Friday 23 February 2018

New warning to elderly on 'too good to be true' scam fraudsters

Stock photo: PA
Stock photo: PA
Charlie Weston

Charlie Weston

Elderly people who own shares have been warned not to let investment fraudsters offering "too good to be true" deals trick them into parting with their cash.

There has been a spate of attempts by swindlers from overseas companies cold-calling investors and trying to scam money from them. The con artists tend to target people over the age of 55 and use psychological games to trap unwitting victims.

They will also use pressure tactics, like forcing share owners to act quick or make decisions on a "special deal".

The Irish Stock Exchange and the Central Bank have warned people with investments to be on their guard.

"Investors are reminded to be vigilant. If it sounds too good to be true, it probably is," a spokeswoman for the Irish Stock Exchange (ISE) said.

Recently, quoted nutrition group Glanbia warned its shareholders to be vigilant against what the company describes as "boiler-room" fraudsters.

Shareholders, many of them farmers, are receiving unsolicited phone calls from foreign companies seeking to sell or buy Glanbia shares at inflated prices.

Boiler-room scams are where fraudsters cold-call investors offering them worthless, overpriced or even non-existent shares.

They promise high returns, but people who take up the offers usually end up losing their money.

Ciaran Phelan, chief executive of the Irish Brokers Association, said his members were aware of clients being targeted in these scams.

"We suspect that many of those that have been subject to it unfortunately don't tell anyone," he said.

He added that these days, returns from secure or guaranteed investments tend to be relatively small, typically less than 2pc to 3pc a year, so any offer that is better than this warrants close scrutiny.

Mr Phelan said that people should be wary of dealing with unsolicited phone calls.

"Only dealing with someone over the phone isn't wise," he said. "Similarly, dealing with someone over the internet also carries its own risks and is really only appropriate for those that can decipher the difference between a fraudulent and a genuine offer."

Read More: If it sounds too good to be true, it is

The Central Bank regularly warns about, and names, firms that are not authorised to operate here that are attempting to do business in Ireland.

Last week, it said a firm calling itself GMO Funds Plc, GMO IM Ltd, GMO Investment Management Plc, GMO Investment Management (Ireland) Limited and/or GMO Investment Management Limited was offering investment services and/or offering investment advice.

The Central Bank said the firm had cloned the details of a firm it regulates called, GMO Funds plc and GMO Investment Management Company (Ireland).

"This unauthorised firm has been operating as an investment firm in the State in the absence of an appropriate authorisation," the Central Bank said.

Someone who invests their cash with an unauthorised firm will have no protection from the Financial Ombudsman Service or the investor compensation scheme, which can pay eligible investors 90pc of the money they have lost in an authorised firm, up to a maximum of €20,000.

Flattery is a common tactic used to swindle people in investment scams.

This could include a scammer praising their victim for being a "knowledgeable investor".

Fraudsters may also pressurise potential investors to make a quick decision on a limited-time investment offer. They may also tell unwitting targets that other people have backed the shares or want to put money into the investment.

Research in the UK found that more than half of over-55s surveyed believed acting quickly can be key to getting a good deal, suggesting that many people could be vulnerable to this tactic.

Mr Phelan said investors should get advice from an independent financial adviser who is appropriately qualified and regulated by the Central Bank to give that advice.

How to spot the tactics used by cruel con artists

Many people have been tricked, but would you know how to spot an investment scam?

Here are some common tactics used by boiler-room fraudsters, according to regulators:

* Offering the target lucrative returns above the market rate and downplaying the risks of the investment.

* Making use of flattery to make their potential fraud victims feel good, such as praising them for being such a knowledgeable investor.

* Saying that the deal is available only to the target, and asking them to keep it a secret.

* Saying that other clients have already invested in the shares or want in on the deal.

* Putting people under pressure to invest in a time-limited offer.

Irish Independent

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