Poster of the film Boiler Room
By: Ali Ismail
By: Ali Ismail
Telephone: 0778-842 5262 (United Kingdom mobile)
aliismail_uk@yahoo.co.uk
BEWARE OF BOILER ROOM FRAUD
If you don’t want to be a victim read this story and be warned
Back in 1997 when I was desperate for get employment I answered an advertisement in the London Evening Standard for telesales work. What followed was an eye-opener for me and, I trust, for you.
In essence I found myself in a room in a building on Oxford Street, London selling European Union (EU) grants by telephone. The call centre was a room consisting of about five rows of desks with several telephones on each. We were told to ‘phone up businesses offering to make applications for EU grants for about £400 a go. Telephone directories were provided, as was supervision in the form of a man at the front watching us with hawk’s eyes.
Payment was based on results. There was no basic salary or wage. If you failed to sell enough you were sacked. Several people suffered that fate while I was there for the three weeks that it lasted.
One day, the supervisor told us that the owner of the business wanted to speak to us one by one. When my turn came the owner turned out to be a thickset middle-aged Englishman with a dominant personality.
“We are having record sales and record profits. There are tremendous potentials here and I want you to do everything you can to push us forward,” he told me. Despite his attempt to motivate me I had the impression that he was not A-OK.
The final scene was the day when the supervisor, with some others, told us all to stop working and that he was going to talk to us one by one. While I was waiting for my turn the face-to-face “closing” salesmen turned up and sat around. One of them told me that it was all a big scam and that almost nobody got an EU grant.
When I was called up the supervisor told me that the boss had disappeared and had proved to be elusive. When telephoned, presumably by mobile ‘phone, he had claimed to be in France. Our wages left unpaid and we were all sent home with some of the by now ex-staff hooting and laughing. The supervisor told me that something better might be set up by his good self but by then I wanted nothing more to do with anything of that ilk.
That was my personal introduction to the world of boiler room fraud. The unusual aspect of what I was doing was that we were selling applications for EU grants. Most boiler room frauds are to do with investments, usually in shares. Another atypical feature of my work was that we were ‘phoning up businesses while the usual boiler room rings up homes.
That is one reason why an ex-directory telephone number is useful. It shields you from many sharks.
The Financial Services Authority (FSA) has published a big blacklist of firms that investors need to be extremely cautious about before handing over any money. The list is an attempt by the watchdog to alert investors to potential cowboy firms that operate scams using heavy-handed sales ploys to convince them to buy worthless shares. The watchdog has also warned of a new scam that means some people are being stung twice.
BEWARE OF BOILER ROOM FRAUD
If you don’t want to be a victim read this story and be warned
Back in 1997 when I was desperate for get employment I answered an advertisement in the London Evening Standard for telesales work. What followed was an eye-opener for me and, I trust, for you.
In essence I found myself in a room in a building on Oxford Street, London selling European Union (EU) grants by telephone. The call centre was a room consisting of about five rows of desks with several telephones on each. We were told to ‘phone up businesses offering to make applications for EU grants for about £400 a go. Telephone directories were provided, as was supervision in the form of a man at the front watching us with hawk’s eyes.
Payment was based on results. There was no basic salary or wage. If you failed to sell enough you were sacked. Several people suffered that fate while I was there for the three weeks that it lasted.
One day, the supervisor told us that the owner of the business wanted to speak to us one by one. When my turn came the owner turned out to be a thickset middle-aged Englishman with a dominant personality.
“We are having record sales and record profits. There are tremendous potentials here and I want you to do everything you can to push us forward,” he told me. Despite his attempt to motivate me I had the impression that he was not A-OK.
The final scene was the day when the supervisor, with some others, told us all to stop working and that he was going to talk to us one by one. While I was waiting for my turn the face-to-face “closing” salesmen turned up and sat around. One of them told me that it was all a big scam and that almost nobody got an EU grant.
When I was called up the supervisor told me that the boss had disappeared and had proved to be elusive. When telephoned, presumably by mobile ‘phone, he had claimed to be in France. Our wages left unpaid and we were all sent home with some of the by now ex-staff hooting and laughing. The supervisor told me that something better might be set up by his good self but by then I wanted nothing more to do with anything of that ilk.
That was my personal introduction to the world of boiler room fraud. The unusual aspect of what I was doing was that we were selling applications for EU grants. Most boiler room frauds are to do with investments, usually in shares. Another atypical feature of my work was that we were ‘phoning up businesses while the usual boiler room rings up homes.
That is one reason why an ex-directory telephone number is useful. It shields you from many sharks.
The Financial Services Authority (FSA) has published a big blacklist of firms that investors need to be extremely cautious about before handing over any money. The list is an attempt by the watchdog to alert investors to potential cowboy firms that operate scams using heavy-handed sales ploys to convince them to buy worthless shares. The watchdog has also warned of a new scam that means some people are being stung twice.
Thousands of investors have been caught out by scams where (very) slick, convincing and persistent salespeople ring up and verbally bludgeon them into parting with cash, usually with the line that the investor is getting in "on the ground floor" and by insisting they hand over cash immediately or lose out on the "opportunity" altogether.
