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
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 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
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
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
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-
Copyright 1994 by the American Association of Retired Persons.
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