Boiler room and share scams

Learn to protect yourself with our guide on what to look out for and what action you can take.

You may also wish to visit our list of other useful websites for more information on share and boiler room fraud.

How can I spot a boiler room or share scam?

Make sure you know how these scams typically work.

Remember: if it sounds too good to be true then it probably is!

Ask yourself the following questions if contacted by a salesperson:

  • Is this contact unsolicited?
  • Is this an unusual way to do business?
  • Am I being pressured to respond quickly?
  • Am I being promised a very high or unrealistic return on the investment?
  • Is the company I am being asked to invest in unknown to me?
  • Does the salesperson struggle to properly explain how the investment gives me such high returns?

If the answer to any of the above is yes, then you should be suspicious. Cut off contact immediately as it is likely to be a scam; legitimate firms are unlikely to contact you out of the blue with an offer to buy shares or with other investment opportunities.

If you’re still unsure about the validity of an offer, investigate before taking things further:

  • Check that the firm the salesperson claims to represent is authorised to sell to you in the UK, using the Financial Conduct Authority (FCA) Register. Call the firm back to verify the details of the initial caller and the offer made, but ensure that you call them on the main switchboard number provided on the FCA Register, or that is publicly advertised by the firm.
  • Before buying any shares, check the current trading price to ensure they are not being offered at inflated prices.

Remember: legitimate firms won’t mind if you want to do your own checks first. If they refuse to allow you time to do this, or are reluctant to provide contact details, then cut off all contact immediately as it is almost certainly a scam.

For more comprehensive advice, read the FCA’s tips on how to protect yourself from boiler room fraud.

How do boiler room scams work?

The so-called ‘boiler rooms’ are usually based in overseas locations, although scammers may claim to be located in the UK.

Such scams target experienced and novice investors alike, typically cold-calling the victim claiming to be a salesperson and offering shares in a company. Contact may also be made using email, post, or in person but once established present similar features:

  • Aggressive sales tactics are often used
  • Very high returns are promised
  • Victims are pressured for a quick decision at the risk of “missing out”
  • The company the victim is to buy shares in is generally unknown to them (usually because the company does not exist).
  • The victim is often asked to transfer money for the shares to an overseas bank account, although UK bank accounts are now used in such scams

The scammers will profit either by taking your money without providing the shares, sometimes issuing you with seemingly valid share certificates, or by selling you genuine shares at highly inflated prices.

Be aware that the people behind the scams will also share or sell on their contact lists to other fraudsters. This can lead to you becoming a target of other related investment scams.

What should I do if I think I’ve been scammed?

If you think that you have become a victim of a boiler room or share scam, stop making payments to the individuals involved and tell your bank immediately if you have handed over your bank account details.

You should report the incident to:

The Financial Services Authority (FSA)

Via its consumer helpline on 0845 606 1234 or using its online share fraud and boiler room reporting form.

The police

Either through your local police station or to the UK’s national fraud reporting centre Action Fraud on 0300 123 2040.

If you have any concerns regarding your investment with M&G, contact us.

What is a boiler room scam?

This is a fraudulent operation in which worthless or non-existent stocks and shares are sold to unsuspecting investors. These are often operated from illicit offices known as ‘boiler rooms’ where fraudsters call investors out of the blue to make such offers.

Although high returns are promised, the sole purpose of the operation is to defraud would-be investors who will end up losing their money.

Other related investment scams

Be aware that it is likely that your details will have been shared or sold on to other fraudsters. This can lead to you becoming a target of other types of fraud and you should remain alert.

Recovery room fraud

Fraudsters are now targeting victims of boiler room and share scams pretending to offer assistance. For an upfront fee they will offer to recover the money you have already lost.

The fraudsters will take the upfront payment but you will never receive any recovered funds. They may also ask for your bank account details in order to pay the funds to you; this will actually be so that they can attempt to empty your account.

Recovery rooms may claim to be working on behalf of a government organisation, the FSA, or police in an attempt to add legitimacy to their claim. However, law enforcement and government agencies will not contact you in this way or charge a fee to recover your funds. If the police were to be involved in recovering your funds, this would be done through a criminal investigation.

See the FSA’s advice on Recovery room fraud for more information.

Advance fee fraud

You may receive a fraudulent request from someone offering to buy shares that you already own, requesting an upfront fee. See our tips on identifying and preventing this and other fraudulent scams.