Have you heard the one about the boiler room scam? If you’ve got no idea what I’m talking about maybe it’s time to get clued-up, or your next investment could leave you out of pocket.
You may have thought boiler room scams – in which vulnerable investors are duped into buying worthless or bogus shares through aggressive sales tactics – were a thing of the past. You’d be wrong.
The impact of the recession has caused a sharp rise in the number of victims who have fallen foul of this serious crime. With interest rates low, and the stock markets unsteady, more and more people have been persuaded to invest in these schemes.
Enough to make your blood boil
Which? Money met with the City of London Police last month – the hub of investigations into boiler room scams. What they told us was truly shocking. In 2009 alone, over 1,000 people in the UK were conned out of around £300m. That’s over £30,000 per person.
Many of these victims now face financial ruin. Some that we met had remortgaged their homes to buy even more dud shares. Others were struggling for cash for the rest of their retirement.
It’s not just novice investors that get ripped off. Sophisticated and experienced investors have fallen prey to the boiler room conmen too.
This is something that all investors need to watch out for. There are few genuine guarantees in the world of investment, and anything that’s billed as a sure thing is likely to be far from it.
Don’t fall for these tricks
If you ever get a cold-call asking you to buy shares, remember that under regulations, stockbrokers are only allowed to sell up to £100 worth of shares over the phone in this way. If you’re asked for thousands, it’s most likely a scam.
The Financial Services Authority (FSA) regularly publishes lists of boiler rooms on its website to help you check up on companies selling shares.
Do you think you’ve been the victim of a boiler room scam? If so, don’t hide away. Tell us about your experiences here, but also report the scam. This will aid investigations and could ultimately end with some form of redress. You can contact the FSA, Crimestoppers (0800 555 111) www.crimestoppers-uk.org) or Action Fraud (0300 123 2040).