March 23, 1999
What to look for and How to protect
Madison, WI (SafetyAlerts)
- The heart of a fraudulent telemarketing operation is usually a "boiler room,"
a rented space with desks, telephones, and experienced sales people who talk to hundreds
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. Fraudulent telemarketers and sellers may reach you in several ways, but the
telephone always plays an important role.
You may get a call from a stranger who got your
number from a stranger who got your number from a telephone directory, mailing list, or
"sucker list." A "sucker list" refers to lists of consumers who have
lost money through fraudulent prize promotions or merchandise sales. These lists contain
names, addresses, phone numbers, and other information, such as how much money was spent
by people who have responded to telemarketing solicitations. "Sucker lists" are
bought and sold by unscrupulous promoters. They are invaluable to scam artists who know
that consumers who have been deceived once are vulnerable to additional scams.
You may get a letter or postcard saying youve
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, youll be called by a
sales person who may use persuasive sales pitches, scare tactics, and exaggerated claims
to deceive you and take your money.
Broadcast and print
In some cases, you may make the telephone call in
response to a television, newspaper or magazine advertisement, or a direct mail
solicitation. The fact that you make the call doesnt mean the business is legitimate
or that you should be less cautious about buying or investing on the phone.
The telemarketing sales
The Federal Trade Commissions 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 and investment opportunities. It also applies to calls consumers make in
response to postcards or other materials received in the mail.
Keep this information near your telephone. It can
help you determine if you are talking with a legitimate telemarketer or a scam artist.
- Its illegal for a telemarketer to call you if
youve asked not to be called. If they call back, hang up and report them to the
Bureau of Consumer Protection.
- Calling times are restricted to the hours between 8
a.m. and 9 p.m.
- Telemarketers must tell you its a sales call
and whos doing the selling before they make their pitch. If its a prize
promotion, they must tell you that no purchase or payment is necessary to enter or win. If
youre asked to pay for a prize, hang up. Free is free.
- Its illegal for telemarketers to misrepresent
any information, including facts about their goods or services, earnings potential,
profitability, risk or liquidity or an investment, or the nature of a prize in a
- 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.
- Its illegal for a telemarketer to withdraw
money from your checking account without your express, verifiable authorization.
- 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/credit services until these services have been delivered.
- 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
While most types of telemarketing calls are
covered by the rule, there are several exceptions. The rule does not cover the following
- Calls placed by consumers in response to general
media advertising (except calls responding to ads for investment opportunities, credit
repair services, recovery room services, or advance-fee loans.)
- 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, prize promotions, credit repair
services, recovery room services, or advance-fee loans).
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
Calls from one business to another unless
non-durable office or cleaning supplies are being offered.
Sales of pay-per-call services and sales of
franchises. These are covered by other FTC rules.
In addition to knowing about the Telemarketing
Sales Rule, its a good idea to keep the following tips in mind whenever you hear a
- Resist high pressure sales tactics. Legitimate
businesses respect the fact that youre not interested.
- Take your time. Ask for written information about
the product, service, investment opportunity, or charity thats the subject of the
- Before you respond to a phone solicitation, talk to
a friend, family member, or financial advisor. Your financial investments may have
consequences for people you care about.
- Check out testimonials to make sure theyre
genuine - not statements that have been bought or paid for.
- Dont send money - cash, check or money order
- by courier, overnight delivery, or wire to anyone who insists on immediate payment.
- Keep information about your bank accounts and
credit cards to yourself - unless you know who youre dealing with.
Before you pay, check out the company with the
Bureau of Consumer Protection. Call toll-free: 1-800-422-7128.
To report a scam
Fight telephone fraud. Report telephone scam
artists to this office, the Bureau of Consumer Protection at 1-800-422-7128. The
Telemarketing Sales rule gives state law enforcement officers the power to prosecute
fraudulent telemarketers who operate across state lines.
You also may call the National Fraud Information
Center (NFIC) at 1-800-876-7060, 9 a.m. - 5:30 p.m. EST, Monday-Friday. 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 on its telemarketing fraud database.
In addition, you may want to file a complaint with
the FTC by writing to: Correspondence Branch, Federal Trade Commission, Washington, D.C.
20580. Although the FTC generally does not intervene in individual disputes, the
information you provide may help indicate a pattern of possible law violations requiring
action by the Commission.
Back to "Junk Mail and Telemarketer Fraud"
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