What Is a Boiler Room Scam – And How to Smell a Rat

What Is a Boiler Room Scam – And How to Smell a Rat

What is a boiler room scam and how to protect yourself from getting ripped off?

To illustrate it, here is a true story about a businessman (let’s name him Kevin) who got scammed big time by the boiler room fraudsters.

Please read the story because it gives you a pretty clear picture of how heartless con-men use boiler room scams to harass and rip off innocent people.

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Here’s how it happened:

Kevin had his own company, a few expensive sports cars, and did financially exceptionally well. He was a bright man, followed business news, and thus did not classify as one of those ignorant (and therefore highly vulnerable) dream-chasers.

Legitimate companies don't bombard people with cold calls
You don’t need to be a novice to fall victim to sophisticated boiler room frauds.

One day Kevin got a cold call from a smooth-talking ‘broker’ who persuaded him to invest in currency options. The broker said that from these options, it was possible to make two or three times the initial investment.

To prove his case, he asked Kevin to take a piece of paper and do the calculations. And guess what? It worked indeed and added up. Awesome!

Next, the conman asked if Kevin was ready to invest £10,000.

Kevin took the time to think about it and even asked his friend (who, by the way, smelled the rat and suggested, “Stay away”). About a week later, the broker called Kevin again and said that the Euro had fallen (as he had told him before). If Kevin had listened to him, he would have already made £18,000 clear profit.

Kevin checked the numbers and was convinced – everything worked like a clockwork. So he decided to place the deal. A few days later, the broker called again, telling that on the ‘trading floor,’ things were getting wild and that there was an excellent opportunity for a set of options at a very competitive price. This, however, required from Kevin an additional investment of about £250,000.

Kevin refused. Then, as you might suspect, the price dropped quickly, and five minutes later, Kevin agreed to invest an additional £150,000.

A couple of days later, according to Kevin’s calculations, he was up by roughly £30,000. And then, a few days later, the reality hit him like a sledgehammer to the head – He found a fatal mistake in his paperwork. The ‘broker’ knew about the error, of course, but did not tell him.

Long story short –

…No happy ending for Kevin, the poor misguided soul. He lost all his investments.

Boiler room scams use highly sophisticated tactics to make you part with your money

There are countless heartbreaking stories like the one above. And you don’t need to have hundreds of thousands of dollars, to begin with. Also, it does not even matter how much you lose. When you are conned out a significant amount of money, it can have (and often has) devastating effects on both of you and your family as well.

When you read these stories, it’s just heart-wrenching. They will make you cry. Seriously!

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What Is a Boiler Room?

A boiler room scam (sometimes called a ‘Share scam’) is a type of fraud in which fraudsters cold call potential victims and persuade them to invest their money into something that they insist promise very high returns.

The term itself (boiler room) comes from the fact that these scams involve high-pressure selling and increasingly sophisticated rip-off tactics. Thus, it is analogous to the conditions in the boiler and its surrounding room.

Many useful techniques work exceptionally well (more about that later). As you might expect, scammers fill their coffers while unaware victims pay through their nose.

Try this out for size:

The North American Securities Administrators Association estimates that investors lose $10 billion a year (it’s about $1 million per hour) to investment fraud promoted over the telephone alone.


How Does a Boiler Room Work?

As I wrote, the boiler room frauds involve high-pressure selling. They use sales offices where salespeople have to follow carefully prepared scripts.

But for that, they obviously need your phone number (or any other way to contact you). There are different ways to achieve that. They can do it by asking it by email. By the way, I often get emails like the one below:

Spam email asking for a phone number

These (often identical) scam emails always come from separate addresses, though (which is a red light for me).

Another option to get your phone number is to ask it in the signup form:

Scammers often ask your phone number to better persuade you.

Please remember, the initial investment is only a bite and, therefore, relatively small. It is meant to hook and draw you in.

boiler room scams use high-pressure sales tactics. In the photo - telemarketing agentAfter that, the fraudulent salesmen follow up on these unaware victims and convince them to invest more significant sums of money (or buy way more expensive products).

The ugly part here is that when they contact you, they already know your financial situation and how much you can fork out (there are different ways how they get that information). As a result, they can make you an offer that you will find realistic and attainable.

Apparently, this fact alone makes you much more vulnerable to their abuse.

