Straight Talk About Telemarketing
It's like clockwork. You
sit down to dinner and the phone rings.
You answer it. The caller is trying to sell
you something or tell you that you've won
a fabulous prize. If you're tempted by the
offer, get the facts. If you don't, you
may be in for a fraud.
Although most phone sales
pitches are made on behalf of legitimate
organizations offering genuine products
and services, many sales calls are frauds.
Consumers lose billions of dollars a year
to telemarketing fraud. That's why the Federal
Trade Commission (FTC) encourages you to
be skeptical when you hear a phone solicitation
and to be aware of a law — the Telemarketing
Sales Rule — that can help you protect
yourself from abusive or deceptive telemarketers.
How
Telemarketing Scams Work
The heart of a fraudulent telemarketing
operation is usually a "boiler room,"
where seasoned operators try to scam hundreds
of thousands of people across the country
every day. Telephone fraud knows no race,
ethnic, gender, age, education or income
barriers. Anyone with a phone can be victimized
by telemarketing scam artists.
Cold Calls.
Scammers may get your number from a telephone
directory, a mailing list or what fraudsters
call a "sucker list." Sucker lists
contain information about people who have
responded to previous telemarketing solicitations,
like their name, phone number, and how much
money they spent. The lists are bought and
sold by promoters. They are invaluable to
scam artists, who believe that consumers
who have been deceived once are vulnerable
to additional scams.
Direct Mail.
You may get a letter or postcard saying
you've won a prize or a contest. This often
is a front for a scam. The instructions
tell you to respond to the promoter with
certain information. If you do, you'll be
called by a fraudster who may use persuasive
sales pitches, scare tactics, and false
claims to deceive you and take your money.
Broadcast and
Print Advertisements. You may place
a call in response to a television, newspaper,
or magazine advertisement. The fact that
you initiate the call doesn't mean the business
is legitimate or that you should be less
cautious about buying or investing on the
phone.
Tip-Offs
to Telephone Rip-Offs
Fraudulent telemarketers
often use phrases like these —
“You’ve
been specially selected to hear this
offer.”
“You’ll
get a wonderful free bonus if you
buy our product.”
“You’ve
won one of five valuable prizes.”
“You’ve
won big money in a foreign lottery.”
“You must
send money right away.”
“This investment
is low risk and provides a higher
return than you can get anywhere else.”
“You have
to make up your mind right away.”
“We’ll
just put the shipping and handling
charges on your credit card.” |
The
Hooks
Prize offers.
You usually have to do something to get
your "free" prize, like attend
a sales presentation, buy something, pay
a fee, or give out a credit card number.
But the prizes are worthless or overpriced.
Travel packages.
"Free" or "low cost"
vacations can end up costing a bundle in
hidden costs. You may pay a high price for
some part of the package — like hotel
or airfare. The total cost may run two to
three times more than what you'd expect
to pay, or what you were led to believe.
Some "bargain" vacations never
happen at all.
Investments.
People lose millions of dollars each year
to "get rich quick" schemes that
promise high returns with little or no risk.
These can include movie or cable television
production deals, Internet gambling, rare
coins, art, or other "investment opportunities."
The schemes vary, but one thing is consistent:
Unscrupulous promoters of investment fraud
rely on the fact that investing can be complicated,
and many people don't research the
investment process.
Charities.
Con artists often push you for an immediate
gift, but won't send written information
so you can check them out. They also may
try to confuse you by using names that sound
like well-known charitable organizations
or even law enforcement agencies.
Recovery scams.
If you buy into any of the above scams,
you're likely to be placed in a sucker list
and be called again by someone promising
to get your money back. Be careful not to
lose more money to this common practice.
Even law enforcement officials can't guarantee
they'll recover your money.
Defensive
Moves
In addition to knowing
about the Telemarketing Sales Rule,
it’s a good idea to keep the
following tips in mind whenever you
hear a phone solicitation:
- Don’t be pressured to make
an immediate decision.
- Don’t give your credit
card, checking account, or Social
Security number to unknown callers.
- Don’t buy something merely
because you’ll get a “free
gift.”
- Be cautious of statements that
you’ve won a prize —
particularly if the caller says
you must send money to claim it.
- Don’t agree to any offer
where you have to pay a registration
or shipping fee to receive a “prize.”
- Get all information in writing
before you agree to buy.
- Check out a charity before you
give. Ask how much of your donation
actually goes to the charity. Ask
that written information be sent
to you so you can make an informed
giving decision.
- Don’t invest your money
with an unknown caller who insists
you make up your mind immediately.
- If the offer is an investment,
check with your state securities
regulator to see if it’s properly
registered.
- Don’t send cash by messenger
or overnight mail. If you use cash
rather than a credit card in the
transaction, you may lose your right
to dispute fraudulent charges.
- Make sure you know the per minute
charge for any 900 number call you
make.
