Fraudulent telemarketers swindle American consumers out of more than
a billion dollars each year. These professional con artists peddle
everything from overpriced and useless water "purifiers" to "gold
mines" that are nothing more than piles of dirt.
Of course, selling products or services by phone is not in itself a
crime. Most telemarketers represent honest, reputable businesses. But
because so many customers enjoy the ease and convenience of shopping
by phone, it is an attractive tool for unscrupulous salesmen.
Anyone with a telephone is vulnerable to the high-pressure sales
tactics and enticing offers of the dishonest telemarketer.
Stockbrokers have been lured into phony investment schemes. Real
estate professionals have bought into worthless land deals.
The Federal Trade Commission (FTC), state Attorneys General, and
others are working hard to put fraudulent telemarketers out of
business. Unfortunately, though, fraudulent telemarketers are hard to
track down. Most are "fly by night" operators working out of so-
called "boilerrooms" -- leased space with banks of telephones staffed
by professional scam artists. Once under investigation, they can
easily shut down and move -- virtually overnight -- to another town
or state. They may even change their name -- anything to cover their
Because enforcement is so difficult, it is essential that today's
consumer be an informed telephone shopper. The following tips suggest
how you can detect telemarketing fraud and avoid becoming a victim.
"Get rich quick" schemes involving rare coins, gemstones, real
estate, securities, oil and gas leases, and precious metals are
commonly pushed on the unsuspecting consumer. Most are worthless.
Frequent targets are those who have been victimized before, since
they are often eager to recoup losses from previous deals.
Capitalizing on growing environmental awareness, some businesses are
selling so-called water purification or filtration systems. Callers
use scare tactics to convince you that your tap water is filled with
impurities or cancer-causing substances. You may end up paying $300
to $500 for a device that is worth less than $50.
Some unscrupulous telemarketers will say they're calling on behalf of
a charity. They may ask you to buy tickets for a benefit show, make a
donation toward sending handicapped children to the circus, or
purchase light bulbs or other household items at inflated prices, to
cite a few examples. If you are not careful, your generosity may be
exploited and little or none of your contribution will actually go to
So-called "free" or "low-cost" vacations often come with extra
charges, hidden restrictions, and hard-to-meet conditions. You might
be required to join a travel club. A vacation-for-two may only
include airfare for one. You could be charged extra for "peak season"
reservations. As a result, your vacation ends up costing two to three
times what you would have paid had you made your own arrangements.
Some health conscious consumers fall prey to telemarketers selling
vitamins. As with many other scams, the sales pitch may include a
prize offer to get you to pay as much as $600 for a six-month supply
of vitamins that are worth as little as $40.
Tips on Spotting Fraud
As the examples in this brochure illustrate, there are many kinds of
telemarketing scams, and new ones are invented every day. But certain
elements are common to most of these scams.
* "Free" gifts that require you to pay "shipping and handling"
charges, "redemption" fees, or "gift taxes" before delivery.
* "High-profit, no-risk" investments. No high-profit investment is
free of any risk.
* High-pressure sales tactics and demands for you to "act now."
* A request for your credit card number for "identification"
purposes or to "verify" that you have won a prize.
* Refusal to provide written materials or even the most basic
details about the organization, such as its exact location or names
of its officers.
* Organizations that are unfamiliar to you or that have only a P.O.
Box for an address. (Some organizations use a P.O. Box so you will
not know their location.)
Don't Be a Victim!
To avoid being swindled, follow these precautions.
* Don't give out your credit card number over the phone unless you
know the organization is reputable.
* Insist on getting written information about the organization. At
the same time, don't assume an organization is legitimate solely on
the basis of impressive-looking brochures or enthusiastic
* Find out if any complaints have been registered against the
company with your state Attorney General or local Better Business
Bureau. But remember that scam artists frequently change names and
locations. Just because there are no complaints on file does not mean
a business is trustworthy.
* In the case of charitable organizations, you have the right to
know if the caller is a volunteer or a professional
telemarketer/fundraiser. Don't commit yourself over the telephone.
Ask for written information about how much of your donation will
actually go to the charity and how much will be spent on
* Take time to make a decision before investing. Consult someone
whose financial advice you trust -- a banker, lawyer, accountant, or
friend. Have them review any contract or prospectus before you commit
* If a caller is uncooperative in answering your questions, simply
hang up the phone. Remember, you have a right to know specifics. They
have no right to your money.
Above all, follow the advice: "If it sounds too good to be true, it
If You are Victimized
The nation's leading consumer protection enforcers, the FTC and the
state Attorneys General, have declared telemarketing fraud as a high
priority. Together they are working to end this problem that robs
American consumers of more than a billion dollars each year.
If you get swindled by a telemarketer, don't be embarrassed to report
it or assume it's not worth your time. By reporting the incident,
you can help ensure that others aren't victimized.
Federal Trade Commission
Telemarketing Fraud, Room 200
6th & Pennsylvania Avenue, NW
Washington, D.C. 20580 or
Your State Attorney General
Office of Consumer Protection
Your State Capital
Facts for Consumers Prepared as a public service by the Federal Trade
Commission and the National Association of Attorneys General
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