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Scams, mis-selling, and sharp practice
Posted: 23 July 2016 12:03:05(UTC)

Joined: 27/01/2013(UTC)
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This post is intended to act as a link for new enquiries so that we don't have to keep repeating the same things.

From time to time in these forums, either members ask about some proposition or firm about which they have doubts, or some newly signed-up member posts what is an obvious advertising trailer for a business unknown to regular members.

In replying, forum members might want to exercise thoughtful moderation in their descriptions of such businesses or propositions especially where their comments, if not based on fact, might be deemed defamatory or libellous and open them, and indeed the forum host, to legal threats.

1. Keeping the right side of laws on libel and defamation:

These laws as they apply to the internet were revised a very few years ago. They are extensive - in retirement I was host and moderator for a website forum for some nine years and I had to read them. But there is a short, readable piece of advice on the BBC site:

For example, it is justifiable to write: "The FCA website says that one indication of a scam is that the suggested rewards sound too good to be true" and "The website holds out the probability of 25% p.a. return. This sounds to me too good to be true" and "I will not be touching this with a bargepole". These three things are facts and "honest opinion".

And it is OK to write: "The Daily Mail investigation [add the link] into DeadCerts concluded that it was a scam" or "this has several hallmarks of a possible scam [list them]." Or: "If you visit the Financial Parasites website forum thread you will see what experiences members had there, many of whom concluded that it was a scam"

But if without facts you write: "DeadCerts is obviously a scam and you shouldn't touch it with a bargepole" you may open yourself and even Citywire to a legal civil challenge to prove it or make remedial payment for defamation.

Be very careful if you allege fraud, which is a criminal matter. Mis-selling is a trading standards matter. Sharp practice is practice that is likely just about legal but not perhaps ethical. The word "scam" is loosely used for all three. The Oxford English Dictionary gives the following meanings:

a. A trick, a ruse; a swindle, a racket

b. (specialist) A fraudulent bankruptcy

c. A story, a rumour, information

However, in general use the third meaning has gone out of currency while the word now tends to imply fraud. Be careful!

If there is a legal challenge to something a forum member has written rather than something the host website has written, the host website is tempted to immediately cave in to the legal threat, for it is not worth the hassle to them. You can make that less likely by phrasing your comments to stay the right side of the law.

2. Doing some quick due diligence:

It is very easy to carry out some quick checks of a firm on the web, free of charge and taking around ten minutes.

a. The website:
- do a whois search on the domain name. For example, on the results are here: Following the registrant's link will lead you to the web management service used by Citywire (Herald). If you want to do further research on who or what is behind a website, you can search the domain name on

What these searches might tell you: that the website's registration is consistent with the firm's owner as given on the website; where it is hosted; names and addresses of others e.g. site administrator/owner.

b. The company:
- do a company check on the company (e.g. search on "Citywire company check"). The free results will tell you whether the enterprise is registered as a limited liability company (or other structure) and if it is a company, give you details of the registered number, the names and addresses of directors, other directorships they have or have had, the length of time the company has been founded, its net worth and whether accounts have been filed.

What watchpoints might this search throw up? - that a company has not been in existence very long; that its net worth is very little; that it has not filed accounts; that its name is very similar to names of other companies. If under the same director, this is a negative sign (e.g. Acme Investments 2004-2006; Acme Investment Company 2006-2009; Acme Opportunities 2009-2010; Acme Capital Markets 2010-2014; Acme Overseas Real Estate Investments 2014-present). If very similar in name to a well-known and more prestigious company, this is also a negative watchpoint.

c. The regulators:
- a company offering investment advice or taking money for investment should be regulated and be able to quote its registered number with the regulator. You can look this up e.g. on the FCA website. This will confirm the extent of authorisation and also give you a couple more addresses for the place of business and the director.

Watchpoints: if this firm is doing things it is not authorised to do, better not to deal with it. The same, if it is dealing in unregulated investments - often an area for propositions of abnormal profit and doubtful worth.

d. The addresses:
- by now you may have a number of addresses to search on Google, Google maps and street view. And e.g. on Zoopla. Do so.....

