Facts for Consumers

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Putting Telephone Scams on Hold

Recognize & Report Phone Fraud

Telemarketing fraud is a multi-billion dollar business in the United States. Every year, thousands of consumers lose as little as a few dollars to as much as their life savings to telephone con artists.

That’s why the Federal Trade Commission (FTC) encourages you to be skeptical when you hear a phone solicitation and to be aware of the Telemarketing Sales Rule, a law that can help you protect yourself from abusive and deceptive telemarketers.

Unlike most other crimes, telemar­keting fraud requires one essential element: victim participation. We’re all potential targets, because fraud isn’t limited by race, ethnic back­ground, gender, age, education, or income. But, if you’re age 60 or older, you may be a special target for people who sell bogus products and services by phone. The best way to protect yourself is to know the dif­ferences between legitimate offers and fraudulent ones.

How Telemarketers Contact You

• Cold Calls. Operators may get your number from a telephone directory, a mailing list, or what fraudsters call a “sucker list.” Sucker lists contain information about people who have responded to previous telemarketing solicita­tions, like their name, phone number, and how much money they spent. The lists are bought and sold by promoters. They are invaluable to scam artists, who believe that consumers who have been deceived once are 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. The 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.

How Older People Become Victims of Telemarketing Fraud

Fraudulent telemarketers try to take advantage of older people on the theory that they may be more trust­ing and polite toward strangers. Older women living alone are special targets of these scam artists.

Here are some reasons older people become victims of telemarketing fraud:

• Often it’s hard to know whether a sales call is legitimate. Telephone con artists are skilled at sounding believable — even when they’re really telling lies.
• Sometimes telephone con artists reach you when you’re feeling lonely. They may call day after day — until you think a friend, not a stranger, is trying to sell you something.
• Some telephone salespeople have an answer for everything. You may find it hard to get them off the phone — even if they’re sell­ing something you’re not inter­ested in — because you don’t want to be rude.
• You may be promised free gifts, prizes, or vacations — or the “investment of a lifetime” — but only if you act “right away.” It may sound like a really good deal. In fact, telephone con artists are only after your money. Don’t give it to them.

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. But the prizes are worthless or overpriced.

• Travel Packages. “Free” or “low cost” vacations can end up cost­ing a bundle in hidden costs. 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. Some “bargain” vacations may never happen at all.
• 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 or cable television production deals, Internet gambling, rare coins, art, or 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.
• Reloading 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.
• Foreign Lotteries. Scam operators — often based in Canada — are using the telephone and direct mail to entice U.S. consumers to buy chances in high-stakes for­eign lotteries from as far away as Australia and Europe. These lot­tery solicitations violate U.S. law, which prohibits the cross-border sale or purchase of lottery tickets by phone or mail. And you may never see a ticket.
• Medical Discounts. If you’re considering signing up for a medical discount plan, be aware of scam artists who are reportedly contacting seniors claiming to represent providers. All they really want is your personal information so they can commit financial fraud.
• “Expiring” car warranties. Scammers find out what kind of car you drive, and when you bought it, so they can pitch overpriced — or worthless — extended car warranties.

 

How Can You Protect Yourself?

• Don’t be pressured to make an immediate decision.
• Don’t give your credit card, checking account, or Social Security number to unknown callers.
• Don’t pay for something merely because you’ll get a “free gift.”
• Get all information in writing before you agree to buy.
• 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.
• 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’s properly registered.
• 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.
• Make sure you know the per minute charge for any 900-num­ber call you make.
• Don’t agree to any offer where you have to pay a “registration” or “shipping fee” to receive a prize or a gift. If you have to pay, it’s a purchase — not a prize or a gift.
• Don’t confirm your account information over the phone or by email. Some callers have your billing information before they call you. They’re trying to get you to say “okay” so they can claim you approved a charge.
• 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.
• 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.”
• Don’t be afraid to say “no thanks” and hang up the phone
• If you don’t want a business to call you again, say so. If they call back, they’re breaking the law.

 

The Telemarketing Sales Rule

The FTC’s 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 or investment opportunities. It also applies to calls consumers make in response to materials received in the mail or offers made through the Internet.

Keep this information near your telephone. It can help you determine if you’re talking with a legitimate telemarketer or a scam artist.

• It’s illegal for a telemarketer to call you if you’ve asked not to be called. In fact, the federal govern­ment has created the National Do Not Call Registry — the free, easy way to reduce the telemar­keting calls you get at home.
• If your number is not on the National Do Not Call Registry, you still can ask a company to put you on its own do not call list. The company must honor your request.
• Calling times are restricted to the hours between 8 a.m. and 9 p.m. A seller calling earlier or later is breaking the law.
• 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 or a gift, hang up. Free is free.
• It’s illegal for telemarketers to misrepresent any information, including facts about their goods or services, the earnings potential, profitability, or risk of an investment, or the nature of a prize in a prize-promotion scheme.
• 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.
• It’s illegal for a telemarketer to withdraw money from your checking account without your express, verifiable authorization. That means they must tell you the total number of payments, the amount of each payment, the date the payments will be submitted to your bank, and which account they will charge.
• Telemarketers cannot lie to get you to pay, no matter what method of payment you use.
• You don’t have to pay for credit repair, recovery, or advance-fee loan/credit services until after these services have been delivered. (Most of these offers are scams. 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. “Reloaders” 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.)

Exceptions to the Rule

Although most types of telemarketing calls are covered by the Rule, there are several exceptions. The Rule does not cover the following situations:

• Calls placed by consumers in response to general media adver­tising, like television or newspa­per advertisements. (Calls responding to ads for investment opportunities, credit repair serv­ices, recovery room services, or advance-fee loans are covered).
• 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, business opportunities other than those covered by the Franchise Rule, credit card loss protection, prize promotions, credit repair services, recovery room services, advance-fee loans, or to “upselling.” Upselling is when a company offers you additional goods or services after the initial transaction for which you called.
• Catalog sales.
• 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 presentation.
• Business-to-business calls. But calls offering nondurable office or cleaning supplies are covered.
• Sales of pay-per-call services and sales of franchises. These are covered by other FTC rules.

 

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.