What is a boiler room?

As a slang term for shady enterprises - the term "boiler room" dates back to the stock swindles of the 1920's - in the run-up to the Great Depression - and refers to the earliest of telephone scam artists – who worked out of the actual basement rooms of office buildings - housing banks of telephones - staffed by unscrupulous high-pressure salespeople - who called lists of potential investors - known as "suckers lists" – and used sophisticated scripting to corner the unsuspecting “suckers” into purchasing highly-speculative - even fraudulent securities.

Back in the day - the cheapest space to rent in an office building was typically located in the basement next to the heating equipment. The term "boiler room" also describes the high pressure atmosphere of such businesses - the raucous racket - as loud as a boiler room - of hundreds of voices crammed into a close setting – all pitching from the same script - and all selling schlock.

The term “boiler room” carries a very negative connotation - and has expanded over the years - and is now applied to almost any sort of telemarketing operation where unfair, dishonest, high-pressure sales tactics are used - whether selling stocks – photocopier toner – home loan modifications - or time shares to name just a few.

Telemarketing fraud from “boiler rooms” is still with us today – is estimated to rake in over 40 Billion/year – and in many cases is tied to Organized Crime. Like many other segments of the Call Center Industry - “boiler rooms” have moved callers offshore to India, the Philippines, Eastern Europe and Central America – in a bid to avoid prosecution by the Federal Trade Commission or FBI. Telemarketing fraud from “boiler rooms” is very much on the increase in Canada, the UK and Australia/New Zealand as well.

It is important to keep in mind that while deplorable & worrisome - telemarketing fraud from “boiler rooms” represents only a very small percentage of the telephone sales calls placed daily – and that the overwhelming majority of telemarketing calls are placed by legitimate, law-abiding business. The Call Center Industry in the US employs more than 3 million people - represents approximately 2.5% of the overall workforce – of which only a tiny percentage works in a “boiler room”.

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