And remember, there is almost always some ‘urgency factor‘ involved in the scheme – to get you to act immediately.

After you have swallowed their hook, line, and sinker (= transferred your initial investment to their account), you are like a salmon on a fishing line:

Once you swallow the bait, it's easy for scammers to rip you off


Wait a few days, and the charming fraudster will show you what a juicy profit your investment has already made. And to bring it home, they may even send a dividend payment of a few hundred dollars to your bank account

…Hey! You just have made easy money! The system works indeed, and you have discovered a secret treasure trove.

They may even contact you to congratulate and check whether you had received the payment. After that, there is a second wave coming – a way juicier offer. This time, though, the required minimum investment is 10 to 20 times higher.

Again, the price is realistic, but it surely hurts. That’s how they have designed it for you. However, because the first deal went so well, then your tank of self-control goes from full to empty. The scammers go for a kill, and you fall prey to temptation.

The result? You will lose everything. It’s not rare when people lose all their savings or even their family home.

what is a boiler room scam and how victims lose their homes

Even worse. The harassment does not stop here.

After you have been ripped off and victimized, the fraudsters sell your details to other scammers who take their turn in carpet bombing you with new ‘lucrative’ offers. The follow-up scam may be related to the previous fraud – they may offer to help you get your money back or buy back the shares after you pay an administration fee. Or it may be completely separate.

what is the boiler room scheme
The numbers are just jaw-dropping. From the FCA (Financial Conduct Authority) website.

It’s beyond words…

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What do These Boiler Room Scams Promote?

Well, they promote everything that promises heavens to you. Here are some of the most common examples (or niches):

  • shares (that’s why boiler room scams are also called share scams.)
  • bonds
  • binary options (for example, check this, this, and this)
  • diamonds
  • gold
  • real estate
  • art
  • betting
  • wine
  • coaching
  • software

What these scam artists usually do is that they sell you worthless, overpriced or even non-existent products (be it shares, diamond, coaching, whatever)

Criminals use every single trick in their tool bag – virtual offices, operating from overseas locations and using offshore bank accounts, fake receptionists, fake testimonials, misleading claims of high returns, a false sense of urgency, threatening, etc., etc., etc.

Frankly, the money invested into these useless companies (old shelf companies with no complaint history), fake diamonds, or overpriced information products will never be likely to make any profit for their investors.

Boiler Room Sales Techniques

Let me list some of the leading sales techniques used by boiler room fraudsters.

1. Upselling

As you have seen above, these schemes always work like that – the initial bite is small and usually delivers. That is designed so – to make your greed glands salivate.

2. High-Pressure Sales Tactics

Expect extremely high-pressure sales pitches – all intended to initiate and close the sale and get you into investing vast sums of money in sham products.

2. Black-mailing

Here’s an example of how scammers used black-mailing to make their victims pay:

what is the boiler room fraud

As you can suspect, these are mostly empty threats. The big trouble for you, though, is that you don’t know whether you deal with criminals. That’s why people take these threats seriously. And pay until it bleeds.

3. Cloning

Cloning is a sophisticated twist on the scam where the scammers ‘clone’ famous and respected companies.

How do they do it?

Simple. The fraudsters use almost identical brand names, logos, mock-websites, email addresses, phone numbers, and even business cards. Thus, when they contact you, they claim to be from a fully regulated and licensed financial institution.

And if you are not careful enough, you will surely fall into their trap.

For example, Skipton Asset Management pretends to be a member of the Skipton Building Society Group (one of the largest building societies in the UK.)

cloned companies

Not only that. Scammers even clone official regulators for financial services firms and financial markets – such as FCA in the UK.

How do they do it?

The same way they clone private companies. They use fake phone numbers that are similar to the conventional ones. When speaking with their victims, they adopt a similar or the same name as genuine consultants. They use impressive job titles, technical jargon, etc.

Then, after ripping off their victims, they call them as official regulators. They provide fake consultation and encourage the victims to accept the defeat – nothing can’t be done anymore, the money is lost and better if they keep their embarrassing ‘investment’ secret.

You see! A smart way to prevent official complaints and lawsuits, right?

Utterly disgusting!

How to Spot Boiler Room Frauds

Remember this: If the offer sounds too good to be true, it probably is!

