What are recovery room scams?

A recovery room scam occurs when scammers falsely present themselves as insolvency professionals to recover funds lost in a failed investment.

This is a growing problem in the UK so it’s important that you look out for red flags such as:

• False claims of working for the police, government or the Financial Conduct Authority (FCA)
• Stories that lack a reasonable explanation of how money will be recovered
• Web-based email addresses such as Gmail, Yahoo and Hotmail

Contact is usually made using hurried tactics including cold calls to get you to part with your cash. Sometimes these costs can be even greater than the initial investment loss.

Recovery room scammers targeted victims of failed wine investment scheme Global Wine Exchange (GWE) and promised to retrieve their funds.

Recovery room scammers

According to an Insolvency Service report, the fraudsters told GWE investors they would only get their money after sharing personal details of their claim in the company’s liquidation.

In truth, the official receiver responsible for GWE’s liquidation is the only person to whom investors should have revealed this information.

Senior examiner Mark Ireson said: “Recovery room scammers deceitfully impersonate a legitimate corporate entity and claim they are acting on their behalf to help you recover lost fees. In the Global Wine Exchange case, the scammers [sent] emails from what looked like official trading standards accounts.”

Oftentimes, those at the helm of the original fraud, may sell or share a client data within a scam network. This results in victim’s data circulating amongst fraudulent organisations.

Vulnerable investors

Recovery room scammers prey on the vulnerabilities of those who have already lost funds. Furthermore, they know how to take advantage of an investor’s anxiety and desperation.

In some cases, recovery room scammers have used the names of real liquidators (insolvency practitioners) to reel people in. It’s important to note there are legitimate companies that charge for services such as debt assignment.

However, it’s a huge warning sign if someone asks for a fee and claims to be able to recover funds without an official method.

Email info@i10.303.myftpupload.com if you’ve been the victim of an investment scam or you’re struggling to get a return on an investment. And as we say here at Insolvency & Law: always do your due diligence!