Hang up on cold callers says FCA

If you get an unsolicited call from someone offering a too good to be true return on shares, you're probably right to be suspicious.

The Financial Conduct Authority (FCA) is urging people to be alert to sophisticated fraud operations known as 'Boiler Rooms' that it believes are costing UK investors around £200m each year.

And the FCA's offering some useful advice too.

Frustrated manBeware '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.

Convincing

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.'

Hang up!

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.

 

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Boiler room fraud

If you get an unsolicited call from someone offering a too good to be true return on shares, you're probably right to be suspicious.

The Financial Conduct Authority (FCA) is urging people to be alert to sophisticated fraud operations known as 'Boiler Rooms' that it believes are costing UK investors around £200m each year.

And the FCA's offering some useful advice too.

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