Alternative Distribution?
Mike Banos
May 09, 2009
I recently experienced what I could only properly term "boiler room" tactics by a reputable company selling financial securities. I was aghast, to say the least, that this firm would stoop that low just to push its product. Business must be really bad, I thought.
For those not familiar with what is known as "boiler room" tactics, the moniker comes from the shady world of financial scammers in the US where sales people called "boiler room operators" sit in a room making cold calls to potential clients trying to pressure them into buying junk investments. Armed with sophisticated sales scripts and high-pressure sales techniques, they victimize individuals with money such as businessmen, professionals and retirees.
I´m sure you´ve already encountered this previously in one of the malls in the city where a similar modus operandi involving numerous sales people swarm around a potential client and offer him prizes for which the hapless customer finds out later he actually paid for. This high-pressure tactic affects the consumers' decision-making. By the time he realizes he´s been duped, he´s already paid exorbitant prices for stuff he really doesn´t need.
I have no doubts about the product of this reputable firm I´m talking about, it´s the "high-pressure" boiler room tactics they use which I find disturbing. Why adopt a modus operandi which has its roots in the criminal world?
The pitch for this started with a telemarketing staff calling me during my breakfast and getting into her spiel unmindful of what I was doing before she so rudely interrupted before I cut her short and asked her to call later since I was still having my breakfast. See, I usually work at my PC late into the night and oftentimes into the early morning so I often take a rather late breakfast. Still, I found it rude that such a firm would hire someone not properly trained to ask if the party they were calling was free to talk.
Of course, there was a carrot dangled in front of you to make you come to their office where you would be given the A-Z of the new product. And they made sure you came by following it up with calls and even text messages. Where they got my phone number and cellphone numbers I´d like to find out. They didn´t tell when I asked.
This is one characteristic of the "boiler room tactics" you should watch out for: sales people make repeated calls and even become insulting, asking, instance, how anyone could pass up such a "sure thing."
Another is the promise of extraordinarily high profit at little or no risk like what many local investors learned to their sorrow following the recent collapse of a high-profile investment enterprise which was given major minutes by network TV. The rule is: The higher the return, the higher the risk. Listen for salesmen who claim it is possible to make extremely high (15, 20 or 30 percent) or even "guaranteed" profits without any risk of loss. Most legitimate firms will provide written materials clearly disclosing the potential for loss in an investment, as well as its short- and long-term tax implications.
Surprisingly, the reputable firm I was talking about provided no such materials. In fact, I was expecting a power point presentation on a laptop to be de rigueur for such products. But no, this time around, the sales person was equipped with nothing more than a pen and blank sheet of paper. Not that this was objectionable to per se, but if a substantial amount of money is involved, one would expect some glossy brochure or flyer to lend credence to the product or firm.
Another characteristic this firm has adopted from the boiler room was the demand for an immediate decision. Boiler room salesmen want fast action before you have a chance to develop second thoughts or consult with a professional for advice. As a result, many deals will be "gone tomorrow," "sold out today" or have "just one of two remaining openings." All these caveats were present in the presentation made to me by this company.
Nevertheless, despite my misgivings on the "boiler room" tactics involved, I still purchased the product which I found useful for my present purposes. However, I told the sales person I was unhappy with the way the company was using this type of sales technique, which I find totally unnecessary and superfluous for a firm with its stature and reputation.
Still, some other firms out there using these same "boiler room" tactics may not be so legit, like that timeshare company we encountered some time ago offering us a free vacation in a far away place which we never went to. Here are a few tips to remember when called or texted to by such "boiler room operators."
Right off, before you get hooked by high pressure tactics, hang up the phone or delete the text message. Remember, out of sight, out of mind.
Do not make an immediate decision. Get written information first about the firm, the sales person, and the investment.
Do not part with your money until you seek out a professional (lawyer, accountant or broker) for advice.
Avoid investments you do not understand. The greater your degree of ignorance, the greater is the chance that you will be swindled.
Do not give out your credit card number or other personal information over the phone to strangers.
Contact the Department of Trade and Industry (DTI) to find out if the boiler room and sales person are registered to do business in your area. If an investment is being promoted, the firm and agent must be registered to sell into your city, province or municipality.