Here is a shortlist of warning signs on how to recognize boiler room scams:

  1. It is a cold call.
  2. The company has an overseas location
  3. It has an impressive name and convincing website
  4. It promises very high returns
  5. ‘You cannot lose’ guarantees (see here)
  6. You must act at once
  7. You must pay upfront
  8. You must give them your phone number, bank details, and/or your credit card data.
  9. You must keep details confidential

If You Have Got Scammed

If you think you have been a victim of a Boiler Room scam (in fact, any fraud), or you believe that you have information about suspected fraud, it is highly recommended to report.

There are different ways you can report a scam (I list some of the options):

How to Protect Yourself From Boiler Room Scams

Here is a list of some cautionary steps to take:

  1. Beware of offers that appear “too good to be true.”
  2. If you want to invest money, it is way better to research, find, and contact a reputable company than respond to cold calls.
  3. Ask the salesperson as many questions as you can. Also, ask for written materials.
  4. Check the background and details of the one who makes the offer.
  5. Never give out your sensitive personal information (bank and credit card details) out over the phone or by email
  6. Take your time to make a decision. Remember, a false sense of urgency is almost always coded into the script.
  7. Keep any paperwork you are sent (emails, etc.)
  8. Be aware of bank accounts that are based overseas. Also, be mindful of bank accounts that have different names to the companies that are presented.


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What About You

Thank you for taking your time and reading through the review. I hope you found it useful and got the information that you were looking for.

Do you have any first-hand experience with boiler room scams that you want to share?

Please drop a comment into the comment section below, and I will return with a response.

Stay safe!

Egon (EgonSarvReviews.com)




  1. See you says:

    Watch out for the Boiler Room by the name of LMC CAPITAL!
    They sell to Australia and around the world with Australian Banks and they will take your money forever!

  2. Joseph says:

    Hi do you know Ling Capital and ATW mining

    • Hi, Joseph,

      No, I hadn’t heard about them before. But I did a quick check and found their websites. Ling Capital seems interesting, I will research it and if it is in my niche, I will review it. As for ATW Mining, they don’t target my niche so it’s out of my scope.

      Thank you for the comment, Joseph. I appreciate it a lot.

      Stay safe,

  3. Kenny Lee says:

    There are so many types of scam out there that you often wondered if there are any legit programs at all. I’m lucky in a sense that I only lost close to 200 dollars to an online scam. I’m super cautious these days, and highly focus on building my own online business in a realistic manner. I hope many would start to be aware of scams like this too.

    • Thank you for the comment, Kenny. I lost money to scams as well, If memory serves, I think it was $100 or something. Not much but embarrassing anyway. It’s not nice feeling to know that you’ve been scammed.

      However, I decided that I had learned my lesson and I won’t let myself being scammed again. Also, I decided to raise awareness about online scams and that’s how this website was born.

      Now I am just left baffled at how widespread the ‘diseases’ actually is. Also, it’s just mind blowing how many millions of people get scammed each and every year. They all must get (at least somehow) victimized. It’s tragic.

      Thank you again for the comment, Kenny.

      Stay safe!


  4. Israel says:

    Hey Egon!

    Too bad many people end up falling for this scams, and there’s a lot more of them everyday on the Internet.

    I come across many of the binary options’ ones each and every day. They’re everywhere, even spamming my email…

    As you said, there’s many ways to make money online, and they wouldn’t ask you for money right away, since that’s what scammers do.

    Thanks for the heads up and the helpful info about this rip-offs! :)

    • Hi, Israel, and thank you for taking time and dropping a comment.

      I am often stunned how widespread the binary options scam ‘disease’ is. It’s kind like pretty much epidemic already. Can’t imagine how many innocent people get scammed by them. It’s absolutely terrible.

      The need to make extra money is clearly there. The only problem is, if people are not offered proper training, they fall prey to all kind of internet scams (including lucrative binary options). Probably because Binary Options look like an easy and low cost business opportunity. How far it is from truth though.

      I keep telling everybody: If you are a complete novice and want to learn how to make extra income online, don’t mingle with Binary Options. There are much better ways, safe ways, and cheaper ways. Here’s my top recommendation. No risk involved because there are no obligations + it won’t cost you bean to see whether it can help you .

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