What is a boiler room scam and how to protect yourself from getting ripped off?
To illustrate it, here is a true story about a businessman (let’s name him Kevin) who got scammed big time by the boiler room fraudsters.
Please read the story because it gives you a pretty clear picture of how heartless con-men use boiler room scams to harass and rip off innocent people.
[Sidebar: If you are not interested in scams, check out THIS instead! You’re gonna like this.]
Here’s how it happened:
Kevin had his own company, a few expensive sports cars, and, in fact, did financially extremely well. He was a bright man, followed business news, and thus did not classify as one of those ignorant (and therefore highly vulnerable) dream-chasers.
One day Kevin got a cold call from a smooth-talking ‘broker’ who persuaded him to invest in currency options. The broker said that from these options it was possible to make two or three times the initial investment.
To prove his case, he asked Kevin to take a piece of paper and do the calculations. And guess what? It worked indeed and added up. Awesome!
Next, the conman asked if Kevin was ready to invest £10,000.
Kevin took time to think about it and even asked his friend (who, by the way, smelled the rat and suggested him to stay away). However, about a week later the broker called him back and said that the Euro had fallen (as he had told him before), and if Kevin had listened him, he would already made £18,000 clear profit.
Kevin checked the numbers and was convinced – everything worked as a clockwork. So he decided to place the deal. A few days later the broker called again, telling that on the ‘trading floor’ things were getting wild and that there was a great opportunity for a set of options with a very competitive price. This, however, required from Kevin an additional investment of about £250,000.
Obviously, Kevin refused. Then, as you might suspect, the price dropped quickly, and five minutes later Kevin agreed to invest additional £150,000.
A couple of days later, according to Kevin’s calculations, he was up by roughly £30,000. And then, a few days later the reality hit him like a sledgehammer to the head – He found a fatal mistake in his paperwork. Obviously, the ‘broker’ knew about the mistake but did not tell him.
Long story short…
…No happy ending for Kevin, the poor misguided soul. He lost all his investments.
There are countless heart-breaking stories like the one above. In fact, you don’t need to have hundreds of thousands of dollars to begin with. Also, it does not even matter how much you lose. When you are conned out a significant amount of money, it can have (and often has) devastating effects on both of you and your family as well.
When you read these stories, it’s just heart-wrenching. They will make you cry. Seriously!
Much Safer Way to Make Legitimate Money Online
Whatever the reason might be why you want to make money online…
…Be it your financial freedom.. or more quality time with your kids and spouse.. or security in old age.. desire to travel the world.. more time for your hobbies or sports.. Or just to help you pay your bills, bless your grandchildren (if you have them), etc.
You know the “why.” I can only confirm and encourage you…
…YES! It is absolutely possible to make side money (or even a second income) online. AND it is possible to do it WITHOUT getting involved with ugly scams that drag you into a major disaster.
Here is, in my humble opinion, by far the most complete and newbie friendly program for creating a thriving internet business from home.
What Is a Boiler Room?
A boiler room scam (sometimes called a ‘Share scam’) is a type of fraud in which fraudsters cold call potential victims and persuade them to invest their money into something that they insist promise very high returns.
The term itself (boiler room) comes from the fact that these scams involve high-pressure selling and increasingly sophisticated rip-off tactics. Thus, it is analogous to the conditions in the boiler and its surrounding room.
There are many effective techniques that work extremely well (more about that later). As you might expect, scammers fill their coffers while unaware victims pay through their nose.
Try this out for size:
The North American Securities Administrators Association estimates that investors lose $10 billion a year (it’s about $1 million per hour) to investment fraud promoted over the telephone alone.
How Does a Boiler Room Work?
As I wrote, the boiler room frauds involve high-pressure selling. They use sales offices where sales people have to follow carefully prepared scripts.
For that, they obviously need your phone number (or any other way to contact you). There are different ways to achieve that. They can do it by asking it by email (I often get emails like the one below, always from different addresses though):
Or they ask it in their sign up forms:
Please remember, the initial investment is only a bite and therefore relatively small. It is meant to hook people and draw them in.
After that the fraudulent salesmen follow up on these unaware victims and convince them to invest much bigger sums of money (or buy way more expensive products).
The ugly part here is that when they contact you, they already know your financial situation and how much you are able to fork out (there are different ways how they get that information). As a result, they can make you an offer that you will find realistic and attainable.
Obviously, this fact alone makes you much more vulnerable to their abuse.
And remember, there is always some kind of ‘urgency factor‘ involved in the scheme – to get you act at once.
After you have swallowed it hook, line, and sinker (transferred your initial investment to their account), they can play you like a salmon on a fishing line:
Wait a few days and the charming fraudster will show you what a juicy profit your investment has already made. To really bring it home, they may even send a dividend payment of few hundred dollars to your bank account
…Hey! You just have made easy money! The system works indeed and you have discovered a secret treasure trove.
They may even contact you to congratulate and check whether you had received the payment. After that there is a second wave coming – a way juicier offer. This time, though, the required minimum investment is 10 to 20 times higher.
