My father has just been sent a letter from Financial Services Authority. This letter has the following ominous headline: "This is a Warning - You may be Targeted by Fraudsters".
Apparently my father's name is on a list currently used by share fraudsters, commonly known as boiler rooms'.
"These fraudsters," it goes on, "may contact you by telephone with offers to buy worthless shares."
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Given that my father died ten years ago, they are not likely to get very far in his case. But that doesn't change the fact that these boiler rooms have been a persistent blight for many years - and I hate them with a passion...
The despicable work of boiler room fraudsters
I hate them because they strip honest, trusting folk of their hard-earned savings. I hate them because they are run by greedy, heartless, ruthless shysters. And I hate them because they give a bad name to the very worthy and sensible practice of investing in small companies.
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Boiler rooms are generally set up in some off-shore location, beyond the reach of the boys in blue. They are populated by sharp young men whose job is to ring up the unwary, spin some exciting-sounding investment opportunity, then persuade them to part with their money. After that they hear nothing...
Well, it so happens that last Thursday I was confronted with this very scourge. I had a call from a girl called Melanie claiming to be from a wine merchant in Mayfair. It went something like this:
Melanie: "Hello Mr Bulford, I am Melanie and I am offering you the chance to make tax-free gains by investing in vintage wines..."
Me: "I am not interested."
Melanie: "But you have not even listened to what I have to say."
Me: "Go away."
Melanie: "Is that because you have never thought of investing in wine?"
Me: Words to the effect of "get lost".
Melanie: "But..."
Sound of phone slamming.
The following day Melanie, nothing if not thick-skinned, called again. This time I was even more abrupt. And then I decided to look at that letter sent to my Dad.
"If you think you have been contacted by a boiler room, call 0845 602 2185 and quote Operation Domingo'", it read.
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And so I did, and found myself speaking to a very nice lady from the Financial Services Authority. She listened carefully to what I told her and gave me some helpful advice.
She did not sound surprised when I explained it involved a supposed wine vintner. The boiler rooms, she explained, are increasingly turning to vintage wine scams, so it sounds very much like I was an intended victim.
She told me that the best thing to do in a situation like this is to put the phone down straight away. This is important but not easy to do, because these sales sharks have a very cunning tactic: They never take no for an answer.
The best way to deal with share scam chicanery
These people simply respond to anything you say with another question. And since the natural response of most of us is to answer any question that is put to us, we find that we are drawn into a long conversation. In the end many victims are either persuaded to part with their money by the plausible sounding arguments, or else they simply give in as a way of ending the phone call.
I told this nice woman from the FSA that I had indeed put the phone down smartly, but not before giving Melanie a piece of my mind. This, she assured me, was a good thing to have done. "The ruder you are," she explained, "the less likely you are to be bothered."
She then asked me if I had heard of the Telephone Preference Service. This free service allows you to opt out of receiving unsolicited sales or marketing calls. It is easy to register your phone number. You can find all the details on www.tpsonline.org.uk.
But the main thing to remember is this. Never ever agree to part with your money on the basis of a telephone conversation. Just put the phone down straight away. Or, if you find you are being drawn into a conversation, be as rude as you like and then slam down the receiver. And report these sharks to the FSA. Let me repeat the FSA's number. It is 0845 602 2185. Alternatively, you can file a report on https://www.fsa.gov.uk/Pages/Doing/Regulated/Law/Alerts/form.shtml.
Fight the fraudsters! And, of course, for honest advice about small companies that really do exist,sign up to our free penny shares emailThe Penny Sleuthor take a look at our premium penny share serviceRed Hot Penny Shares.
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Tom worked as a fund manager in the City of London and in Hong Kong for over 20 years. As a director with Schroder Investment Management International he was responsible for £2 billion of foreign clients' money, and launched what became Argentina's largest mutual fund.
Now working from his home in Oxfordshire, Tom Bulford helps private investors with his premium tipping newsletter, Red Hot Biotech Alert.
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