1. Americans lose over $40 billion per year from falling victim to fraudulent marketing of goods and services over the telephone, according to the FBI.
2. Attorneys general offices around the country report numerous cases of older persons losing their life savings to telemarketers.
3. One-third of the fraudulent telephone "boiler rooms" closed down in a recent FBI nationwide sting operation exclusively targeted older persons.
4. Ninety-two percent of all American adults have at one time or another received a postcard or letter in the mail informing them that they have won a fabulous prize. Nearly one-third or 53.6 million people have responded and often unwittingly self-selected themselves as potential victims for unscrupulous telemarketers to call. (Harris, Telephone-Based Fraud: A Survey of the American Public, 1992).
5. There are 140,000 firms engaged in the telemarketing business in the U.S. Authorities estimate up to 10 percent or 14,000 of them are fraudulent "boiler rooms."
There are many specific tactics that unscrupulous telemarketers use to rip off older Americans. Most of them revolve around the so-called "sweepstakes mentality": the idea that it is possible to get something for nothing. "Congratulations! Mrs. Jane Doe, you are the grand prize winner" is the battle cry of the 1990s for literally thousands of illegal telephone marketing rooms across America.
The next time you get a suspicious phone call, compare what the caller wants you to hear (the pitch) with what may be really going on (the truth).
The Pitch: You've Won a Valuable Prize
Congratulations, you've just won either a $35,000 car, $10,000 in cash, a European vacation or a $2,000 diamond necklace.
The Truth: You Probably Won a Cheap Prize and It'll Cost You Plenty
This pitch has been used millions of times. While the type of prizes offered vary, one thing usually doesn't: you typically win the cheapest prize. In the previous example, you generally win the necklace which the con artist puts in a fancy box. Of course, it isn't worth $2,000. It may cost as little as $8 each and be a diamond look-alike necklace made of cheap cubic zirconium.
The Pitch: We'll Sell You Our Products at Wholesale
A typical pitch might be: "In order to win one of these fabulous prizes, we expect something in return. We will sell you a one-year supply of super concentrated cleaning solution (or some other product) at our ultra low wholesale price. Normally this would retail for $1,200. Because of this promotion, we will give it to you for only $599."
The Truth: Our Wholesale is Double Everyone Else's Retail
The cleaning solution or other product you will get is not worth anywhere near what the telemarketers say it is worth. You could buy the same products for under $100. They get you to pay almost $600 by telling you you're getting a 50 percent discount. The telemarketers hope you're willing to do it because of the supposedly valuable "diamond" necklace or other prize you won.
The Pitch: This is the Final Day of Our Promotion
The telemarketer tells you this is the last opportunity you will have to participate in this promotion because it is the final day. Therefore, you must decide right now and make your check out right now. The telemarketer may even offer to have an express runner come pick up your check right now. If you wait until tomorrow, it will be too late, you are told.
The Truth: Every Day is the Final Day of the Promotion
Con artists almost always pressure a person into deciding immediately. The truth is if you don't buy that day, the con artist is apt to call back the following week with basically the same offer.
The Pitch: We're Trying to Keep Kids Off Drugs
This one goes like this: "Our firm is engaged in a major promotion to raise money to help keep kids off drugs. Your name has been selected to win either a new $35,000 luxury car, $10,000 in cash, a brand new stereo or a $2,000 shopping spree. To find out what you've won, all you have to do is invest in our country's future by donating $2,000 to our "Just Say No" campaign."
The Truth: We're Just Saying That to Get You to Buy Overpriced Frisbees or Sunvisors (or Something Else)
The truth is that the "One of Four" prize gimmick is just a way for scam artists to sell things for grossly inflated prices. In the above example, you would win shopping spree coupons worth about $35 and your $2,000 would purchase about 150 frisbees that read "Say No To Drugs." The frisbees would actually cost about $1 each, but the con artists would sell them for about $13 to $15 each and perhaps send them off to some police department which might or might not hand them out to kids.
Remember, the next time someone calls offering you a free prize, perhaps the best thing to do is hang up the phone. If you avoid participating in something that involves you supposedly winning, your chances of being taken will decline dramatically.
Telemarketing Fraud Prevention Tips
1. If someone calls to say you've won a prize, you can just hang up the phone.
2. Never buy anything over the phone unless you initiated the call and are dealing with a reputable mail order firm.
3. Never make a buying decision at the time of the sales pitch. Always give yourself at least 24 hours to think it over.
4. Beware of filling out mail order solicitations that say you have won a prize. Most of them are looking for potential victims to call.
For more information, write or call the American Association of Retired Persons at 601 E. Street, N.W., Washington, D.C. 20049, 800- 424-3410.
Copyright 1994 by the American Association of Retired Persons.
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