Boiler room Scams: tell-tale signs that avert losses

Boiler room Scams

A curse that plagues investors, particularly boiler room scams, involves the operator selling low-value shares at blown-up prices. A trend of ersatz stockbrokers has emerged, cold calling larger and larger numbers of UK investors intent upon coaxing funds from them. Based generally in a firm abroad, a broker will call an investor, suggesting buying a certain company’s shares.  As for the share and the company, there will be reasons apparent that will show just how low value  – even downright irrelevant – it is.

The shares have no life outside of an online message board. The company can likely be traced to an illiquid market. Small wonder that, despite the high attached price, the shares will remain practically unsellable. They take strength from the fact that they are outside the purview and competence of the Financial Conduct Authority. Boiler scams and boiler room scams/frauds derive their name from the extremely aggressive, high-pressure sales pitch type of forceful, even urgent persuasiveness that used to characterize the proverbial ‘snake oil salesmen’ in days of yore. 

Characteristic features of boiler room scams 

Cold calls pretending warmest concern – 

Boiler scams,  Or boiler room scams, involve getting cold-called by operators who persistently and smoothly wear down the recipient’s resistance. Though only making cold calls, these intrepid callers appear to know the recipient inside out. As a result, they mostly end up prevailing up[on the listener to purchase shares that actually represent very little, if any, value, listed on an illiquid market so far removed from FCA jurisdiction and to make such transaction truly a travesty. 

‘Mum’s the word!’ – sworn to secrecy? – 

Just as you are sworn to a pledge of secrecy if you are doing something elicit, there’s more than a whiff of the conspiratorial to the caller’s urgent instruction that you keep mum over the call in question. If the call’s content were to go public, observant folk would immediately see that the call’s subject is clear as mud. 

The caller wants you to catch a train leaving its platform – or does he?

There’s a lot of urgency about the caller’s forceful’ request’ – so much so that it practically feels like a demand rather than anything polite. You are allowed no space to reflect. We all know what follows when we act without thinking. You are being asked to buy shares in a company, and you are not allowed to at least do ‘due diligence. Has he even taken up the ‘caveat emptor mantle for your sake? Why so much solicitousness? Why can’t the business wait? Or leastways take a breather? You should mark that red flag soon as you have that share purchase foisted upon you. 

Guaranteed victory promised

Even the most seasoned company would fight shy of making grandiose promises of guaranteed wins. Risk attendants invest always, and legit companies look after their clients’ interests, enumerating risk factors before making a sale. Mark that red flag soon as it comes up – regardless of that sales pitch, the scammer is pushing his product for his own interests, which are just the opposite of your own. 

Huge returns promised – 

If the caller has little understanding of his own product, it will show. If he cannot detail reasons why the share is a surefire win, see that red flag go up. If he accompanies this with incoherent talk of gifts and discounts, his scheme is mud, and you know this that very instant. 

The caller has the air of the High-falutin about him

The caller will make out that he’s some Grand Vizier in some Grand Conglomerate somewhere. It will sound pompous – but so disingenuous you’ll see through his mischief immediately. Or leastways you ought to. Should it not be someone who lowers down the hierarchical ladder that ought to be thusly briefing you on your very own financial needs? Why is there such a VIP after your investment? 

Right. Smells fishy. 

‘From Russia with love?’ Why’s the caller based abroad?

The caller will let you in on his UK address. His call will be from a UK listed number. This will lull you into complacency. Since the caller is based abroad, and since cold call share selling via telephone is not legit in the UK, the caller will be using aUK listed number but calling from abroad. He will be circumventing a couple of regulations just in the first few minutes with you. How many rules will have been bent by the time he’s done? This interaction has all the transparency of FSB agents stalking their British prey. 

Payment upfront – please!

If you can spot this red flag, this is the straw that breaks the camel’s back. It really is the last straw! As soon as the caller mentions an ‘advance fee’ or ‘deposit’, you ought to see that a boiler room scams is being foisted upon you. No good company worth its salt deprives potential clients of the right to do their own research. 

Your bank details – or your life!

While it’s not as bad as all that, the caller’s sense of fierce urgency does make you smell a rat. It’s even impolite to ask for bank details over the phone. However, this being a boiler room scams – the least genteel of operations – he will step all over your toes, conspicuous in his need to have your’ bank details’ well and truly under his belt. And that’s when you know you are living a boiler room scams. 

Chummy from the word ‘go’ – 

You two go back a long time, don’t you? The caller will get real palsy with you, ‘letting you in on a secret. Even kids wouldn’t be sold on this tactic! No one shares insider info with strangers. And why does he have such tips for you, just so that you may be sold some shares? Is that how urgent it all is? Now you have the measure of the scammer’s desperation!


Boiler room scams are an offence type UK courts take a very dim view of. For really serious crimes, the perpetrator can land in the cooler for an uncomfortable ten years – or more. But, like so many other scam types, boiler room scams are dealt with easily enough. All you need to do is be mindfully aware of what you observe, process it as it happens, and make the perpetrator take his fall. A habit of vigilance pays huge dividends. For extra advice, the UK is blessed with whole paraphernalia of advisory and administrative bodies that document and monitor fraud in the UK.  

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