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Frequently Asked Questions

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FAQs about Boiler Rooms

What is a boiler room scam?

Boiler room scams are a type of financial crime, so called because they were originally conducted in high-pressure environments. Fraudsters contact potential victims, offering them worthless, overpriced or even non-existent shares, which promise high returns but almost always end up costing the victims large amounts of money, sometimes even their life savings. As much as £200m is lost in the UK each year to these types of fraud. 

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How do the scams work?

In a number of ways. For example, scammers offer to sell shares ~ often these are for worthless, overpriced or non-existent shares. Victims are persuaded by high-pressure tactics to invest more and more, sometimes convinced by initial returns and bonuses, only to find that, one day, their “broker” has disappeared and their investment is lost. Another way the scammers operate is to offer to buy shares at a premium to the current price. Victims are asked to pay a handling or release fee up front, to secure the trade, only to find that their money is gone. The scammers may also offer land as an investment ~ sometimes with the promise of future revenues from house building, agriculture or mining. Invariably, the land does not have the permissions (planning approval, mining licences etc.) for the required activity and the investment is worthless. Other ways include the sale of “carbon capture” schemes as an investment with promised future prices unlikely to materialise and the scammers disappearing with investors’ money. Similarly, commodities, such as graphene or gemstones, are sold at inflated prices to uninformed investors.

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Who are the victims?

Almost anyone can be a victim. The elderly are often targeted due to their potential vulnerability, however, sophisticated investors are also often taken in. Those of a pensionable age are increasingly targeted ~ new pension freedoms are allowing more people to become investors, chasing better returns than those offered by banks.

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How do scammers identify and contact potential victims?

Victims can be identified in a number of ways. A common method is through publicly available records of shareholders ~ many shareholders do not realise that their contact details and shareholdings are available in this way. Previous victims who have already bought or sold shares through a boiler room are more likely to be targeted again or have their details sold to other criminals. The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get their money back or buy back the shares after an administration fee has been paid. Online harvesting, or “phishing” scams acquire sensitive information such as usernames, passwords, and credit card details which can be used to persuade victim of the bona fides of a scammer. These can be stolen via online forms, malware etc. Personal details can also be acquired through personal contact: for example, “vishing”, or “voice phishing”, where victims are persuaded to share sensitive information via telephone conversations. Details can also be acquired at face-to-face meetings, seminars, through “market research” or questionnaires.

Traditionally, scammers have used the telephone to contact their victims, and while this remains the most common method, scams can also be conducted by, or combined with, e-mail contact, websites, seminars and events or face-to-face meetings. In many cases, victims make the initial contact, responding to adverts placed in newspapers, magazines or the web.

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Where are the scammers based?

Until relatively recently scammers were most likely to be based outside the UK, in unregulated territories where they were safe from UK and EU authorities. Recently, however, there has been an increase in UK-based operations, specifically located within the City of London and the Square Mile to increase the credibility of the criminal organisations.

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How can I avoid being targeted by a boiler room?

Scammers often access a target’s details through a share register. This is a public document containing the details of those holding shares in certificated form. The easiest way to avoid operators getting your details, therefore, is to hold your shares in a Nominee company, keeping your name and address off the register. The FCA advise investors to only deal with financial services firms that are authorised by them, and to check the Register to ensure they are. The FCA also maintains a second register of those firms which it knows have run Boiler Room operations and which it would advise against doing any business with. If you are contacted, get the name of the firm calling you and see if it appears on this list. Authorised firms are unlikely to contact investors out of the blue with an offer to buy or sell shares. The other simple check is to look at the list of authorised firms and ring one of them to check on the company that has been recommended to you (if it has been named, rather than simply being called ‘a fantastic opportunity’). If a genuine UK broker cannot find it listed, or sees other suspicious details, then be warned.

If you suspect you have been contacted by a bogus firm, you should make a note of each email and call, and keep any paperwork you are sent. Then you need to report your suspicions to the FCA, the police and to Action Fraud, who can investigate.

Further details on financial scams can be found on the FCA website at

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