I’ve just been talking to my friend Annie Shaw from Cashquestions.com and we were discussing yet another ‘Boiler Room’ scam that has hit the press recently.

‘Boiler Room’ scams are a nasty and expensive type of fraud that, in some cases, has cleaned people out of their life savings on the promise of big earnings on share investments. Even seasoned investors have been conned by this scam.

What happens is that some stranger calls you up and tells you about this amazing stock or fund or some such product which you just have to invest in. It’s going to go stratospheric any day now, according to your persuasive-sounding caller, so you’ve got to put money in asap or you’ll miss out on this incredible investment opportunity.

These people are often based thousands of miles away, somewhere where the rules are pretty lax but, as Annie said, they often have pukka-sounding names like ‘Barclays Investment Growth’ or ‘Lloyds Fund Management Research’ and will have a London phone number (which you can buy easily) and a City address (which is bogus). It can all look and sound totally plausible. In fact it’s a lying, scumbag fraud (and you can quote me on that!).

A good way of learning about how they work is to watch the film of the same name, ‘Boiler Room‘, which has Ben Affleck, his talented brother Giovanni Ribisi and Vin Diesel (who I really like…I know I shouldn’t but…well…) in it. It’s worth a look to find out how these people think and what harm they can do. It’s a good watch too, I think.

But in general, remember that if an investment sounds too good to be true, it probably is. Also, if they are phoning you to get you to invest in something, there’s bound to be a problem. If it were that good, wouldn’t you think they would keep it to themselves?