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Customer data leaked from Barclays and sold to boiler room scammers

According to an article in the Mail on Sunday, thousands of UK Barclays Bank customer files have been stolen and sold on to boiler room companies. The companies used the information in the files to pressure people into investing in scams: rare earth metals; diamonds; and carbon credits.

A whistleblower describing himself as a “former commodity broker” gave the Mail on Sunday a memory stick with details of 2,000 of the bank’s customers. The file on each customer is about 20 pages long and includes details of earnings, savings, mortgages, health issues, insurance policies, passport numbers and national insurance numbers.

The whistleblower used to work for a company that tried to get people to invest in “all manner of dodgy schemes”. He told the Mail on Sunday that Barclay’s customer data was,

“pure gold to brokers (who must have made a fortune out of it) because it gave them a psychological edge over potential investors – their victims.

Because of its detail it allowed the brokers to get inside the minds of their targets. They knew exactly how much money these people were prepared to invest and their attitude to risk.

The company he worked for sold rare earth metals (that did not exist), scamming more than 1,000 people between December 2012 and September 2013. When investors started to realise they’d been tricked, the company boss closed up the boiler room. Computer hard drives were wiped clean, 15 bags of paper records destroyed, and the desks were bleached to remove his DNA from the office.

The Mail on Sunday article includes more details about how these companies operate. The former broker calls them “spank shops”. The brokers cold call people and “spank” or punish them by convincing them to invest in commodities that make money for the broker, but not for the investor. Here are some extracts:

  • “The broker sells the commodity for such a massive mark up that it eliminates any opportunity the investor has to make money. The industry gets young people, brainwashes them, shows them a high end lifestyle and trains them to pull private investors.”
  • “Out of 10,000 brokers, 9,000 will be earning below the minimum wage. The majority will never succeed. The successful ones do not have a moral compass.”
  • “When trust is established it’s very easy to make the ale or ‘load’ a client with a commodity. Loaders are a breed of broker and some can earn 40 per cent a deal on just the commission.”
  • “At one time carbon credits were the top commodities sold. Investors paid £6.50 for the credits – in fact worth nothing.”
  • “A lot of contracts between broker and investor include ‘exit confirmation’ – the date when the return on investment is expected. But in many cases those clauses are a lie. A month or two before the exit strategy is due, the firm winds up and disappears. The owners – criminals in sharp suits – will set up shop, trade for a bit, then the company will close, only for the brokers to open another one.”
  • Barclays released a statement explaining that,

    Our initial investigations suggest this is isolated to customers linked to our Barclays Financial Planning business which we ceased operating as a service in 2011. Based on what we have seen, this appears to be data from 2008 or earlier.

    This leak is hugely embarrassing for Barclays. Obviously, the customer data should never have been leaked from the bank, let alone ended up in the hands of unscrupulous boiler room operations. Barclays has launched an investigation and is working with financial and data protection authorities.

    Barclays collected the details about its customers to facilitate selling them financial products. According to Barclays’ statement, the data “appears” to have been collected in 2008 or earlier for its Financial Planning business. Barclays closed down its Financial Planning business in January 2011, following a review determined it was no longer to be commercially viable. In 2010, the Financial Services Authority announced it would ban commissions for financial advisers from 2013. Barclays was the first bank to stop offering financial advice after the FSA’s announcement.

    The information that Barclays collected was extremely detailed and not necessarily related to finance. One customer, 70-year-old Clive Murrell, told the Mail on Sunday that he’d talked to a Barclays advisor about his model railway. These details went into his file and ended up in the hands of a boiler room who cold called him.

    The scammers started using Barclay’s customer data in December 2012. Presumably they started using the data pretty much as soon as they got it. So why did Barclays keep copies of the customer data for almost two years after its Financial Planning business had closed down?

    PHOTO Credit: Russell Shaw Higgs.

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