If you suspect that a phone scammer has contacted you, notify the National Telecommunications Commission (NTC) or the DTI with the name of the firm and the name of the salesman. Prompt action on your part may protect less wary investors.
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For those not familiar with what is known as "boiler room" tactics, the moniker comes from the shady world of financial scammers in the US where sales people called "boiler room operators" sit in a room making cold calls to potential clients trying to pressure them into buying junk investments. Armed with sophisticated sales scripts and high-pressure sales techniques, they victimize individuals with money such as businessmen, professionals and retirees.
I´m sure you´ve already encountered this previously in one of the malls in the city where a similar modus operandi involving numerous sales people swarm around a potential client and offer him prizes for which the hapless customer finds out later he actually paid for. This high-pressure tactic affects the consumers' decision-making. By the time he realizes he´s been duped, he´s already paid exorbitant prices for stuff he really doesn´t need.
I have no doubts about the product of this reputable firm I´m talking about, it´s the "high-pressure" boiler room tactics they use which I find disturbing. Why adopt a modus operandi which has its roots in the criminal world?
The pitch for this started with a telemarketing staff calling me during my breakfast and getting into her spiel unmindful of what I was doing before she so rudely interrupted before I cut her short and asked her to call later since I was still having my breakfast. See, I usually work at my PC late into the night and oftentimes into the early morning so I often take a rather late breakfast. Still, I found it rude that such a firm would hire someone not properly trained to ask if the party they were calling was free to talk.
Of course, there was a carrot dangled in front of you to make you come to their office where you would be given the A-Z of the new product. And they made sure you came by following it up with calls and even text messages. Where they got my phone number and cellphone numbers I´d like to find out. They didn´t tell when I asked.
This is one characteristic of the "boiler room tactics" you should watch out for: sales people make repeated calls and even become insulting, asking, instance, how anyone could pass up such a "sure thing."
Another is the promise of extraordinarily high profit at little or no risk like what many local investors learned to their sorrow following the recent collapse of a high-profile investment enterprise which was given major minutes by network TV. The rule is: The higher the return, the higher the risk. Listen for salesmen who claim it is possible to make extremely high (15, 20 or 30 percent) or even "guaranteed" profits without any risk of loss. Most legitimate firms will provide written materials clearly disclosing the potential for loss in an investment, as well as its short- and long-term tax implications.
Surprisingly, the reputable firm I was talking about provided no such materials. In fact, I was expecting a power point presentation on a laptop to be de rigueur for such products. But no, this time around, the sales person was equipped with nothing more than a pen and blank sheet of paper. Not that this was objectionable to per se, but if a substantial amount of money is involved, one would expect some glossy brochure or flyer to lend credence to the product or firm.
Another characteristic this firm has adopted from the boiler room was the demand for an immediate decision. Boiler room salesmen want fast action before you have a chance to develop second thoughts or consult with a professional for advice. As a result, many deals will be "gone tomorrow," "sold out today" or have "just one of two remaining openings." All these caveats were present in the presentation made to me by this company.
Nevertheless, despite my misgivings on the "boiler room" tactics involved, I still purchased the product which I found useful for my present purposes. However, I told the sales person I was unhappy with the way the company was using this type of sales technique, which I find totally unnecessary and superfluous for a firm with its stature and reputation.
Still, some other firms out there using these same "boiler room" tactics may not be so legit, like that timeshare company we encountered some time ago offering us a free vacation in a far away place which we never went to. Here are a few tips to remember when called or texted to by such "boiler room operators."
Right off, before you get hooked by high pressure tactics, hang up the phone or delete the text message. Remember, out of sight, out of mind.
Do not make an immediate decision. Get written information first about the firm, the sales person, and the investment.
Do not part with your money until you seek out a professional (lawyer, accountant or broker) for advice.
Avoid investments you do not understand. The greater your degree of ignorance, the greater is the chance that you will be swindled.
Do not give out your credit card number or other personal information over the phone to strangers.
Contact the Department of Trade and Industry (DTI) to find out if the boiler room and sales person are registered to do business in your area. If an investment is being promoted, the firm and agent must be registered to sell into your city, province or municipality.
If you suspect that a phone scammer has contacted you, notify the National Telecommunications Commission (NTC) or the DTI with the name of the firm and the name of the salesman. Prompt action on your part may protect less wary investors.
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