Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Boiler Room

What it is:

A boiler room is a call center in which salespeople call potential investors in an attempt to sell risky, or even falsified, investment opportunities using aggressive and unethical tactics.

How it works (Example):

The term came about as a result of the high pressure sales environment it creates. Most salespeople in these environments work solely on commission and many of the investment opportunities are less-than-legitimate.

The salesperson may use fake reports or documents to support claims of profits or legitimacy. During the sales call, aggressive tactics are used to intimidate and entice naïve and non-investment-savvy consumers to partake in an investment scam that may have little, if any, true value. The salespeople try to entice potential investors by promising or hinting at huge returns on their investment.

Why it Matters:

If not illegal, the sales tactics that are used in boiler rooms do not conform to government regulations or fair market rules. Boiler room salespeople maximize their income by conveying one-sided, or even false, information in order to persuade as many customers as possible to invest as quickly as possible.