If you’ve ever picked up a call from an unknown number and heard a high-intensity sales pitch for the latest and greatest hot stock, then you’ve experienced what’s known as a boiler room-style call. These unsolicited callers are simply trying to pressure their targets into buying into a scam, and while they usually target seniors, people of all ages have been tricked out of their hard-earned money.
FINRA suggests that you equip or install a caller ID service on your phone so you can see the number before you pick up, and simply let it ring if you don’t recognize it. If you choose to pick up the phone and hear the start of an aggressive sales pitch, simply inform the caller that you aren’t interested and hang up the phone. FINRA has also put together several services intended to help protect seniors from falling prey to investor fraud.
What Does A Scam Sound Like?
Not all scammers sound as sinister as Snidely Whiplash – most can come across as perfectly reasonable sales people, but they use several distinct tactics when attempting to pull off a boiler room scam.
- Many scammers attempt to pressure targets into buying “can’t miss” investment opportunities by calling back repeatedly, and becoming more aggressive with each call. Most of these pitches are for microcap or penny stocks, and investors who ended up purchasing these stocks often discover that their new shares are basically worthless.
- Others claim to work for companies that offer stock recommendations, but FINRA has discovered that some of the organizations these callers have been using are neither registered nor associated with any FINRA-registered firm. Many of these people turn out to be unaffiliated with any legitimate business at all, and may use fake credentials, fake names or fake phone numbers to make it seem like they are calling from a reputable firm. The best way to protect yourself here is to use FINRA’s BrokerCheck to verify that the person you are speaking with is registered.
- Some callers are attempting to pull off what’s known as a “pump and dump” scam, where they convince targets to buy shares in order to massively inflate the value of a stock. Investors have bought hundreds of thousands of dollars’ worth of these essentially worthless stocks while on the phone with a scammer.
- Cold callers may not even be selling worthless stocks – instead they’re just trying to outright steal your money. FINRA reported that one target was convinced to send two checks worth a total of $2,500 to a mail drop box that wasn’t associated with any business or firm.
- Not all scammers use cold calling tactics. Occasionally, targets are contacted by someone claiming to be an account executive after signing up with or visiting a website promoting cheap stocks.
If you find yourself on the receiving end of a boiler room pitch, there are a few ways to protect yourself from making an investment with a scammer.
- No matter how enticing the caller’s pitch may sound, never agree to a purchase on the spot. The best scams are designed to sound believably enticing – simply hang up or put the phone down.
- Hang up immediately if the caller attempts to follow up with you. It’s a common tactic to place repeated calls in an attempt to pressure you into making a purchase. If you already made an investment, they’re likely to be even more aggressive with their follow-up calls.
- Don’t put any investment purchases on your credit card, make any wire transfers or address any check to an address you haven’t verified. FINRA keeps information on all registered firms, and a simple online search will let you know whether or not you’re sending your check to a legitimate address.
If you realize that you lost money investing in a scam quickly enough, you may still be able to stop the transfer of funds by alerting your financial institution. Otherwise, contact the investment fraud lawyers at Meyer Wilson for legal assistance. Our attorneys will assist you in recovering any lost funds, and work on a contingency fee basis so you won’t be charged for our services until we can assist you in recovering your lost funds. Fill out our online form to tell us more about your situation.