Boiler Room/Recovery Room scam awareness

What are these scams?

In recent months, there has been much publicity generated concerning share dealing fraud. Boiler Room scams are a high profile type of share dealing fraud and are normally carried out by unlicensed stock brokers who offer shares at a seemingly fantastic rate, usually with some hard-sell sales tactics. Once these shares have been taken up, they never actually materialise and the fraudster can disappear with thousands of pounds.

Recovery Room firms target shareholders of companies which have seen a massive fall in value or have gone into liquidation. They often offer to help their victims to recover the money or shares lost, but for a highly inflated fee.

What do these scams involve?

The scams normally involve sales people calling from a professional sounding company offering ways of protecting a victims shares. They may also offer shares in a company which is just about to float on the stock exchange. Boiler Room fraudsters are usually based overseas and obtain their victims personal details from share registers which are easily accessible.

Recovery Room firms tend to target those who hold shares in a company which has recently ceased trading. The caller will then offer to buy these shares at a fantastic rate, in return for the victim paying a fee. As soon as the fee has been paid, the fraudsters simply disappear with the money and without purchasing the shares. Overall, the advice that the FSA has given is that if an offer seems too good to be true, it usually is.

What should you do if you are contacted?

If you receive one of these phone calls, the FSA recommend you just hang up the phone. The sales techniques are often very high pressured with the caller being aggressive and forceful in trying to get what they want. Just remember, never give out any personal details over the phone without checking who they are! To find out whether the company you are speaking to is genuine, visit http://www.moneymadeclear.fsa.gov.uk/home.html for information.

How does Bank of Scotland Share Dealing protect its customers from these scams?

The most effective way of protecting yourself is by signing up for a share dealing account with a broker who is authorised and regulated by the FSA, such as Bank of Scotland Share Dealing. When holding stock in our nominee, your personal details are not publicly available as those on a general register of shareholders are.

It's also worth checking the value of the shares by using a trusted and verified source. Bank of Scotland Share Dealing has a free to use Research Centre which provides stock market news and information as well as share price and performance statistics.