Prepared as a public service by the Federal Trade Commission and the National Association of Attorneys General
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 tracks.
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 the charity.
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.
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.)
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 testimonials.
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 administrative costs.
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 yourself.
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 probably is!"
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
Your State Attorney General
Office of Consumer Protection
Your State Capital
(Most Attorneys General have toll-free consumer hotlines -- check with your local directory assistance)
FTC CONSUMER & SMALL BUSINESS ADVISORY - PUBLIC DOCUMENT
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