Fraudsters are very clever and ingenious people who are always finding new ways to trick people out of their hard earned money.
Whether it is a ‘Boiler Room’ (share sale) scam, stealing information posted on a social networking site or hacking into a Wi-Fi network, an awareness of the risks is your first defence in avoiding online threats.
This section provides information on some of the common scams that fraudsters employ and explains how to stay ahead of the bad guys.
Boiler room/Share sale fraud
What is it?
Share sale fraud - more commonly known as boiler room scams - are on the increase. Given the current economic climate, such scams could claim more victims than before, especially as they claim to offer you a better return on your money than simply depositing it in a savings account.
The majority of share sale fraud/boiler room victims are experienced investors, with 41% having been investing for over 11 years. According to The Financial Conduct Authority (FCA), an estimated £200 million is defrauded from UK victims each year.
Boiler room/share sale frauds use ‘hard sell’ tactics to persuade investors to buy shares which are of little or no value.
Not only will you find it difficult to get evidence or confirmation from the firm about what shares you hold, but it’ll be even more difficult to sell them when you want to.
If you deal with a share sale fraudster or boiler room you’ll almost certainly lose the money you’ve invested. You won’t have a right to complain or claim compensation in the UK, as despite what the caller tells you, boiler room scams tend to be based overseas and therefore will not be authorised by the FCA to do business in the UK.
REMEMBER: IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS!
What to look out for
Most commonly, you’ll be approached by ‘cold calling’, so if a stranger rings you out of the blue and tries to sell you shares in companies you've never heard of, you should take great care.
You could also be approached via email, post, or through online advertisements. For instance, you might be offered a free research report into a company in which you hold shares, or a free gift or discount on their dealing charges.
After the initial approach, you’ll receive a call from a well-trained, highly professional sounding salesperson. They can be persistent, often calling every day until they finally make a sale or you hang up. They often follow a script so will be able to answer any questions you ask or fend off your objections – they don’t take ‘no’ for an answer!
In order to appear authentic, callers will often claim to be from legitimate firms and have websites which look professional.
You may be told that you’ve already entered into a contract to buy the shares and are therefore under an obligation to pay. This is not true as under UK law such contracts are unenforceable.
As most boiler rooms are based overseas you will be asked to send your 'investment' by International Payment. Common destinations are Spain and United States, although Dubai is also becoming increasingly popular. To avoid raising suspicion with your bank, you could also be asked to send payment via Western Union or to an intermediary in the UK before the funds are moved offshore.
What to do if you are approached
The FCA has published a list on their website of firms known to be operating in this way. However, remember that this type of firm is likely to change its name frequently, so if you can’t find a particular name on these lists that still doesn’t mean it’s genuine.
Here are some tips on how you can protect yourself:
Before you hand over any money, always make sure that the firm you use is on the Financial Services Register and is allowed to give financial advice. If they aren’t regulated by the FCA and things go wrong, you won't have access to complaints and compensation procedures. To find out if a firm is registered visit the FCA website*.
- Some callers may use the names of firms or individuals from the Financial Services Register to make you think they are legitimate. Don’t just assume that because their name appears on the register they are who they say they are. If you are in any doubt, check the caller’s identity with the firm they claim to work for using the Financial Services Register. Remember – if the call is genuine a trustworthy firm won't mind you being careful.
- Do your own checks - try to check the current price in the financial press or with a broker. You could also do your own research before buying, such as looking on the company’s website if they have one, getting a copy of the annual report and/or reading the financial press.
What are the risks?
With the rise in popularity of social networking sites such as Facebook, YouTube and Twitter, there are increased avenues for fraudsters to operate. These sites work by building networks and communications between individuals. They encourage us to divulge greater amounts of personal information about ourselves than ever before, sharing information and photos online.
These sites can be a lot of fun but at the same time there are some risks associated with placing information about yourself online. This information we post is increasingly being used illegally to obtain products and services without our knowledge. The more information you give about yourself, the more vulnerable you become to fraud. Problems include cyber stalking, bullying, identity theft and extortion.
We urge you to be extremely cautious about the type of information that you make public. Think about who might see it and what could be used against you.
How to stay safe online
If you stick to some basic rules then socialising online can be a rewarding experience.
Never post your personal details such as telephone number, date of birth, address or employment details.
Learn about site security privacy features, and set them to a level you are comfortable with. Be careful who you allow to be your ‘friend’ or join your network.
What should I do if someone has my bank details?
If you think that a fraudster already has any of your banking details, or that someone other than you has accessed your account online, you should contact your bank immediately.
Sitting in coffee shops, in the park, even on the bus – now you can surf the internet wherever there is an accessible wireless network. With laptops and smart phones now having wireless capability built in the internet really is with us wherever we go.
Unfortunately that has opened the door to another type of online security hazard. Wireless networks use radio waves instead of wires to transmit data, which makes them more vulnerable to attack.
Stay safe on wireless
- Speak to your internet provider about what security options are available to you
- Protect your wireless access to stop criminals breaking into your computer
- Make sure you have firewalls in place
- Always choose strong passwords
- Never use online banking services on an unsecured wireless network
Keeping your wireless router secure
If you connect your home computer, games consoles or any other devices to the internet using a wireless router, we recommend the following:
- Read the security information contained in the manual for your wireless router as most routers come with security features switched off by default
- Use a firewall on all computers or devices that use your wireless router
- Change the default password required to access your router
If you are unsure of how to carry out these tasks then you should ask someone you trust with computer experience to help, or contact the manufacturer of your wireless router.
If you have an email address, you'll be used to receiving spam – unwanted junk email that is sent automatically to thousands of people. There are a number of ways you can end up on a spammer's mailing list, including:
- Signing up for a newsletter from a unscrupulous website, which sells on the email addresses of its subscribers
- Providing your email address on a newsgroup, message board or your personal web page
- Choosing an email address which is then guessed (automatically generated) by software used by the spammers
Some spam emails contain attempts to defraud you or damage your computer:
- They may infect your computer with a virus. This is a program that does something malicious, such as sending random files (or copies of itself) from your computer to everyone in your address book. More about viruses
- They may contain a Trojan. This is a malicious program that may appear to be innocent (or be invisible altogether), but does something you dont expect, like sending your confidential information to a remote computer. More about Trojans
- They may be phishing which means trying to trick you into handing over your personal details. More about phishing.
What you can do about spam
To cut down on the amount of spam you receive, you can ask your ISP (Internet Service Provider) about spam-filtering software. This will allow you to flag emails as spam, so that you do not receive as many in future. But some spam will always get through, so you'll still need to delete it.
If you are unsure about whether an email is genuine, assume it isn't and delete it. If you receive an attachment you weren't expecting, or from someone you don't know, don't attempt to open it. If the email looks like it's from Bank of Scotland, report it to us (see phishing).
To get more information about online security issues, try the following link*:
- Bank Safe Online An advice website set up by the UK Payments Administration, to keep banking customers up to date on online security issues.
*Links to external sites are provided as part of our commitment to making online banking safe and secure. However, we cannot accept responsibility or liability for the content or availability of external sites. We cannot guarantee that any software downloaded from these sites will work, or be free from viruses or malicious code.