The Financial Services Authority (FSA), has warned consumers about a wave of fraudsters selling fake shares under the auspices of a variety of legitimate companies.
The city watchdog, which regulates the financial services industry, said it had seen a dramatic increase in enquiries about this kind of fraudulent activity since November last year. In some instances, crooks had even gone as far as cloning the website of an authorised firm, but making subtle changes to things such as contact details, so beware......
What to look out for
Share fraudsters – often known as ‘boiler rooms’ - cost consumers an estimated £17 million a year, though both the police and FSA believe that only 10 per cent of victims report such crime. Worst of all, people who do invest with such rogue firms will not be covered by the Financial Services Compensation Scheme – meaning that it’s highly unlikely they will ever see their money again.
To combat the problem, the FSA recommends that anyone contacted by a firm which they are not a customer of should take the following steps:
- Ask for the contact details of the person calling you;
- Check the firm or individual’s status on the FSA register; and
- Call the firm back on the switchboard number provided on the FSA register to make sure that the call came from the legitimate authorised firm.
Jonathan Phelan, head of the FSA’s unauthorised business department, said it is encouraging that there is a high awareness of share scams, which is in turn forcing crooks to come up with new tactics.
He said: “Sadly, however, this also means there is a renewed risk to investors and a new type of scam for us to tackle [but] our message remains the same.
“Never deal with unauthorised firms. If somebody calls you out of the blue to promote shares, then you should be very wary of them even if they claim to be authorised by the FSA. If in doubt, make a report to the FSA; the more information we receive on a firm, the better placed we are to shut them down.”
The warning falls during the Office of Fair Trading’s (OFT) designated Scam Awareness Month, an issue we highlighted in our recent Money Talks blog.
According to the OFT, three million consumers a year are taken in by scams across email, phone, post and various other communication methods. Make sure you’re not one of them.
What to do if you fall victim
If you think you may have been the target of a potential scam, waste no time in passing on the information to the FSA and ask them for guidance on the next best steps for you.
