Boiler Room Scams – what they are and what to look out for
Its is important to take your financial security very seriously. So I just wanted to highlight the threats around so-called Boiler Room Scams. I recently heard about someone who had been coaxed into sending money to these fraudsters and on further investigation ( including, going to their fictious offices), I found out that it was all a scam as the name suggests.
What is a Boiler Room?
Boiler Rooms are businesses that use high-pressure sales techniques to sell ‘sure thing’ investments with the promise of massive returns. In fact, what they’re selling is worthless stock in often unquoted companies that are either overvalued, or simply don’t exist at all.
How they work
Boiler Room operatives generally cold-call their targets, using phone numbers from publicly available lists. They tend to be based abroad (often Spain, Switzerland, or the US) where they’re beyond the jurisdiction of the Financial Services Authority (FSA). They can approach anyone, anywhere.
Boiler Room techniques
A Boiler Room can look and sound legitimate. They may mention companies you’ve heard of, give themselves an Italian address or phone number, and have a professional looking website. They’re notoriously persistent, and can hound a victim for months in the hope of a sale, catching out even seasoned investors. (In the case noted above, the investor was very experienced). According to the FSA, Boiler Room Scam victims lose on average £20,000.
Remember, as a general rule, if an opportunity sounds too good to be true, then it almost certainly is.