Be on the Alert for Boiler Room Tactics

If you get an unsolicited telephone call about an investment opportunity, be alert to the signs of fraud, warns the Inter-Global Financial Regulatory Board. You might be a target of a boiler room operation. Boiler room operations wear many disguises, and they are once again rearing their ugly head in. Boiler room operators hope to give you a false sense of security with promises of quick profits - but the only ones that profit are the scam artists, at your expense.

They may be located in the financial district near reputable firms, but their address may be nothing more than a rented space tucked away from the public eye. Rarely, if ever, are the offers they peddle to your benefit. Why would a complete stranger call to offer you a no-risk, high-return investment? It is too good to be true.

To gain your trust, the salesperson may boast of a business idea that sounds probable - perhaps a company in the medical industry with a new technological breakthrough for detecting cancer. The pitch is that with your investment, the company could go public on the stock exchange and make you more money. The scam artist may also try to play on your sympathies - he or she may know that cancer has taken the life of someone dear to you. Or perhaps they know that you are a busy professional, with extra income to invest, and little time to do your own research. Regardless of the background, the investment opportunity will be sold on the promise of quick profits.

If the offer is really such a great deal, there should be no need for a broker to cold call strangers to promote it. Ask yourself why they are calling you.

To avoid becoming a victim of a boiler room, watch out for:

  • Unsolicited phone calls. Don't be afraid to tell a salesperson not to call again, or simply hang up.

  • High pressure sales tactics and repeat callers. Take the time to research any investment opportunity and get a second opinion.

  • Promises of high returns with no risk. Any investment that offers returns higher than the bank rate has risk. If you invest in a high-risk investment, you must be financially prepared to lose your money.

  • Setups. With the first call, the scam artist may only try to gain your trust by offering information about the company and their alleged success. This is a setup for future calls, when you will be pressured to buy.

    Unregistered salespersons. Check the registration of the person offering you the investment by contacting Inter-Global Financial Regulatory Board.

 

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