Warning as victims of 'boiler room' fraud lose thousands

The City of London police has written to 6,500 households, including 377 in Yorkshire and the Humber, urging them to be on their guard against "forceful and convincing salesmen" who are selling non-existent or over-priced shares on behalf of organised criminals. The typical victim of this crime loses 24,000.

The letters were sent out after an intelligence operation – Operation Archway – gained the names and addresses of UK investors who are believed to be on lists of potential victims used by criminals.

Det Chief Inspector Paul Barnard of the City of London police said some victims of "boiler-room" fraud had been left with so little money that they struggled to pay their lighting bills.

He said fraudsters obtained the phone numbers of potential victims from lists of shareholders, or from studying advertisements in upmarket magazines.

He added: "This is worth hundreds of millions of pounds a year to fraudsters and there appears to be no letting up."

Many of the fraudsters were based in Spain, and used young salesmen who had worked for legitimate companies, he said.

Mr Barnard added: "Over the past six months or so we have made some dramatic inroads, particularly dismantling a boiler room operation over Christmas. All the operations we undertake, including our harm reduction ones, such as this one, have enabled us to improve our understanding of what's going on and warn people who could be at risk."

He said anybody who received a letter from the City of London police should take sensible precautions if they received a "cold-call" from somebody selling shares. For example, they should check the Financial Services Authority (FSA) website to see if the company making the call was genuine.

Many boiler room cold-callers were very plausible, Mr Barnard warned.

He said: "A relationship is built up between the caller and the person being called. It becomes like a friendship which is built up, and particularly, if they are targeting elderly and vulnerable victims who maybe don't get a lot of calls, it becomes like a best friend phoning them up.

"We've got people who have lost significant amounts, more than 24,000. Some of them have been approaching 1m. Once you are drawn to this sort of thing, it's very difficult to break that cycle.

Anybody who believes they have been contacted by boiler-room fraudsters should call the FSA helpline on 0845 602 2185.