- Check out unsolicited offers
with the Better Business Bureau,
local consumer protection agency,
or state Attorney General’s
office before you agree to send
money.
- Beware of offers to “help”
you recover money you may have lost
previously. Be wary of callers saying
they are law enforcement officers
who will help you get your money
back “for a fee.”
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The
Telemarketing Sales Rule
The FTC's Telemarketing Sales Rule requires
certain disclosures and prohibits misrepresentations.
It gives you the power to stop unwanted
telemarketing calls and gives state law
enforcement officers the authority to prosecute
fraudulent telemarketers who operate across
state lines.
The Rule covers most types
of telemarketing calls to consumers, including
calls to pitch goods, services, "sweepstakes,"
and prize promotion or investment opportunities.
It also applies to calls consumers make
in response to materials received in the
mail, or offers received through the Internet.
Keep this information
near your telephone. It can help you determine
if you're talking with a legitimate telemarketer
or a scam artist.
- It's illegal for a telemarketer to
call you if you've asked not to be called.
In fact, the federal government has created
the National Do Not Call Registry —
the free, easy way to reduce the telemarketing
calls you get at home. To register, or
to get information, visit www.donotcall.gov,
or call toll-free 1-888-382-1222
(TTY: 1-866-290-4236) from the phone you
want to register. You will receive fewer
telemarketing calls within three months
of registering your number. It will stay
in the registry for five years or until
it is disconnected or you take it off
the registry. After five years, you will
be able to renew your registration.
- It's also against the law to call you
before 8 a.m. and after 9 p.m.
- If your number is not on the National
Do Not Call Registry, you still can ask
a company to put you on its own do not
call list. The company must honor your
request.
- Telemarketers must tell you it's a
sales call and who's doing the selling
before they make their pitch. If it's
a prize promotion, they must tell you
that no purchase or payment is necessary
to enter or win. If you're asked to pay
for a prize, hang up. Free is free.
- It's illegal for telemarketers to misrepresent
any information, including facts about
their goods or services, the earnings
potential, profitability, or risk of an
investment, or the nature of a prize in
a prize-promotion scheme.
- Telemarketers must tell you the total
cost of the products or services offered
and any restrictions on getting or using
them, or that a sale is final or nonrefundable,
before you pay. In a prize promotion,
they must tell you the odds of winning,
that no purchase or payment is necessary
to win, and any restrictions or conditions
of receiving the prize.
- It's illegal for a telemarketer to
withdraw money from your checking account
without your express, verifiable authorization.
That means they must tell you the total
number of payments, the amount of each
payment, the date the payments will be
submitted to your bank, and which account
they will charge.
- Telemarketers cannot lie to get you
to pay, no matter what method of payment
you use.
- You do not have to pay for credit repair,
recovery room, or advance-fee loan or
credit services until after these services
have been delivered. (Most of these offers
are scams. Credit repair companies claim
that, for a fee, they can change or erase
accurate negative information from your
credit report. Only time can erase such
information. Recovery room operators contact
people who have lost money to a previous
telemarketing scam and promise that, for
a fee or donation to a specified charity,
they will recover your lost money, or
the product or prize never received from
a telemarketer. Advance-fee loans are
offered by companies who claim they can
guarantee you a loan for a fee paid in
advance. The fee may range from $100 to
several hundred dollars.)
- If you have the slightest doubt about
a telephone offer, wait until you can
get information in writing and check it
out!
Exceptions
to the Rule
Although most types of telemarketing calls
are covered by the Rule, there are several
exceptions. The Rule does not
cover the following situations:
- Calls placed by consumers in response
to general media advertising, like television
or newspaper advertisements. (Calls responding
to ads for investment opportunities, business
opportunities other than those covered
by the FTC's Franchise Rule, credit card
loss protection, credit repair services,
recovery room services, or advance-fee
loans are covered.)
- Calls placed by consumers in response
to direct mail advertising that discloses
all the material information required
by the Rule, except calls responding to
ads for investment opportunities, business
opportunities other than those covered
by the Franchise Rule, credit card loss
protection, prize promotions, credit repair
services, recovery room services, advance-fee
loans, or to "upselling." Upselling
is when a company offers you additional
goods or services after the initial transaction
for which you called.
- Catalog sales.
- Calls that are initiated by the consumer
that are not made in response to any solicitation.
- Sales that are not completed, and payment
or authorization for payment is not required,
until there is a face-to-face sales presentation.
- Business-to-business calls. But calls
offering nondurable office or cleaning
supplies are
covered.
- Sales of pay-per-call services and
sales of franchises. These are covered
by other FTC rules.
To
Report a Scam
Fight telephone fraud. Report telephone
scam artists to the Federal Trade Commission
and your state Attorney General. The Telemarketing
Sales Rule gives these local law enforcement
officers the power to prosecute fraudulent
telemarketers who operate across state lines.
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