Beware 'too good to be true' deals
How 'Boiler Rooms' work
Using phone numbers from publicly-available shareholder lists, the fraudsters generally cold-call their targets.
Because it's against UK law for brokers to cold-call in the UK, they're usually based abroad, beyond the jurisdiction of the Financial Conduct Authority (FCA). Boiler rooms use email, post, advertisements in newspapers and magazines and even seminars to try and dupe people into believing in these 'investment opportunities.'
They might offer a free research report into a company in which you hold shares, offer discounts or gifts, and you'll invariably be told you need to make a quick decision or miss out on the deal.
It's often hard to spot the scam because these con-artists can sound plausible. They may mention companies you've heard of, use a UK address or phone number, and some may even have a professional-looking website. According to the FCA, they're notoriously persistent, and can hound people for months in the hope of a 'sale' which, on average, costs the victim around £20,000.
Even seasoned investors have been caught out, with the biggest individual loss recorded by the police being £6m.
Selling the Earth
Not content with dodgy shares, wine, plots of land without planning permission and other dubious 'investment opportunities', fraudsters are also trying to sell ' rare earth metals or elements'. These are chemical elements used to make things like computers, mobile phones, batteries, satellites and wind turbines .
They're also called ‘rare earth elements’ even though they're not actually rare, just difficult to extract.
The FCA points out that because of the amount of metal needed, manufacturers would be 'highly unlikely' to deal with small retail consumers and warns, 'There is a strong possibility of fraud with each of these products, including rare earth metals, because they are unregulated and it is difficult to confirm that the product or scheme exists, especially when it is said to be based abroad.'
The FCA's advice is simple - if an opportunity sounds too good to be true, then it almost certainly is! So, if you think you're being targeted by a Boiler Room, then don't worry about being polite - just hang up and then contact the FCA on 0845 606 1234. If you've given your bank account details, then contact your bank immediately and stop any payments.
If you've already bought or sold through a Boiler Room, beware of follow-up scams in which fraudsters may offer to get your money back or buy your shares after you pay an administration fee. Tempting as it may be to try and recoup your losses, don't fall for fraud twice.
If you've already set up a payment or sent money abroad, contact Action Fraud on 0300 123 2400.
And, most importantly, warn your friends and family about the Boiler Room scam.