Telemarketing Fraud

The Arizona Association of Retired Persons (AARP) has reported that there are approximately 140,000 telemarketing firms operating in the U.S. As many as 14,000 may be fraudulent. The F.B.I. says that consumers lose an estimated $40 billion dollars each year to criminal telemarketers.

How Telemarketing Scams Work

The heart of the fraudulent telemarketing operation is the "boiler room," a rented space with desks, telephones, and experienced sales people called telemarketers. Telemarketing scam artists can victimize anyone with a telephone. Fraudulent telemarketers and sellers may reach you in several ways, but the telephone always plays an important role.

COLD CALLS: You may get a call from a stranger who got your number from the telephone directory, mailing list, or "sucker list." The "sucker list" refers to people who have lost money in the past to fraudulent schemes.

DIRECT MAIL: You may get a letter or a post card saying you won a prize or a contest. This is often a front for a scam. Instructions will tell you to respond to the promoter with certain information. If you do, a sales person will call and may use persuasive sales pitches, scare tactics, or exaggerated claims to deceive you and take your money.

BROADCAST AND PRINT ADVERTISEMENTS: In some cases, you may make the telephone call in response to a television or newspaper advertisement. The fact that you call does not mean the offer is legitimate or that you should be less cautious.

The Telemarketing Sales Rules

The Federal Trade Commission's Telemarketing Sales Rules require certain disclosures and prohibit misrepresentations. The Rules give you the power to stop unwanted telemarketing calls and give state law enforcement the authority to prosecute fraudulent telemarketers who cross state lines. The Rules cover most types of telemarketing calls to consumers. The Rules state the caller:

• Must say it is a sales call & provide seller's name
• Must disclose total cost
• Must disclose terms of sale prior to payment
• Must tell exactly what is being sold
• Must not misrepresent what is being sold
• Must tell if refunds, exchanges, or cancellations are allowed
• Cannot threaten, intimidate, or harass
• Must put consumer on "do not call" list if requested
• Must provide odds of winning
• Must inform that no purchase is necessary to win
• Cannot ask for money to pay taxes on winnings
• Must give instructions on entering contest

Defensive Moves

In addition to knowing about the Telemarketing Sales Rules, it's a good idea to keep the following tips in mind whenever you hear a phone solicitation:

• Resist high-pressure sales tactics. Legitimate businesses respect the fact that you're not interested.
• Take your time. Ask for written information about the product, service, investment opportunity, or charity that is the subject of the call.
• Before you respond to a phone solicitation, talk to a friend, family member, or financial advisor. Your financial investments may have consequences for the people you care about.
• Check out testimonials to make sure they're genuine – not statements that have been bought and paid for.
• Don't send money (cash, check or money order) by courier or overnight delivery, or write to anyone who insists on immediate payment.
• Keep information about your bank accounts and credit cards to yourself – unless you know who you're dealing with.
• Before you pay…check out the company with your local or state consumer protection office.

To Report A Scam

Fight telephone fraud. Report telephone scam artists to your Attorney General. The Telemarketing Sales Rules give local law enforcement officers the power to prosecute fraudulent telemarketers who operate across state lines.

The Arizona Attorney General Consumer Fraud line is 1-800-352-8431.

You may also contact the National Fraud Information Center (NFIC) at 1-800-876-6090, 9 a.m. – 5:30 p.m. EST, Monday-Friday, or at www.fraud.org on the Internet. NFIC is a private, non-profit organization that operates a consumer hot line to provide services and assistance in filing complaints. NFIC also forwards appropriate complaints to the Federal Trade Commission for entry in its telemarketing fraud database.

In addition you may want to file a complaint with the FTC by writing to Consumer Reponse Center, Federal Trade Commission, Washington D.C. 25080.

Remember…

• If you didn't enter a contest, you couldn't have won.
• If it sounds too good to be true, it probably is.
• Something given "free" does not require you to pay.
• Request everything in writing before making a financial commitment.

"If In Doubt, Check It Out!"