January 2016 – Trading Standards Scams Bulletin…
The purpose of this scams bulletin is to enable Hampshire residents to be aware, and therefore guard against the type of scams currently being reported to the Hampshire County Council Trading Standards Service.
Hampshire County Council Trading Standards Service has noticed an increase in complaints about investment fraud. The fraudster will use convincing arguments to make their victim pay money into investment opportunities that seemingly offer good rates of return.
The fraudster will go to great lengths to protect their identity and may build up a ‘friendship’ with their victim over time. Once they realise they will not be getting any more money they will sever contact, leaving the victim penniless and fearful.
This type of fraud is very sophisticated and the chance of tracking down the perpetrators is very small.
Trading Standards therefore want to make Hampshire residents aware of how the fraud can operate through the following examples and real life case studies.
A ‘boiler room fraud’ uses high pressure sales tactics to sell stocks to clients who are either randomly selected out of a phone directory or specifically targeted from a mailing list. This fraud operates where either fake shares are sold, or shares that are not trading well on the stock market are sold at a highly inflated price.
The operator behind the fraud is normally based abroad, although they may use a UK postal address at an impressive location such as Canary Wharf in London. They will cold call the victim, initially by telephone but they may also make personal visits once the fraud progresses.
The fraudster will also sell on the victims details so there is a chance they may get caught in a ‘second wave’ or ‘recovery room’ fraud. This is where a second company will make contact offering to sell the shares on at a cost.
Real life Case Study:
Mrs R who is in her 80’s and lives alone has made various investments over many years. Whilst some of the investments may be genuine, Mrs R has been targeted by boiler room frauds and invested approximately £200,000. Although Mrs R acknowledges this money may be lost she has been contacted by a second waive fraudster who has made a convincing argument that they can recover her money. Mrs R considers this is the only way she may get some money back and has paid them further funds. The second waive fraudster has severed contact and she has not received any money back. Support is being given by Hampshire Trading Standards to safeguard Mrs R against this type of activity in the future. She has also asked her bank to investigate this matter.
Carbon Credits Scam:
A carbon credit is a certificate or permit which represents the right to emit one tonne of carbon dioxide (CO2) that can be traded for money.
The fraudster will make an unsolicited phone call to their victim asking if they are interested in investing in carbon credits or other opportunities to make a ‘green’ investment. They may follow this up with a home visit and produce a glossy brochure explaining how ‘you can do your bit for the environment and make money in return’. However, many investors have said they are not able to sell or trade the carbon credits they have bought and that they have not made a profit. The majority of companies offering this type of investment are based overseas.
Real Life Case Study:
Mrs D was cold called by a carbon credit investment company who asked if she was interested in the environment. As Mrs D was looking to invest some money this ‘green’ claim caught her interest and she invested £18,000. Although the trader produced an impressive looking share certificate she was unable to find out if the carbon credits existed. Mrs D has not heard back from the trader or received any money.
Wine Investment Scam:
This type of investment fraud has been around for many years and is still being reported to Hampshire Trading Standards Service.
As with most frauds, this normally begins with an unsolicited phone call offering an ‘exciting’ opportunity to invest in wine for a high return. This fraud operates where either the wine does not exist or that it is being sold at an inflated price. Most victims of this fraud will normally admit at a later date that they know little about wine but they thought the investment sounded convincing.
Real Lift Case Study:
Mr G was targeted over two years by a wine investment fraudster and spent approximately £150,000. He has no evidence the wine exists other than ‘stock lists’ and photographs. Mr G understands some of the wine in being held by a storage unit. Despite attempts to contact the unit to release the wine, as yet there has been no response.
How to protect yourself against investment fraud:
- If you’re considering any type of investment, always remember: if it seems too good to be true, then it probably is. High returns can only be achieved with high risk.
- If you’re suspicious about a scheme’s authenticity, you should investigate the company’s status and contact details.
- The Financial Services Authority regulates stockbrokers based in the UK. You can check a stockbroker’s authenticity by visiting the FSA’s:
If you are worried about a potential scam please contact the Citizens Advice Consumer Helpline:
By telephone: 03454 04 05 06
Web site: Online consumer complaint form
By Post: Trading Standards Service Montgomery House, Monarch Way Winchester, Hampshire, SO22 5PW