Experts are warning that boiler room scammers have been stepping up their efforts to trick UK investors - in the wake of the new pension freedoms rolled out in April. The scams are so sophisticated that increasingly investors are falling for their lies.
The revelation was made by Kevin White, Head of Financial Planning at deVere United Kingdom. He said that since April his investment group has been hit with a wave of new complaints about boiler room scams.
The boiler room scam involves fraudsters cold-calling UK investors, to persuade them to invest their money in a company that they insist is about to see enormous growth. Investors are persuaded to buy shares in these firms, and only afterwards do they discover that they are worthless, overpriced, or in some cases that they don't actually exist.
The sophisticated twist on the scam, White explains, is that the fraudsters operate as clone companies, so they call individuals and claim to be from fully authorised, regulated and licenced financial advisory firms such as deVere.
This was something deVere has warned about for some time, as the scammers use almost identical trading names, websites, logos and business cards as genuine firms. Now White says they have got even more sophisticated and are: "even using fake FCA (Financial Conduct Authority) numbers that are similar to our registered one and adopting the similar or the same names as our genuine consultants when speaking to their potential victims".
White explains: "Since the beginning of April, the number of calls we have received from clients concerned about clone scams has sky rocketed. And with depressing frequency, we're now receiving calls from people after they have transferred funds to the suspected fraudsters." In fact, he said the number of cold calls is increasing by 35% a month. He adds: "We believe that it is not a coincidence that this significant increase coincides with the launch of the government's landmark pension freedoms."
The key to protecting yourself is simply to assume that no legitimate investment company will ever call you out of the blue in order to persuade you to part with your money. Even if their patter sounds convincing, their documents look good, and the name of the firm and the consultant checks out with a quick internet search, you still need to assume that you are not dealing with the real thing.
If you want to invest your money, you shouldn't be responding to cold calls, but identifying reputable businesses and individuals through research and recommendations.
If you suspect you have been contacted by a bogus firm, you should make a note of each email and call, and keep any paperwork you are sent. Then you need to report your suspicions to the FCA, the police and to Action Fraud, who can investigate.
White adds: "Beware of investments that appear too good to be true, bank accounts to send money to in different names to either of the companies that are being presented, and bank accounts that are based overseas. DeVere United Kingdom or deVere Group do not handle client money - do not send anything to an account in these names."
Scam stories on AOL Money
Scamwatch: pension tax fraud
How to avoid common scams
Scammers exploit change in tax disc rules