Boiler Room Scams – What they are and what to look out for |21 August 2011

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 are selling is worthless stock in often unquoted companies that are either overvalued, or 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. They tend to be based abroad (often in Spain, Switzerland or the US) where they’re beyond the jurisdiction of regulatory authorities. They can approach anyone, anywhere.
 
Boiler Room Techniques
A Boiler Room can look and sound legitimate. They may mention companies you have heard of, giving addresses, phone numbers and have a professional looking website. They are notoriously persistent and can hound a victim for months in the hope of a sale, catching out even seasoned investors. According to one foreign regulator, Boiler Room Scam victims lose on average £20,000.
 
What to do if you are called
If you are being targeted by a Boiler Room, simply ignore the call and inform the Financial Intelligence Unit (FIU) on telephone number 4282000 giving as much details as you can remember.  

Contributed by the Financial Intelligence Unit