What is a boiler room scam?
Boiler room operations are share scams and the curse of investors. The operator of a boiler room scam will con an investor into buying worthless shares at inflated prices that are impossible to sell. The scams can be very convincing which is why they’re on the rise in the UK. Here are the top signs that suggest the caller is a fraudster:
1) They are unfamiliar
Cold calls can happen in the form of email too so it’s important to be vigilant online. Before speaking to a cold caller or responding to an email, consider the following:
How did this person get your number?
Why are they calling you?
2) They ask you to keep the call a secret
This should be an immediate red flag. If you’re asked to keep the contents of the call confidential, something is likely to be ‘off’.
3) They pressure you into an instant decision
On a similar vein, a fraudster will use scare tactics to strong-arm you into making a purchase decision on the phone. A legitimate company will understand if you need time to consider.
4) They insist you can’t lose
This is a promise even the most experienced companies wouldn’t make. All investment comes with risk and legitimate companies will outline the risks to you before you invest. Fraudsters will act as though you win in every outcome which isn’t possible with investment.
5) They promise huge returns
If the caller can’t explain how this return will be generated, chances are it’s a scam. Promises of discounts or gifts are also a big tip-off that something isn’t right!
6) They have a prestigious job title at a fancy-sounding company
Fraudsters will overcompensate to try and reassure by claiming to have a professional sounding name, title, or company. Some even go so far as to pretend they’re calling from a legitimate company and try to confuse you by using technical jargon without stopping to explain.
7) They are based abroad
As it’s illegal to sell shares via cold-calling in the UK, fraudsters will try calling from a UK-listed phone number even though they may be based overseas. This can, of course, be difficult to detect but is important to be aware of.
8) They tell you to pay upfront
Callers who ask for upfront payment may use the term ‘advanced fee’ or ‘deposit’ and say the sale can’t go through without this money. A legitimate company will let you go away and do some research before investing any form of payment to secure shares. If they press the matter, it’s usually a sign they are committing fraud.
9) They ask for your bank details
A legitimate company will never ask for bank details over the phone and would always offer a secure method of payment. Fraudsters tend to ask directly for bank details on the phone – a huge warning sign!
10) They tell you they have special information
If the caller really did have industry secrets, they wouldn’t be sharing them with a stranger on the phone. Look out for callers who tell you they have insider knowledge but can’t tell you how they are privy to it.
We hope you will never have to deal with a boiler room scam. However, they can be incredibly convincingly and meticulously pulled off. There are reports of incidents where people have lost their life-savings to a boiler room scam and were unable to recover these funds. You can never be too careful, so if you think you’ve been scammed by a fraudulent shares company, get in touch with our team of experienced fraud barristers.