REDD-Monitor has reported several times on sales of carbon credits in the UK, from what seem to be boiler room operations. The Metropolitan Police recently put out, “The Little Book of Big Scams” (pdf file, 3.9 MB), explaining how to avoid these and other scams and providing advice on what to do if you are the victim of an investment scam.
A boiler room is a cheap, rented office where salespeople ring hundreds of people every day using high pressure sales techniques. (There’s a film called Boiler Room which is worth watching to get an idea of how the scam works.)
Carbon credits are one of the investments where “fraud is commonplace” according to the police. Other investments to be wary of include land, wine, gold, jewels, stocks and shares. The average victim in an investment scam loses £20,000.
The Little Book of Big Scams includes a list of what you need to know about boiler room scams:
- Scammers will cold-call you normally by telephone and try to sell you investments that will supposedly lead to huge financial gains. In reality they either do not exist or are worthless.
- Often the scammers will give you details that you might think only a genuine investment company will have. They may have details of previous investments you have made, shares you hold and know your personal circumstances. Be aware the scammers will do their homework and make it their business to know as much about you as possible.
- The scammers will often call you a number of times slowly developing a friendly relationship. If you respond in anyway they will persist, build trust and eventually persuade you to part with your money. Having obtained some money from you, they will probably call again and try to persuade you to ‘invest’ further money, perhaps in a different commodity.
- Scammers may say they are from a well-known and reputable investment company. Some will say they are stockbrokers and some pretend to be investors. Always seek independent/legal advice before you commit to any investment.
And the book explains what you should and shouldn’t do if you are contacted by someone trying sell carbon credits over the phone:
If you think you have been targeted by a carbon credit scam (or other investment scam), report it to Action Fraud. Contact them by phone on 0300 123 2040 or via the website. Action Fraud will provide advice and will send a report to the National Fraud Intelligence Bureau.
The National Fraud Intelligence Bureau has a warning page on its website about carbon credit scams: “The reality is victims are handing over their savings for worthless vouchers from an unregulated market, with individual losses running into hundreds of thousands of pounds.” NFIB’s website includes the following information and advice:
- If you buy carbon credits you WILL NOT make any money no matter what the salesman says.
- Companies will not offset their carbon allowance by buying carbon credits from individuals – as the salesman claims.
- Companies will purchase carbon credits from other companies/brokers and these deals take a lot of time to set up and are heavily regulated – for this reason carbon credits are not investments that an individual can make money on.
- There is a heavily regulated market for carbon credits and this is the market that the salesman will be referring to. However individuals do not invest in this regulated market. What the salesman will actually sell you is what is known as a “voluntary” carbon credit where environmentally conscious small businesses and individuals pay to off-set their carbon emissions. This is not a “regulated” carbon credit.
- These are bought by the salesman for around 50p and sold to victims for a massively inflated priced dressed up as carbon credits from the “regulated” market.
If the salesman believes that the victim has more money to invest they may even give a return on the initial small investment to build confidence in the victim. They will then request a larger investment promising higher returns. The victim will jump at the chance and then lose all their money. - If you are cold called and offered carbon credits – HANG UP THE PHONE IMMEDIATELY!