July is Scams Awareness Month 2017, a campaign led by Citizens Advice and Trading Standards which encourages people to report and talk about scams.
Whilst you may not think a fake liquidator contacting you is something you or a loved one would have any need to worry about The Financial Services Authority (FSA) have warned that 30% of people who have lost money through Investment fraud will also fall victim to a Recovery Room fraud. This could see a fake liquidator make an approach to you especially if you have previously made an investment over the telephone.
Investment scam companies can be forced into liquidation. Some of the most recent cases have been companies involved in wine, carbon credits, land, precious metals and diamonds.
Victims of such companies may only find out their investment was a scam when they learn of the liquidation. The victim may receive a letter from the Liquidator, see something on the internet or find out by chance when trying to contact the company for an update. Any one of these scenarios can be life shattering and see the victim subjected to another level of scam manipulation known as the ‘Recovery Room Scam’.
A Recovery Room Scam is a follow up to a lost investment. The perpetrators of the original scam will have shared or sold their customers’ personal details within a scam network. Victims will now find themselves to be on a list that is circulated around different scam operations. These scammers will now be preying on the vulnerability of victims, their anxiety and in some cases desperation to see their investment ‘found’ or returned.
In many cases the official Liquidator will have written to the creditors listed in the company’s records and advised there are no investments held in the victim’s name or any that are will be of nominal value. Fraudsters will use this to their advantage. When many victims are trying to come to terms with the distressing knowledge that their investment is worthless fraudsters will be busy making an approach to these victims, generally by telephone, in a bid to part them with even more of their savings.
A common theme is emerging from the scammers. They are trying to add credibility to their approach and the victim is being told one of the following scenarios:
The Liquidator has instructed the company to contact the creditor directly (sometimes purporting to be a government agency or legal professional);
The Liquidator has concluded their role and now the scam company has received the victim’s details to take over their case;
The scam company has located the victims lost ‘investment’ and the liquidator has authorised the company to facilitate the release for a fee/tax or sale to a buyer.
Shockingly in some cases the scammer will masquerade as the legitimate Liquidator.
These scammers will suggest a small fee at first which will soon escalate with the fraudster providing various excuses for the delay and the need for further funds. Some victims I have spoken to say they felt it probably was a scam but because the amount was so small and it offered the opportunity to have their investment returned they wanted to take that risk.
The small amounts however soon grow with some losing track of the ‘recovery’ costs being incurred. The amounts lost in recovery room fraud can parallel that of the initial loss.
No invested assets are ever recovered or money returned.
A Liquidator would never instruct a third party to seek an upfront fee or tax to release a victim’s ‘lost’ investment nor would they request any upfront cost.
If you are approached to make any kind of payment to release your ‘found’ investment always revert back to the Liquidator. The genuine Liquidator’s contact details can be confirmed by checking the London Gazette or through Companies House.
Further advice on scam awareness and recovering losses can be found here:
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Victims of investment scams are increasingly vulnerable to other investment scams, follow-up scams and recovery room fraud. The perpetrators of these scams are in possession of your details and even when they have been stopped and closed, down your details may have already been shared and re-used by numerous scammers. Once you have made an initial ‘investment’, you are classed as a potential repeat target and the web of scammers will stop at nothing if they think they can steal more of your money.