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Cold-call phone scams have switched from traditional sales staples, such as unlisted shares in obscure companies, to novel new get-rich investment options such as land, wine, and lumps of rare earth metals.
The Independent reports that the sale of rare earth elements by unregulated “boiler room” companies in England has become the latest trend in investment phone scams.
Around 25 to 30 such companies currently operate in the UK, none of which are subject to regulation or oversight by the Financial Services Authority (FSA).
One company in the Midlands offer credulous investors a “green energy bundle” of rare earth metals via cold-call phone marketing.
For 6,744 British pounds retail investors can buy one kilo of dysprosium, one kilo of yttrium and two kilos of lanthanum and neodymium, which purchasers are informed over the phone will surge in value.
Yet based on current market prices the bundle, assuming 99% purity free of oxides, is worth only 900 pounds, equivalent to a 7.5 times price mark-up.
One investor in Bradford was targeted by cold-call investment company Rare Earth Metal Exchange Ltd firm after receiving a substantial inheritance, the public details of which had been data-mined and sold.
The company convinced the investor to spend 45,000 pounds on five kilos of rare earth metal dyprosium which she was informed would surge in value over the next twelve months.
The investor received only one kilo of the metal, while the total value of her purchase was only around 3,500 pounds.
The new wave of scams capitalize upon the vital importance of rare earth metals for modern hi-tech industries, and the increasing media attention they receive due to China’s stranglehold on global supply.
The FSA states, however, that there is no “convincing evidence that there is a viable market for investors to make money,” with Jonathan Phelan, head of the FSA’s unauthorized business department, pointing out that these kinds of industrial metals are traded between specialist firms.
The FSA has achieved modest success in returning money to investors defrauded via unregulated phone scams, yet has called for the government to introduce new legislation to prohibit such activities and protect the unwary.
