The connection between this post and the main theme of my blog is a bit tenuous. But I wanted to post this because I was talking with a friend last night who'd recently experienced this type of scam which arrived in the form of an unsolicited phone call. So I thought I'd just post this to inform and, perhaps, serve as a reminder to us all to be vigilant. As the saying goes, forewarned is forearmed.
What is a Boiler Room?
Boiler Rooms are businesses that use high-pressure sales techniques to sell "sure thing" investments with the promise of massive returns. In fact, what they're selling is worthless stock in often unquoted companies that are either overvalued, or that simply don't exist at all.
How they work
Boiler Room operatives generally cold-call their targets, using phone numbers from publicly-available shareholder lists. Because it's against the law for brokers to cold-call in the UK, they tend to be based abroad (often Spain, Switzerland, or the US) where they're beyond the jurisdiction of the Financial Services Authority (FSA). They can approach anyone, anywhere.
Boiler Room techniques
A Boiler Room can look and sound legitimate. They may mention companies you've heard of, give themselves a UK address or phone number, and possibly even have a professional-looking website. They're notoriously persistent, and can hound a victim for months in the hope of a sale, catching out even seasoned investors. According to the FSA, Boiler Room Scam victims lose on average £20,000. The bottom line is that if an opportunity sounds too good to be true, then it almost certainly is.
The advice is simple. If you think you're being targeted by a Boiler Room, the FSA's advice is not to worry about being polite - just hang up. You should then call the FSA contact centre on 0845 606 1234 with as much detail as you can remember. You'll find more information about Boiler Rooms on the FSA website www.fsa.gov.uk
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