Republic of the Philippines
National Police Commission
PHILIPPINE NATIONAL POLICE
Camp BGen Rafael T Crame, Quezon City
ACG-CYBER SECURITY BULLETIN NR 182: Understanding the Boiler Room Scam
Reference Number ACG-CSB 021020182
The following information was obtained from different cyber security sources for notification to all parties concerned pursuant to the mandate of the Philippine National Police Anti-Cybercrime Group (PNP ACG) and classified as “Restricted” pursuant to the PNP Regulation 200-012 on Document Security and Impact Rating as high based on PNP Information Communication Technology (ICT) Security Manual s.2010-01 p. 22 and p.129.
A boiler room is a place or operation usually a call center where high-pressure salespeople call lists of potential investors to peddle speculative, sometimes fraudulent, securities. The term boiler room refers to an early practice of running such operations in the basement or boiler room of a building and is so called due to high-pressure selling.
Boiler-room tactics are sometimes used to convince investors to overspend on the purchase of securities that are actually of lower value. The securities may, in fact, be worthless or nonexistent, and the funds that are raised are solely for the enrichment of the individuals behind the operation. A variety of fraudulent scams may be run through boiler-room schemes. This can include binary options fraud, advance fee fraud, and microcap fraud.
Boiler-room salespeople may also solicit prospects through other means than phone calls. Electronic messaging, such as email, text messages, and social media can be used to initiate contact with the prospect.
Typically, salespeople can be very convincing and oftentimes, good actor. They might try to tell their targets that they are licensed in other countries or try to impress its target/s with the wealth they say they have attained themselves. They may also share the phone number of their targets with other fraudsters. This may cause the victim to be on a list and susceptible to another scam called “double-dip”. The second fraudster may even claim to help the victim recover their money from the first fraud if they pay them a fee, but this is a scam as well.
The scammers will profit either by taking your money without providing the shares, sometimes issuing you with seemingly valid share certificates, or by selling you genuine shares at highly inflated prices.
Be aware that the people behind the scams will also share or sell on their contact lists to other fraudsters. This can lead to you becoming a target of other related investment scams.
Boiler rooms may claim to be working on behalf of a government organization, the Financial Conduct Authority (FCA) or police in an attempt to add legitimacy to their claim. However, law enforcement and government agencies will not contact individuals in this way or charge a fee to recover funds. If the police were to be involved in recovering funds, this would be done through a criminal investigation.
All PNP personnel as well as the public are advised to follow the tips in order to avoid the risk of Boiler Room Scam:
• Be wary of unsolicited emails, phone calls or letters saying you have unclaimed funds or are owed money.
• Check that the organization, and the rebate, are legitimate, by contacting them directly.
• Try and get their details from an independent source, such as a phone directory.
• Never Assume investments are genuine just because the company offering them is based in a well-known location.
• Tell your bank immediately if you have handed over your bank account details.
For additional information, please refer to the following websites:
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