SCAM WATCH: What Are ‘Boiler Room’ Dealers?

 2723000293_abd5830a42_zQ: What’s a ‘Boiler Room’ scam, and how do I spot it?

A: If you’ve ever seen the movie Boiler Room, you’ll understand this scam. In this scam you have a big room with a bunch of guys calling lists of people and hard selling them on a very rare, very exclusive deal that will be gone soon.

I worked undercover in a boiler room watching the “brokers” dial all day, talking their poor unsuspecting targets into buying overpriced “specialty coins.” The “brokers,” as they called themselves, used all sorts of fear tactics to lead their prospects into buying overpriced collectibles and specialty proofs. Over and over, I heard the main broker say, “Sir, I recommend you go with the non-confiscatable, non-reportable Double Eagle.” Every time I heard that, I wanted to puke.

They would often use bogus charts that focused on a specific rare coin that had done well for a narrow period of time and then use that one example as proof that the rare coin was a way better buy than the bullion coins. The true charts with long-term trends and actual large data samples showed the exact opposite result, but naturally those charts didn’t sell collectible coins very well so they were kept in the cabinets away from the target.

The type of boiler rooms that sell these high markup coins using scare tactics are neither honest, nor are they acting with integrity. Watch out for boiler rooms. Best to work with dealers you’ve been referred to by people you trust and who are financially savvy.