The sales reps work from lists (sometimes compiled using the names of people who have fallen for similar scams in the past and sometimes by duping people who inadvertently responded to mail-shots without reading the small print).
The reps will often tell investors they stand to make as much as a 100% return on their investment. Sometimes they rely on jargon to pull the wool over people's eyes and the shares being sold often sound obscure and hi-tech or are quoted on little-known markets.
The reps will often tell investors they stand to make as much as a 100% return on their investment. Sometimes they rely on jargon to pull the wool over people's eyes and the shares being sold often sound obscure and hi-tech or are quoted on little-known markets.
The firms operate out of a number of countries - popular choices being China and south-east Asian countries to get around UK regulations and often by the time an investor realises that no money is forthcoming the operation has shut up shop, closed down websites, disconnected ‘phone lines, moved on and changed its name.
And because all dealings will have been done on the ‘phone and any UK addresses they may use tend to be nothing more than postal pick-up addresses, the investor has no way of tracking the culprits down.
In some cases, the firms are regulated in other countries, but a foreigner who attempts to get compensation is likely to find it impossible.
The companies use names that sound vaguely familiar and official to lull would-be investors into a false sense of security.
Carol Sergeant, the FSA's managing director, says: "Dealing with unauthorised firms can seriously damage your wealth. You may be lucky and have no problems but if you do, you will have no complaints or compensation scheme to turn to and you could lose all your money.
"Before deciding to deal with a firm, our advice is always to check with us whether a firm is authorised. You should also be careful not to hand over personal details such as your bank account and credit card numbers until you have established the credentials of a firm."
The latest scam uncovered cleverly lures investors into selling their original shares for an upfront "administration fee" if they have found them difficult to sell through other avenues - a not uncommon occurrence.
However, what investors find is that once the "fee" has been handed over they never hear from the firm again and are stung twice, having lost both their original investment and the fee.
The FSA can and has taken action (including criminal proceedings) against companies it has been able to track down and prove have been swindling investors.
However, because the companies involved are unregulated and outside its jurisdiction no compensation is available to their victims.
A spokeswoman says: "It's a bit like shutting the stable door once the horse has bolted. By the time we get to the firms investors have already lost their money. Consumers need to do as much research as possible about firms who approach them."
How can you tell if a firm is authorised? Investors can check by visiting the FSA’s “firm and person check service” or by phoning 0845-606 1234.
You can get more valuable information from the www.boiler-rooms.co.uk
website whence the above was gleaned.
The Bangladeshi community in the UK most probably has its fair share of middle-aged and retired members with significant amounts of capital to invest as a result of having run one or more successful businesses.
In my humble view, if one has, say £100,000+ spare to invest the four major choices - apart from setting up another businesses - in one’s later years are:
Ø Property
Ø Shares in individual companies
Ø Unit trusts
Ø Investment trusts
Ø Property
Ø Shares in individual companies
Ø Unit trusts
Ø Investment trusts
My own family swears by property and indeed there is some security and pride in ownership of bricks and mortar. The downside is the trouble one has to take doing renovations and repairs with the assistance of frequently aggressive and difficult workmen. Furthermore, when there are no tenants there is no income for the nonce.
When it comes to shares in individual companies for investment, my word of advice is: “Don’t.” Company shares fluctuate wildly and many of them go bust owing to volatile trading conditions.
Unit trusts are a safer bet. Provided they are in general fields and are large and the managing company is well known and well respected, you need fear little bar the sometimes heavy administration fees.
Investment trusts are sometimes called “closed end funds”. In my understanding an investment trust is a company that has shares like any other company but its business is buying and selling securities on the stock market.
If one is going to invest one’s capital there are two kinds of funds: the actively managed ones and the passively managed ones. The former have an energetic management that actively chops and changes policies according to the vagaries of the financial climate. The latter just take money, invest it and let it be.
Returning to boiler rooms, bearing in mind that many Muslim men are short on female company one has to beware of the initial approach of the typical boiler room which is to use a friendly sounding woman to initiate the contact.
Joanne who works at an independent financial adviser’s (IFA’s) office in Aberdeen says: “I think I would be highly sceptical. I would go to an IFA myself. I don’t think anyone would recommend buying shares because someone ‘phones you. You would normally go to a stockbroker or your bank if it deals in shares for its customers. Ripping off elderly people is terrible especially when they lose all their savings.”
Ruth Shulver of the specialist crime press desk at Scotland Yard advises:
ü Don’t respond to unsolicited communications of this nature
ü Only deal with reputable brokers you have researched yourself
ü Only deal with reputable brokers you have researched yourself
Members of the ethnic minorities are often targeted because they are perceived to be safer to victimise. Furthermore, since so many are self-employed they frequently handle more money than salaried employees.
As Joanne says, if in doubt consult an IFA.
THE END
This article was published in the 25th January 2007 issue of the Bangla Mirror newspaper, read everywhere from the Arctic Circle to the sub-Antarctic.
