Posted in Marketing and Strategy Terms, Total Reads: 650
Definition: Boiler Room
It refers to an outbound call centre which involves selling of questionable investment with the help of telephone. It is a room in which salesman work using illegal and dishonest sales tactics. Some of the examples of boiler room activities include doing private placements, selling penny stocks and committing stock fraud. This negative connotation word, implies use of high pressure sales tactics and is characterised by poor working condition. The term has varied meanings in different areas of operation. For example in investing domain, boiler room operation is used to signify high pressure sales tactics in order to sell stocks to the clients. These clients are cold called meaning called randomly from phone directory.
The boiler rooms can also be located in inexpensive office spaces where cold calls are made by armies of telemarketers. There is an overwhelming desire for selling the products and earn commissions, hence it may happen sometimes that stock may be real but the information used to sell the products may be fake. These brokers are not qualified to work in securities since their operations in broker rooms are based on coercion and deception. There have been various incidences where these brokers try to give a false impression that of wealth and importance to deceive clients.
It can be tough if one becomes the victim of boiler room operations. Once the brokers have money, they will try every way possible to not speak to the client. One of the famous example depicting boiler room is shown in Ben Younger’s 2000 production.
One way to escape the boiler room operation is by using common sense and deciphering information received as effectively as possible. One must be cool headed and not tempted by the big money offered. This trick will help to realise that you are in trouble of broiler room and can help to rectify your errors as early as possible.