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Telemarketing Fraud: What
You Need to Know
Know
Fraud initiative combines federal, state and private efforts.
How Telemarketing Scams
Work
The heart of a
fraudulent telemarketing operation is usually a "boiler
room," a rented space with desks, telephones and well-trained
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 names, addresses, phone numbers and other information, such as
how much money was spent by people who have responded to previous
telemarketing solicitations. The lists are bought and sold by
promoters. They are invaluable to scam artists, who know that
consumers who have been deceived once are especially 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. 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.
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. The prizes are worthless or overpriced.
Travel packages.
"Free" or "low cost" vacations can end up costing
a bundle in hidden costs, or they may never happen. 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.
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 movies, cable television, Internet gambling, rare
coins, art and 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.
Some Phrases Con
Artists Use
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"You've been
specially selected to hear this offer."
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"You'll get a
wonderful free bonus if you buy our product."
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"You've won one
of five valuable prizes."
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"You've won big
money in a foreign lottery."
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"You must send
money right away."
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"This
investment is low risk and provides a higher return than you can
get anywhere else."
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"You have to
make up your mind right away."
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"We'll just put
the shipping and handling charges on your credit card."
The Telemarketing Sales
Rule
The Federal Trade
Commission's (FTC) Telemarketing Sales Rule requires telemarketers to
make 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," prize promotions and
investment opportunities. It also applies to calls consumers make in
response to postcards or other materials received in the mail. Among
other things, the rule states:
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It's illegal for a
telemarketer to call you again once you've asked to be placed on
their "do not call" list. (It's important that you use
the term "do not call" list.) Use this tip any time a
caller makes you feel uncomfortable.
-
Calling times are
restricted to the hours between 8 a.m. and 9 p.m.
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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.
Federal Lottery Law
According to the Federal
Lottery Law, it is illegal to operate a lottery through the mail or
over the telephone. A lottery exists when you must pay for a chance to
win a prize. The prize could range from money to jewelry or a new car.
The chance means an opportunity to win, such as a drawing or a
matching lucky number. Consideration means some sort of payment by
you. If all three elements are present, it's a lottery
How Can You Protect
Yourself?
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Don't be pressured
to make an immediate decision.
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Don't give your
credit card, checking account or Social Security Number to unknown
callers.
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Don't pay for
something merely because you'll get a "free gift."
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Get all information
in writing before you agree to buy.
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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.
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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.
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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 is properly registered.
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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.
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Make sure you know
the per minute charge for any 900 number call you make.
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Be cautious of
statements that you've won a prize - particularly if the caller
says you must send money to claim it.
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Don't agree to any
offer where you have to pay a registration or shipping fee to
receive a "prize."
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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.
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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."
To Report a Scam
If you have been a
victim of telemarketing fraud, call kNOw Fraud at 877-987-3728,
write to kNOw Fraud at PO Box 45600, Washington, DC 20026-5600;
or visit online at www.consumer.gov/knowfraud.
You may contact your
local law enforcement agency. The Telemarketing Sales Rule gives local
law enforcement officers the power to prosecute fraudulent
telemarketers who operate across state lines.
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