What is a boiler room scam? How to recognise investment fraud calls - and what to do if you’ve fallen victim

There are many different types of fraud, but one of the most common is known as a boiler room scam.

But, what is it, how can you spot it, and what should you do if you think you’ve been the victim of one?

This is everything you need to know about boiler room fraud.

What is a boiler room scam?

A boiler room scam is where a fake stockbroker cold calls people and forces them into investing in products or shares which are worthless or do not exist.

Once the criminals have received payment, they then stop calling the victim, and the victim finds they can not contact the scammers.

The majority of these types of investment frauds are run out of offices known as boiler rooms, according to Action Fraud, the UK’s national reporting centre for fraud and cyber crime.

How do I know if the call is from a fraudster?

According to the UK consumer rights organisation Which?, there are a number of questions that you should ask as these may highlight things that indicate a phone call could be a scam.

• Is the call out-of-the blue? 

If a call is unexpected then that alone could be suspicious, especially if the person on the other end on the phone is asking for personal information.

• Have you been asked to share your personal details?

If you’ve been asked to share any personal information, including your financial details, then this could be a worry.

It’s very unusual for legitimate companies to ask you to disclose your personal information, especially if you aren’t expecting a phone call.

You should also be concerned if you are asked multiple times to give such details, particularly if you begin to feel under pressure. You never feel pressured into revealing your personal information.

• Are the contact details for the company vague?

A legitimate company will always make sure you have all of their contact information, so you can get in touch with them just as easily as they can get in touch with you.

If the person you are speaking to does not give you contact details for the company they claim to be representing, and also appears hesitant to give you their name, then be wary.

Look out for people who only give you one method of contact too; a legitimate company will have at least one phone number, e-mail address or social media platform.

Some scammers also give out premium rate numbers (starting ‘09’) as when their victims call this number they lose even more money.

• Is the offer too good to be true?

Put simply, if the deal you’ve been offered seems too good to be true then it most likely is - especially if you weren’t expecting the phone call.

Scams will often promise high returns for very little financial commitment, but this just isn’t very likely.

• Do you feel pressured?

Scammers will often pressurise people to buy the product they claim to be trying to sell. They may say things like ‘if you don’t buy now you’ll miss out’ or ‘this deal is too good to miss’.

Don’t be taken in by comments like this, a legitimate sales person will be happy to allow you time to consider your purchase - and will provide you with contact details so you can get in touch with them when you are ready.

Anyone who tries to rush you may not be trustworthy.

You should also be wary if the caller insists on calling you back at a later time and won’t provide you with a way of calling them back instead.

If you’re unsure about anything the person is saying to you, or they’re making you feel uneasy, then you should hang up the phone.

You should also use the Financial Conduct Authority’s (FCA) register to check if the company the caller claims to be from is regulated.

If it’s not, then this is a strong indication that the company may not be real.

If you deal with a firm, or individual, that isn’t regulated, you may not be covered by the Financial Ombudsman Service (FOS) if you lose money you have invested.

What should you do if you’ve fallen victim to a boiler room scam?

If you have given out any of your personal information, or have already made a payment, contact your bank immediately.

You should do this using the contact details for your bank as listed on the FCA register, so you can be sure you are actually speaking to someone at your bank.

Your bank will then be able to guide you through what to do next.

You can also contact the Financial Conduct Authority’s consumer helpline on 0800 111 6768 or report suspicious businesses or individuals online.

Be aware that if you have fallen victim to a boiler scam the fraudsters may make a follow-up phone call, claiming to be able to get your money back.

This is a second scam, known as a recovery scam, and could result in your losing even more money.

You should hang up immediately on any callers that claim to be able to get your money back for you. Do not engage with them in any way.

Can I get my money back if I’ve lost it to a boiler room scam?

You might be able to get your money back if you have fallen victim to boiler room fraud, but this will depend on the individual circumstances of the scam, and the policy adopted by your bank.

It can be harder to get money back that you have paid over to a scammer because you have authorised the payment.

Check the Citizen’s Advice website, or speak to your bank directly, for more information.

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