Again, the price is realistic but it obviously hurts (that’s how they have designed it for you). However, because the first deal went so well, your tank of self-control goes from full to empty and you fall prey to temptation.
The result? You will lose everything. In fact, it’s not rare when people lose all their savings or even their family home.
Even worse. The harassment does not stop here.
After you have been ripped off and victimized, the fraudsters sell your details to other scammers who take their turn in carpet bombing you with new ‘lucrative’ offers. The follow-up scam may be related to the previous fraud – they may offer to help you get your money back or buy back the shares after you pay an administration fee. Or it may be completely separate.
It’s beyond words…
I’ve Seen A Lot Of Work-from-Home Opportunities And NOTHING Comes Close To This One.
As Soon As You Look Closer, You’ll See Why.
What do These Boiler Room Scams Promote?
Everything that promises getting rich quickly. Here are some of the most common examples (or niches):
- shares (that’s why boiler room scams are also called share scams.)
- binary options (for example, check this, this, and this)
- real estate
What these scam artists usually do is that they sell you worthless, overpriced or even non-existent products (be it shares, diamond, coaching, whatever)
Criminals use every single trick in their tool bag – virtual offices, operating from overseas locations and using offshore bank accounts, fake receptionists, fake testimonials, misleading claims of high returns, false sense of urgency, threatening, etc., etc., etc.
Apparently, the money invested into these useless companies (old shelf companies with no complaint history), fake diamonds, or overpriced information products will never likely to make any profit for their investors.
Boiler Room Sales Techniques
Let me list you some of the main sales techniques used by boiler room fraudsters.
As you have seen above, these schemes work always like that – the initial bite is small and usually delivers. That is designed so – to make your greed glands salivate.
2. High-Pressure Sales Tactics
Expect extremely high-pressure sales pitches – all designed to initiate and close the sale and get you into investing huge sums of money in worthless products.
Here’s an example of how scammers use threatening to make them pay:
As you can suspect, these are mostly empty threats. The big trouble for you, though, is that you don’t know that you are dealing with criminals. That’s why people take these threats seriously. And pay until it hurts.
Cloning is a sophisticated twist on the scam where the scammers ‘clone’ famous and respected companies.
How do they do it?
Simple. They use almost identical brand names, logos, mock-websites, email addresses, phone numbers, and even business cards. Thus, when they contact you, they claim to be from fully regulated and licenced financial institution.
And if you are not careful enough, you will obviously fall into their trap.
For example, Skipton Asset Management pretends to be a member of the Skipton Building Society Group (one of the largest building societies in the UK.)
Not only that. Scammers even clone offcial regulators for financial services firms and financial markets – such as as FCA in the UK.
How do they do it?
The same way as they clone private companies. They use fake phone numbers that are similar to the official ones. When speaking with their victims, they adopt the similar or the same names as the genuine consultants. They use impressive job titles, technical jargon, etc.
Then, after ripping off their victims, they call them as official regulators. They provide fake consultation and encourage the victims to accept the defeat – nothing can’t be done anymore, the money is lost and better if they keep their embarrassing ‘investment’ secret.
You see! A clever way to prevent official complaints and lawsuits, right?
How to Spot Boiler Room Frauds
Remember this: If the offer sounds too good to be true, it probably is!
Here is a short list of warning signs on how to recognize boiler room scams:
- It is a cold call.
- The company has an overseas location
- It has an impressive name and convincing website
- It promises very high returns
- ‘You cannot lose’ guarantees (see here)
- You must act at once
- You must pay upfront
- You must give them your phone number, bank details, and/or your credit card data.
- You must keep details confidential
If You Have Been Scammed
If you think you have been a victim of a Boiler Room scam (in fact, any scam), or you believe that you have information about a suspected fraud, it is highly recommended to report.
There are different ways you can report a scam (I list some of the options):
- Action Fraud (you can also call 0300 123 2040)
- National Fraud Authority (NFA)
- Financial Services Authority (helpline 0300 500 500)
- Companies House
- Get Safe Online
How to Protect Yourself From Boiler Room Scams
Here is a list of some cautionary steps to take:
- Beware of offers that appear “too good to be true.”
- If you want to invest money, it is way better to research, find, and contact a reputable company than respond to cold calls.
- Ask the salesperson as many questions as you can. Also, ask for written materials.
- Check the background and details of the one who makes the offer.
- Never give out your sensitive personal information (bank and credit card details) out over the phone or by email
- Take your time to make a decision. Remember, false sense of urgency is almost always coded into the script.
- Keep any paperwork you are sent (emails, etc.)
- Be aware of bank accounts that are based overseas. Also, be aware of bank accounts that have different names to the companies that are presented.
This is not investing in shares or stocks but it will teach you how you can make a living on the Internet through a truly legit and in-depth system.
It won’t cost you a bean to find out if it can help you
What About You
Thank you for taking your time and reading through the review. I hope you found it useful and got the information that you were looking for.
Do you have any first-hand experience with boiler room scams that you want to share?
Please drop a comment into the comment section below and I will return with a response.