Now firms based overseas are targeting Warwickshire investors using the same high-pressure sales tactics.
Trading Standards Officers have received reports of companies said to be based in abroad, offering shares in American companies. Householders and businesses have been cold called and told of an opportunity that could net them £60,000 for a £3000 investment, once the shares are floated.
But Trading Standards Officers warn: don’t be tempted by the promise of huge returns – the shares you receive could be worthless are and whilst you lose out, those selling the shares will make hefty profits from the commission you will pay.
Remember – if an investment opportunity seems to good to be true it usually is!
In the UK companies offering to sell shares have to apply for a licence and abide by rules designed to protect consumers – or they are shut down. BUT WATCH OUT! These rules are not identical abroad.
If you already buy shares you could be targeted as your name will appear in the share registers of the companies you have invested in. If you are targeted you may at first be offered a free research report into a company in which you hold shares, or a free gift or a discount on share dealing charges.
If you show an interest you may then be flooded with calls offering you a great deal on shares, often in smaller companies you may not have heard of or possibly other investments such as futures, options or foreign exchange. The firm's sales force will probably sweeten, cajole, flatter, bully and even sometimes threaten you to take up their offer. Don't forget, they probably make a commission on every sale.
Remember if you receive a mailshot, a cold call or something similar offering you an investment opportunity:
- Always check whether the company is authorised in the UK. Ring the Financial Services Authority Consumer Helpline to find out on 0845 606 1234 (calls charged at local rates).
- If it isn’t, take care. You won't have the right to complain or seek a penny in compensation from the UK authorities if things go wrong.
- If it's not authorised, it could mean that the company is based abroad. Look carefully for the address. The majority of firms operating from abroad are perfectly respectable - but what if this one isn't? Even if the authorities overseas have a compensation scheme, it could be difficult to pursue a claim.
- Read the small print.
- If you do decide to go ahead and buy the shares, at least check the current price in the financial press. These firms may be acting as bucket shops, buying in shares from other brokers. If they do so, you may not pay the market price for the share. Even though they will be trying to get you to make a decision quickly, still try to find time to do your own research before buying - look on the company’s website if they have one, get hold of the annual report and read the financial press.
- If you decide to go ahead, be aware that it may be difficult to get evidence or confirmation of what shares you hold from the firm - and it may be even more difficult to sell them when you want to.
- If the offer on these shares sounds too good to be true - it usually will be!
The Advanced Fee Loan Scam
UK consumers seeking credit are being stung for thousands of pounds by a new advance fee scam originating in Canada.
Advertisements have appeared in local newspapers offering fast loans regardless of credit history. The adverts, which have a freephone number to call, are usually placed in the classified sections of free or local newspapers. Consumers who respond to these adverts are told that their loan has been agreed but before they can have the money they will need to pay a fee to cover insurance of the loan. The consumers are asked to pay this advance fee by money order via Western Union or Money Gram. Once this advance fee is paid the consumer never hears from the company again and the loan is never received. The OFT is aware of victims who have lost up to £4000.
Newspapers are called upon to be vigilant against this scam and be wary of placing adverts which do not comply with the new Consumer Credit (Advertisements) Regulations 2004, which govern what form and content an advert for credit should take.
Consumers should be wary of any business which requires an advance fee to be paid via Western Union or MoneyGram to secure a loan.
The Office of Fair Trading is working closely with the authorities in Canada to take action against these fraudsters and is urging consumers who have been contacted in this scam to report it to the OFT by calling 08457 22 44 99.
The OFT is also concerned that organised criminal gangs may be using the personal details collected from victims of this scam to commit further fraud. |