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Rules of engagement for avoiding boiler room scams

Learn to avoid boiler room scams.

You pick up the phone. Hello? Hello? Hello! Nothing at the other end but empty space. It could be a:

  • Charity canvasser
  • Local political candidate
  • Licensed investment advisor
  • Pollster
  • Boiler room shyster

That empty space at the end of the line probably means the call is being connected to a call centre. It could be at the other end of the country, or it could be half-way around the world. If you don’t hang up, then you’re on your way to talking to someone who wants to sell you something. If that someone is a boiler room shyster, he probably has a golden tongue, a sham investment, and only one thing in mind: separating you from your hard-earned savings as quickly as possible.

We want you to know the rules of engagement for avoiding boiler room scams.

Rule 1: Hang up. If you’ve walked a fair ground midway or attended a fund-raising lunch, you know that once you start listening, your hand is already on your wallet.

Rule 2:  If you don’t hang up, ask questions:

Are you registered to sell ___ in Canada? To sell investments to you in Canada, a person must be registered by your local securities regulator. A caller offering a real estate investment would have to be registered with a provincial real estate regulator or council.

What is your name and the name of your firm? If you can’t get this information, hang up. No need to be polite. But if the caller gives it to you, you can look him or her up.

What is your phone number? Tell the caller it’s your policy to do your own due diligence before buying any investment and that, if you’re interested, you will call him back after looking up his name/firm. If you can’t get this information—you guessed it—hang up!

Rule 3: If you think you’ve been called by a boiler room operation, report it. You may think that nothing will come of your effort, or that with nothing lost there’s nothing to gain by reporting. But boiler room operations are huge international businesses, and your tip could set off an investigation that could save thousands of others from losing their life savings.

To find out more about boiler room scams, check out this resource from the Canadian Securities Administrators.

Report a Concern

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymous using the BCSC’s online complaint form.

InvestRight.org is the British Columbia Securities Commission’s investor education website. Subscribe to receive email updates from BCSC InvestRight.

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