Your money-making expert. Financial journalist, TV and radio personality.
I’ve said it before and I’ll say it again – watch the movie ‘Boiler Room’. It’s a good view and it will give you an idea of how these nasty, fraudulent operations work.
“Boiler Room” scams involve bogus stockbrokers, usually based overseas, cold calling people to pressure them into buying shares that promise high returns. In reality, the shares are either worthless or non-existent.
If you saw the documentary on ITV last week about the boiler room scammers that were finally prosecuted, you will know how nasty they are and how much money they take from so many people. There were people who lost their life savings over this.
These operations are becoming increasingly more sophisticated. New lines in sales patter flatter investors and make you think you know what you’re doing when you agree with them.
The shares mentioned in these high-pressure sales calls, if they exist at all, will be listed on small and difficult markets and they are also ramped up through social media and online message boards.
Unfortunately in about 20% of reported cases, people have sent money and people rarely get it back.
Here are five tips to avoid boiler room scams: