An upsurge in boiler room victims coming forward has prompted The City of London police to issue a warning that these scams now represent the biggest fraud threat to UK households.

500 boiler rooms are believed to operating from Spain alone, with many specifically targeting the UK. The boiler room scam is  for high pressure salesmen to telephone unsuspecting investors at home and persuade them to buy shares which are of little value or don’t existat all.

While it is easy to dismiss people who fall for this ruse as naive and gullible, the tactics used to con victims are sophisticated and relentless. We have even had a boiler room salesman from Florida hassling an employee in the Defaqto office.

These salesmen get hold of investors’ names and phone numbers by buying shareholder lists and once in their grip, they can soon start to appear to be convincing. They direct investors to what look like the websites of genuine companies and send them glossy brochures promoting the shares they are selling.
A boiler room insider told the BBC Radio 4 “You and Yours” programme that the industry is worth billions of pounds. He said that salesmen were trained to build up a relationship with the investor through frequent, smooth-talking phone calls, by whetting their appetite for making a quick buck, and then just “ripping them apart.”

The FSA estimates that total annual losses due to these scams stand at £200m, but the City of London police think the true figure is far higher.The regulator added that it is a criminal offence to sell shares to UK investors without being authorised and that it is likely to be a fraud to misrepresent the value of shares.
 

Steve Wilmot of the City of London police said: “There may be thousands of people out there who don’t even know they have been conned. They may have bought shares and filed away the certificates without knowing that they are worthless.

“The more publicity there is on these scams, the more people come forward saying they think they may have been defrauded. It is one of the biggest threats to members of the public. We have seen victims losing anyting from £2,000 to £1.5m”

So if you receive one of these calls, just put the phone down.