Boiler room fraud
Boiler room fraud
Boiler room fraud is the same as share sale fraud. It is also known as hedge fund fraud or bond fraud. This type of fraud involves fraudsters cold calling members of the public to try to get them to buy shares which are either worthless or do not exist.
room fraudsters pose as stockbrokers and contact members of the public,
using hard-sell techniques to offer investment opportunities in the
form of shares.
During your dealings with the fraudsters they may refer you to a fake website or present fraudulent share certificates and other false documents, all in order to make the investments seem valid. They may also claim to offer ‘secret’ stock tips, special discounts or free research reports.
Be wary, boiler room fraudsters try to pressure people into purchasing shares by rushing them into quick, spur-of-the-moment decisions. Fraudsters also try to make their business seem legitimate by using technical jargon and introducing themselves with impressive job titles to imply they have authority.
Once they’ve taken your money, boiler room fraudsters quickly disappear so that they can’t be contacted. Because many boiler room fraudsters operate from overseas, they are not covered by UK jurisdiction or compensation schemes. Therefore, it’s unlikely that you’ll be compensated for any financial losses.
The warning signs:
- You’ve bought shares from someone over the phone who you don’t know.
- You’ve given them your bank account details.
- They’ve taken the payment but now you can’t get in touch with them.
What to do next:
- Stop all communication with the fraudsters immediately.
- Report that you have been a victim of fraud to Action Fraud.
- If you’ve given the fraudsters your bank account details contact your bank and inform them straight away.
- Keep safe any written or e-mail correspondence you’ve received from the fraudsters. This is likely to help you give evidence to the authorities.
- Be wary as other fraudsters are likely to target you now, as fraudsters often share details about people they have successfully targeted or approached, using alternative identities to commit further acts of fraud.
- People who’ve already fallen victim to fraudsters are particularly vulnerable to fraud recovery fraud. This is when fraudsters contact fraud victims and claim to be law enforcement officers or lawyers. They tell the victim that they can help them recover the money obtained by the fraudsters – but request a fee.
How to prevent being a victim of boiler room fraud:
- Be realistic - if you are looking to make an investment it’s likely that high returns are only going to come with high risk shares.
- If you’re suspicious about how genuine a shares scheme is, you should check the company’s status and contact details.
- Stockbrokers in the UK are regulated by the Financial Services Authority (FSA).
You can check the authenticity of a stockbroker by visiting the FSA’s website:
- Register of authorised firms
- List of unauthorised firms and individuals
- List of unauthorised overseas firms
If you have information about fraudsters you can pass it on to Crimestoppers anonymously by calling 0800 555 111 or by filling out our secure online Giving Information Form.
Alternatively, you can call the FSA’s consumer helpline on 0300 500 5000.