheap and easy process. One can reportedly register a new company for around GBP 12 (roughly Rs. 1,228) in the UK without a mandatory requirement of identification submissions.

Taking advantage of the loose rules, several crypto scammers have begun operating out of the UK, forming shell companies to run their businesses under.

Hence, it does not seem unfathomable that the country is now looking to tweak advertising-related rules that current exist in there.

The Financial Conduct Authority (FCA) of the UK has made it compulsory for all crypto firms adhere to the rules of the Financial Services and Markets Act.

As of now, it remains unclear by when the UK would officiate its decision of banning cold calling for financial brokers.