What might this reveal? - that the company address is in fact an office service agency (very often a prestigious-sounding one in London) or even, as was the case in one I recently looked up, a mailbox servicing agency with a notable address! If the firm's slick website claims "a team of highly-skilled ..." you can bet you won't find any of them, and probably any staff at all, at the company's impressive address if you call without an appointment. Or that the director of this dynamic company claiming years of success lives in a maisonette in Swindon. Or in one recent case that a company promoting itself in these forums appeared to have no verifiable company, owner or address at all despite my tracing by all readily available means.

There is no reason why you should not post the factual results of your enquiries in the forum for the benefit of others. By the way, Citywire checks out fine!

And finally:
Of course, the best defence against questionable propositions is never, ever to respond to cold approaches, and even if someone is introduced to you, do your own due diligence before even thinking about parting with any money. But clearly, as witnessed by the number of people including celebs and sports personalities that fall for propositions claiming high reward but in reality of dubious worth, there's still at least one born every minute.
10 users thanked Micawber for this post.
Tony Peterson on 23/07/2016(UTC), Jim Thompson on 23/07/2016(UTC), Alan Selwood on 25/07/2016(UTC), Nigel G on 25/07/2016(UTC), Jeff Liddiard on 25/07/2016(UTC), J Thomas on 25/07/2016(UTC), c brown on 25/07/2016(UTC), Chris Dean on 26/07/2016(UTC), Mike L on 29/07/2016(UTC), eilidh on 31/07/2016(UTC)
Alan Selwood
Posted: 25 July 2016 12:29:14(UTC)

Joined: 17/12/2011(UTC)
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Another truly excellent post, micawber!

(No, he hasn't offered me any reward for saying that!) ;)

Once again, it would be nice if Citywire could set up this post as a 'sticky' that keeps it in the forefront of our thinking when approaching the topic of scams and fraud.
2 users thanked Alan Selwood for this post.
Micawber on 25/07/2016(UTC), Mike L on 29/07/2016(UTC)
Alan Selwood
Posted: 29 July 2016 11:39:17(UTC)

Joined: 17/12/2011(UTC)
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I have been told that a recent poster called "V......I" has now been taken off the forum.

Very pleasing not to have to endure such blatant advertising tosh in the future!
Jim Thompson
Posted: 29 July 2016 12:01:58(UTC)

Joined: 22/02/2012(UTC)
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Amen to that!

Thank you for making sure it happened.
Posted: 29 July 2016 12:12:56(UTC)

Joined: 27/01/2013(UTC)
Posts: 1,534

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I think only the post several of us reported has been removed. If you search for other posts by that poster they are still there.
Alan Selwood
Posted: 29 July 2016 20:31:12(UTC)

Joined: 17/12/2011(UTC)
Posts: 2,344

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Was thanked: 3447 time(s) in 1346 post(s)
So they are!

I was assured that the poster and posts had been removed.
Posted: 02 November 2016 06:46:26(UTC)

Joined: 27/01/2013(UTC)
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Article on Binary Book reinforces the principle that it is very unwise to respond to any cold approach on investment 'propositions':

Posted: 25 November 2016 08:57:10(UTC)

Joined: 27/01/2013(UTC)
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This rather extraordinary news item highlights the need for due diligence and the extent that shady firms will go to in order to get around it!

Special Report - How a British town became a hub for online porn and poker

One way to boost your pension I suppose!
Posted: 25 November 2016 09:41:35(UTC)

Joined: 09/03/2011(UTC)
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Yes, I read that in the paper this morning but, to be honest, I think it is a non-story. It clearly is a case of a company formation agent setting up off-the-shelf shell companies that many of us will have bought and used from time to time (I certainly have). The fact that some of these shell companies get bought and used for unsavoury, or even illegal, purposes is hardly relevant to the 'Directors' whose names were used initially and who were almost certainly replaced by the new owner's own nominees when it started trading.
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