10 signs of a Boiler Room Scam

Boiler room scams can be incredibly convincing 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. In this guide, we explain exactly what boiler room fraud is and ten common signs of boiler room scams.

What is a boiler room scam?

Boiler room operations are share scams. The operator of a boiler room scam will con an investor into buying worthless shares at inflated prices that are impossible to sell. Such scams can be very convincing, which is why boiler room fraud in the UK is on the rise.

What are the signs of Boiler Room Scams?

1. Receiving calls or emails from an unfamiliar source

Boiler room scammers will target individuals via cold calls or cold emails.

2. Being asked to keep communications confidential

Being asked to keep the contents of the call confidential is an immediate red flag pointing to boiler room fraud.

3. Being pressured into an immediate decision

In a similar vein, boiler room scams typically involve the scammer using scare tactics to strong-arm individuals into making a purchase decision on the phone. On the other hand, it’s highly unlikely that a legitimate company would act in this manner.

4. The promise of a guaranteed win  

A guaranteed win 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. When it comes to boiler room scams, fraudsters will act as though you’ll win in every outcome, which simply isn’t possible with investment.

5. The promise of huge returns 

If the caller can’t clearly explain how this return will be generated, chances are it’s a boiler room scam. Promises of discounts or gifts are also a big tip-off that this is a fraud attempt.

6. The caller has a prestigious job title at a fancy-sounding company

Scammers will overcompensate to try and reassure individuals by claiming to have a professional sounding name, title, or company. Some will even pretend they’re calling from a legitimate company and try to cause confusion by using technical jargon without stopping to explain.

7. The caller is based abroad

As it’s illegal to sell shares via cold calling in the UK, boiler room scammers will try calling from a UK-listed phone number even though they may be based overseas. Unfortunately, this can be difficult to detect.

8. Being asked to pay upfront

Callers who ask for upfront payment may use the term ‘advanced fee’ or ‘deposit’ and claim the sale can’t go through without this money. A legitimate company will allow individuals to go away and do some research before investing any form of payment to secure shares. If the caller  pressses the matter, it’s usually a sign they are attempting a boiler room scam.

9. Being asked for bank details

A legitimate company will never ask for bank details over the phone and would always offer a secure method of payment. Scammers tend to ask directly for bank details on the phone – a huge indicator of a boiler scam.

10. Being provided ‘secret, insider knowledge’

If the caller really did have industry secrets, they wouldn’t be sharing them with a stranger on the phone. Callers who claim to have insider knowledge but can’t divulge how they are privy to it are likely to be attempting boiler room fraud.

What type of sentence could you get for boiler room scams?

An individual facing a court case against them for a boiler room scam is likely to get a prison sentence of at least five years. Depending on the severity of the crime, the sentencing may even be ten years or more. However, in most cases, the individual’s time is decreased and they are allowed to spend time back in the community but on license. During this period, the individual convicted wouldn’t be able to offend again, or they would return to court to be resentenced and potentially convicted to further time behind bars.

How does a court decide on sentencing of boiler room scams?

Each boiler room fraud case in the UK will be looked at individually by the judge. However, in every case, a judge takes into consideration whether the defendant shows genuine remorse for their actions, the seriousness of the crime and the amount of damage caused.

To come to a conclusion on a sentence for the defendant, the court will look at:

• Whether the defendant has any previous convictions
• The number of victims affected
• The amount of money involved
• Whether forgery or identity fraud was also involved to secure further funds

How can St Pauls Chambers help?

If your client is under investigation for a boiler room scam, please contact one of our fraud barristers. St Pauls fraud law barristers offer exceptional advice and are able to secure the best possible outcome for clients in all different manners of cases.