The UK regulator, the Financial Services Authority, has revealed that there were more reports of share fraud activity in 2011 than 2010, but fewer people lost money.

In 2011 the FSA saw a 19 per cent increase in enquiries about boiler room fraud, with 5,401 reports made compared to 4,527 in 2010. But despite the increase there was a seven per cent drop in 2011 (from 831 to 770) in the number of people who fell for the scam after having been contacted.

As the average investor loses approximately ÂŁ20,000 (about $32,000) to a share fraudster, this could represent up to ÂŁ1 million potentially saved.

The FSA had previously warned that share fraudsters increasingly clone genuine authorised firms or individuals to appear more credible: the statistics support that trend. In 2011, there were 449 reports made about cloned firms, almost three times as many as the year before when 161 such reports were made.

And to keep up the anti-fraud momentum the FSA has made an online video explaining what a boiler room is, how it operates, how to avoid becoming a victim – and, importantly, what steps to take if you have been scammed. It can be seen via this link.

Boiler rooms are unauthorised, overseas-based companies with bogus UK addresses and phone lines routed abroad. They usually contact people by telephone and use high pressure sales tactics to con victims into buying non-tradable, overpriced or even non-existent shares.