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Boiler rooms are cramped, low-rent offices where telemarketers use high-pressure sales tactics to sell fraudulent or speculative stock options or memberships. These operations can move frequently and use aggressive cold-calling methods. Legal boiler rooms handle magazine subscriptions and fundraising for charities.
Certain unscrupulous telemarketing operations are often run in cramped, low-rent offices with little more than desks, laptops, and phone banks. Employees at these companies are expected to make unsolicited phone calls, also known as up calls, to potential customers in the local area. Often, the product or service sold over the phone is a fraudulent stock option or a membership of a local police or fire benevolent association. Because telemarketers perform high-pressure sales jobs in a less-than-desirable office space, many people refer to the workspace as a boiler room.
A boiler room is usually a mobile feast in business circles. Owners of these telemarketing companies rarely stay in one location for more than a few months and may even need to pack their bags overnight if a formal complaint is lodged about their operation. This is why many boiler room operations can actually be based in basements, private offices or even hotel rooms. As long as boiler room operators can obtain local telephone service and basic services, space quality is a secondary consideration.
Employees working in a boiler room can be encouraged to use dishonest sales tactics and high-pressure techniques to reach a quota. They may be working “in association” with a recognized broker, for example, and have an extremely good investment opportunity to share with preferred clients. In many cases, the preferred customer is often a senior citizen or a retired investor. However, a boiler stockbroker does not stop at the first rejection. He or she might berate the prospect for wasting such a lucrative investment or use other strong language like intimidation.
Often, the stock option or investment opportunity offered by the telemarketer is fraudulent or highly speculative. The victim does not have the opportunity to review a prospectus or verify other claims made by the caller. The decision to invest in the proposal should be made at the end of the call, with little time for consideration. Often these high-pressure sales tactics end with a sudden disconnect, but boiler operators only need a few completed transactions to cover their expenses and make a profit. A boiler telemarketer can make several hundred cold calls a day, but only needs a handful of closes to meet his quota.
A telemarketing operation for boilers can be considered legal in many jurisdictions, as long as the owners have proper business licenses. It’s not uncommon to see advertisements for telemarketing jobs posted on college campuses and in local newspapers. Magazine subscription renewals and fundraising from local charitable organizations are usually handled through fairly reputable boiler operations. More unscrupulous boiler room operations, however, employ experienced telemarketers who are familiar with high pressure tactics and aggressive cold calling methods. These operations can suddenly appear in a new place and disappear just as quickly. A boiler room is no place for social introverts, to say the least.
Asset Smart.
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