North Yorkshire Police are warning the public to be on their guard against cold-callers pressurising them into buying shares over the phone after four people were conned out of an average of about £400,000 each.

In two of the cases the victims came from the force’s central area, which covers York and Selby, one was from the eastern area, which includes Ryedale, and one from the western area covering Harrogate.

The scams are known as Boiler Room frauds because they are frequently based in a busy office using high-pressure sales techniques to sell often questionable goods or services.

They may involve a bogus stockbroker, usually based overseas, who cold-calls investors and pressures them into buying worthless shares.

The Boiler Room fraudsters are suspected of operating out of foreign locations such as Spain, Hong Kong, Japan and Cyprus.

Historically, victims were usually middle-aged men with previous experience of investments or share and stock dealings, who typically lost £20,000 each to the fraudsters.

However, Operation Archway, which is the national response to the problem co-ordinated by the City of London Police, has seen a sharp rise in the number of women and younger men being targeted by the Boiler Room fraudsters.

In the current economic climate, Boiler Rooms are starting to target victims who have redundancy money or those who are not experienced investors. The biggest individual loss to date recorded by Operation Archway is £1.2m.

Detective Inspector Ian Wills, who is head of North Yorkshire’s financial investigation unit, explained that the fraudsters were usually well-spoken and knowledgeable. They were also extremely persistent.

He said: “They might call their victim several times with offers of research, discounts on stocks in small overseas companies, or shares in a firm that is about to float.

“Boiler Rooms make their money in one of two ways. They might simply take your money and walk away. Or they might sell you shares, but at vastly inflated prices and with exorbitant dealing charges.

“To discourage investigation by law enforcement agencies, the deception is typically perpetrated using different legal jurisdictions for the various parts of the overall offence.

“In addition, victims are being encouraged to sell previously highly-regarded ‘blue chip’ company shares, such as banks and financial institutions, and to invest in green and new technology shares marketed by the Boiler Rooms.”

Police advice is not to accept cold calls, however persistent. Always seek legal and independent financial advice.

Is it too good to be true?

Scams often have similar features that may alert you to the fact that they are not genuine:

•If it sounds too good to be true, it probably is

•You are asked for money up front to pay unexpected fees (such as customs) before your “prize” can be released

•You are asked to provide your bank account number, credit card details or other sensitive personal information

•You are put under pressure to reply immediately or the money will be given to someone else

•You are asked to keep the details secret

Building an online history

DI Wills said: “One of the companies involved in the scam, called Milton Haywood, set up their own professional-looking website and sent out press releases to build up an online history to make them look more credible to their victims.

“By the time they were cold-calling victims, they had been in existence for over two months and their fake online history was already in place so they showed up after an internet search.

“Once their victims had bought the fake shares they were sent worthless share certificates and receipts.”