The University of Luxembourg research scam

One lovemoney.com reader was targeted by scammers claiming to be researchers from the University of Luxembourg. But some seemingly-innocent questions masked a classic boiler room scam.

Like most people, I don't know that much about Luxembourg. Here's the limit of my knowledge: the Grand Duchy used to play great music on its crackly radio station to teenager transistor radios, when the BBC majored on light orchestral and Cliff Richard. It's very small (50 by 35 miles so you can cross it in an hour) and has a population of just over half a million. And it has an “offshore” style finance industry and tax haven advantages, even though it is landlocked.

In addition, thanks to a lovemoney.com reader, I now know that it has a university – the University of Luxembourg. I could be forgiven for missing that one – it's very small and this year celebrated its tenth birthday. It has around six thousand students, many of whom also study in neighbouring France, Germany and Belgium as its courses are limited. You can study science, international finance and a few other subjects.

A degree in cold calling?

But one thing it does not do is to cold call UK investors. Yet, this reader tells me, he was phoned out of the blue by a man with perfect English who claimed he was researching UK attitudes to finance in the wake of the banking crash. Ian, our reader, says he was told that he had been selected to answer questions on how the recession is affecting people in the UK.

The questions started in a fairly general way, things like "Has the recession affected you?" and "Have you cut back on your personal spending?". Why should they want to know that from an individual? And how was he “selected”?

Given the amount of data that is published for the UK every month plus the huge number of anecdotal stories online and in newspapers, no one in their right mind would spend time (and we are talking best part of half an hour) talking to one person if they were looking to research this.

Research projects do not just call individuals out of the blue. It does not make sense – and no university department would have the funds to do this anyway. But had this been a legitimate opinion poll survey, the caller would have identified themselves with the name of their firm (such as Gallop or Ipsos-Mori) and prefaced their questions with a preamble from the Market Research Society to confirm their legitimacy.

The questions turn personal

The questions then became more personal - again something no legitimate market researcher would do.

How have your savings held up? How are your investments doing? Would you be interested in improving returns?

At this stage, it is obvious that this is a boiler room fishing for customers. The call is intended to establish that the named person lives at the address, answers the phone, and, most importantly, has some money which could be “re-invested” in some guaranteed-to-lose scheme. It is also meant to create that essential rapport without which selling dodgy or non-existent investments is so much more difficult – hence all those questions about jobs, family and interests.

Ian put the phone down – hard – with a few choice words of which “stop wasting my time” were the mildest.

Had he not done so Ian would have been subquently contacted by the usual “junior broker” who would have put him on to his “senior broker” (the two jobs are interchangeable) – and he would have been subjected to a hard sell in some rubbish “non-investment” investment.

Alternatively, the first caller might have morphed immediately into a boiler room sales operative once he concluded that Ian was suitable as a victim.

This is a new approach, but it will be used, again although next time the university or other academic institution will be somewhere different.

The racket works on the basis that most of us trust academics, who are seen as disinterested and not money chasing, and that many of us like to give our opinions. Legitimate researchers do not cold call. Legitimate researchers always make prior arrangements to talk to someone – and that's assuming there is any research legitimacy in the first place.

A cold call is always a bad call.

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