One of the biggest annoyances of the 21st century is robocalls, or calls from numbers you don’t recognize. Caller ID shows a number close to yours, or even your own number. The proliferation of cell phones has made this broad-brush calling a billion-dollar industry that shows no sign of stopping.
Many places use robocalling to get messages out quickly, such as pharmacies calling to let you know that a prescription is ready, a doctor’s office verifying your appointment, or an emergency notification. But frequently, that isn’t your neighbor or your doctor’s office, who normally leaves a message.
What happens if you answer one of these calls? The caller may be a scammer in a boiler room call center. They are usually overseas with technology to “spoof” someone’s number, hence the name “neighbor-spoofing robocalls.”
Unwanted calls can be any number of scams, including:
- IRS trouble (including threats of arrest)
- Calling from the Social Security Administration (they only send letters)
- Debt collections
- COVID-19 related testing, treatments, or stimulus monies
- Investment Opportunities
- Crypto-Currency Scams
- Boiler Room Stock Scams
Seniors tend to get the most numbers of robocalls. While most people simply don’t answer the phone when they see an unfamiliar number, seniors tend to answer more often.
Note that yelling at the caller doesn’t help. Answering the phone increases these scam calls, because their system now knows your number is live and someone will answer when it rings.
Boiler Rooms And Stock Scams
These calls are also used to promote stock scams which are, at best, selling shady or even non-existent securities. Again, seniors are most frequently the target of these calls.
FINRA recently issued a public warning about stocks and investments being promulgated through cold calling from boiler rooms. The callers engage in high-pressure tactics to get unsuspecting investors to open their wallets.
But scammers are also contacting through email, messaging apps, and social media to reach their victims. Anything you receive that’s unsolicited should be viewed with skepticism until you at least find out more from other sources. And if it isn’t legitimate, hang up the phone or delete the info.
FINRA also warns that many of these individuals are involved in multiple types of cold-call scams at the same time. You’ll know if you receive several in a short time frame.
Churning, Penny Stock fraud & Boiler Rooms
Awareness is one of the most important ways you can guard yourself against boiler room stock scams. FINRA lists these “red flags” to be aware of when someone begins their pitch:
- The call or pitch is unsolicited. When someone cold calls you to discuss an investment opportunity, it’s probably not because you’ve spoken to them before. Chances are you’ve shown interest in a previous investment (especially a high-risk one), or you’ve already experienced a similar scam. People who have been previously defrauded are at high risk for another instance of contact and fraud. Their names go onto a “lead sheet” that’s sold to other scammers.
- The “Hard-Sell.” Does this sound like you have to act right now or you’ll miss out forever? Chances are you’ll do better by hanging up the phone. Microcap securities and other investments with very limited information are commonly part of a scam. The callers will usually promise high returns for the securities but have little company information to offer to offer you.
- Are they licensed? Chances are the answer is no. Using number spoofing technology and names taken from LinkedIn or other social media, boiler-room callers can mimic legitimate brokerages and brokers to engage in fraudulent activity. It’s very likely that the caller and their company are not affiliated or registered with FINRA. There’s an easy way. 2. Find information. On legitimate brokers and companies through FINRA’s BrokerCheck tool.
- The classic “pump-and-dump” scheme. Prior to a cold-calling campaign, scammers may begin manipulative trading, also known as “chart building,” to make the stock’s price look like it’s going up. The idea is to give potential investors the impression that it’s a “stock on the rise,” but it’s really just a pump-and-dump scheme, where you’re all but guaranteed to lose money.
Securities Arbitration Lawyers
FINRA offers suggestions to protect yourself from cold-calling boiler-room stock scammers:
- No matter how legitimate they sound, always be on guard when speaking with someone who calls you unsolicited. Do not say yes to any stock purchase from a cold caller or other contact, especially if the stocks are low-priced. These proposals are designed to sound legitimate, with counters to every possible objection. FINRA has a list of the typical tactics used to convince even educated investors to hand over money for a scam. There is no need to be polite—hang up.
- Do your own research—due diligence is important for any investment you’re considering, so don’t make any exceptions. Use BrokerCheck to research individuals, and The SEC’s Edgar tool for company filings. Use established domain registration databases to research the site itself, and a simple Google search for the company and individuals involved. Include “scam” and “complaints” in the keywords to find even more information.
- Always be on guard when receiving calls, emails, social media or text messages, or other types of contact about buying stocks or other securities. Be especially careful when considering stock picks from unregulated, unlicensed people or investing based on information obtained through social media.
FINRA offers free information on its website to help investors avoid fraud, including a “scam meter” that can tell you with just four questions.
The FINRA Foundation is also working with the National Telemarketing Victim Call Center as well as volunteers to fight back against boiler room stock scams.
Have You Heard From A Boiler Room Scam?
If so, you’re encouraged to contact Silver Law Group for additional information and to help us in our investigation.
Silver Law Group is a nationally recognized class action law firm representing victims of investment fraud. Our attorneys represent investors in class action lawsuits against issuers in state or federal court and investors in securities arbitration claims against Wall Street firms for stockbroker misconduct.
Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice. Contact us for a consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.