Putting
Telephone Scams...On Hold
Telemarketing fraud
is a multi-billion dollar business in the
United States. Every year, thousands of
consumers lose as little as a few dollars
to as much as their life savings to telephone
con artists.
That's why the Federal
Trade Commission (FTC) encourages you to
be skeptical when you hear a phone solicitation
and to be aware of the Telemarketing Sales
Rule, a law that can help you protect yourself
from abusive and deceptive telemarketers.
Unlike most other crimes,
telemarketing fraud requires one essential
element: victim participation. We're all
potential targets, because fraud isn't limited
by race, ethnic background, gender, age,
education or income. But, if you're age
60 or older, you may be a special target
for people who sell bogus products and services
by phone. The best way to protect yourself
is to know the differences between legitimate
offers and fraudulent ones.
How
Telemarketing Scams Work
The heart of a fraudulent telemarketing
operation is usually a "boiler room,"
a rented space with desks, telephones and
seasoned operators who call hundreds of
people across the country every day.
Fraudulent
telemarketers may reach you in several ways:
- Cold Calls.
Operators 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 someone 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.
How
Older People Become Victims of Telemarketing
Fraud
Fraudulent telemarketers try to take advantage
of older people on the theory that they
may be more trusting and polite toward strangers.
Older women living alone are special targets
of these scam artists. Here are some reasons
people become victims of telemarketing fraud:
- Often it's hard to know whether a sales
call is legitimate. Telephone con artists
are skilled at sounding believable —
even when they're really telling lies.
- Sometimes telephone con artists reach
you when you're feeling lonely. They may
call day after day — until you think
a friend, not a stranger, is trying to
sell you something.
- Some telephone salespeople have an
answer for everything. You may find it
hard to get them off the phone —
even if they're selling something you're
not interested in — because you
don't want to be rude.
- You may be promised free gifts, prizes,
or vacations — or the "investment
of a lifetime" — but only if
you act "right away." It may
sound like a really good deal. In fact,
telephone con artists are only after your
money. Don't give it to them.
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
may never happen at all.
- Investments.
People lose millions of dollars each year
to "get rich quick" schemes
that promise highreturns with little or
no risk. These can include movies 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 may 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 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.
- Foreign Lotteries.
Scam operators — often based in
Canada — are using the telephone
and direct mail to entice U.S. consumers
to buy chances in high-stakes foreign
lotteries from as far away as Australia
and Europe. These lottery solicitations
violate U.S. law, which prohibits the
cross-border sale or purchase of lottery
tickets by phone or mail. And you may
never see a ticket.
Tip-Offs
to Rip-Offs
If you hear these — or similar
— "lines" from a telephone
salesperson, just say "no thank
you," and hang up the phone.
"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."
"You don't need to check our
company with anyone"- including
your family, lawyer, accountant, local
Better Business Bureau, or consumer
protection agency.
"We'll just put the shipping
and handling charges on your credit
card."
"You don't need any written
information about our company or references."
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How Can You Protect
Yourself?
- 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 pay for something merely because
you'll get a "free gift."
- 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.
- 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."
- 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."
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 made 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.
- 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.
- Calling times are restricted to the
hours between 8 a.m. and 9 p.m.
- 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 non-refundable,
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 don't have to pay for credit repair,
recovery room, or advance-fee loan/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.)
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, 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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