A share scam, also known as a ‘a boiler room scam’, is when a fraudster pretending to be a stockbroker tries to sell you shares that are either worthless or non-existent. They are generally set up in some off-shore location, beyond the reach of the police, and ran by fast talking ‘dude’s whose job is to call the unwary, spin an exciting-sounding investment opportunity, then persuade them to part with their money. After that the victim hears nothing… only the silent wistful sound of their empty bank account.
Many of these scams are run by organised crime groups whose sole intent is to fleece as many people out of as much money as is possible. How did the scammers get the victims telephone number you may well ask? It could be hacked and put up for sale on hacker forums, it could be one number among thousands sold in a bulk sale, it could be from a telemarketing list that can be bought legally, or it may have been acquired from some other online source.
While this article deals with cold call share scams it’s important to be aware that online ads, in which fraudsters masquerade as existing companies and even use real-life employee names, also employ very similar tactics as those listed below.
Here are the top scam signs:
How to deal with these scams – feel free to be rude
- You receive a cold call. If you haven’t done business with the company before be extremely wary. Why are they calling you and where did they get your number from. They could also contact you via email.
- Callers will try to impress you with technical jargon and professional sounding job titles.
- It is illegal for a UK-based company to cold-call someone and try to sell them shares so companies are usually based abroad. Many however will have a UK listed telephone number to look as though they are based in the UK.
- You are promised high returns. But the salesperson doesn’t explain how these returns are gained or why they can make such an offer. If you ask them, they will probably say they have ‘inside knowledge’. But they won’t tell you what it is or how they got it.
- You’re told you can’t lose. A legitimate company would never make this type of promise and most will point out the risks before you invest.
- Fraudsters use high-pressure sale tactics to make you agree on the spot. If you feel under pressure to make a quick decision it’s a huge red flag.
- If it is a scam the fraudster certainly won’t want you to broadcast it to all and sundry and will ask you to keep it confidential.
- Be wary if you’re asked for an ‘advanced fee’ as a form of ‘security’. Until you are sure the deal is legitimate there’s no need to hand over money.
- If someone asks for your bank details don’t hand them over, ever. A legitimate company would never ask for your bank details, or any personal details, over the phone.
Boiler room scammers simply respond to anything you say with another question pressuring you to respond. Many victims are either persuaded to part with their money by plausible sounding arguments, or else they simply give in as a way of ending the phone call.
But remember never ever agree to part with your money on the basis of a telephone conversation. Just put the phone down. If you are being drawn into a conversation you feel like you can’t escape you can simply be blunt and rude.
Or why not try something like; “My mother taught me to never speak to strangers,” and then put the phone down. If you’re feeling mischievous why not ask the caller to hold on while you get your bank details, place the phone next to a speaker, put some music on and then hit maximum volume. They won’t be holding when you pick up the phone.