If you should receive an unexpected phone call from someone offering fantastic returns on an investment, be extremely sceptical. That’s advice from the Financial Services Authority, based on the proliferation of ‘boiler room’ scams that has been occurring in the UK over the past few years. These scams might involve development of land, overpriced, non-tradable or even non-existent shares and other dodgy offers that sound good and have little or no substance.
According to the FSA, this type of rip-off has been increasing, but though the number of scams rose in 2011, the actual loss to investors decreased, which leads the Authority to speculate that more people are getting wise to the danger. However, last month the FSA sent out a warning letter to over 76,000 people whose names were found on lists of potential targets for investment scams.
The largest of those lists contained around 55,00 names and was acquired during FSA’s investigation of the company in question. The Authority did not reveal the name of the culprit or if it is still in business, as the investigation is still going on. The regulators warned that when these bogus ‘investment opportunities’ are shut down (or just disappear), it’s unlikely that anyone will get their money back, much less any added returns.
The term ‘boiler room operation’ is derived from the fact that scammers use high-pressure sales pitches, usually over the phone and usually to ‘cold’ customers whose names are pulled from phone books. Head of unauthorised businesses for the FSA, Jonathan Phelan, said the scam operators are “. . .ruthless, calculating and will stop at nothing to steal your money.” Anyone who has gotten involved in one of these schemes or receives a suspect offer should contact the FSA immediately.