Hang Up on Telemarketing Fraud

| Print | E-mail |

June 2003, updated March 2007

Telemarketing phone calls certainly annoy most consumers. But more important, many of these calls are designed to steal consumers' cash. The Federal Trade Commission (FTC) reports that telemarketing scams cost Americans more than $40 billion each year. In their surveys, the National Fraud Information Center found that the average individual loss in 2005 was $2,892, up from $1,174 in 2001. A little information and some commonsense tips can help you protect yourself and your family against these rip-offs.

Telephone fraud aims at consumer weaknesses

Telephone con artists generally take advantage of two very human traits:

1. All of us love a bargain—and the idea that we might get something for nothing, or "only pennies," is even more enticing.
2. In tough economic times, when most people worry some about financial insecurity, we are eager to protect ourselves against potential threats. Crafty, glib con men and women position themselves as a consumer's best friend as they pitch a number of popular scams.

Popular fraudulent telemarketing schemes and scams

The FTC and other watchdog groups warn consumers of these favorite cons.

• Sweepstakes and prize offers. The phone rings and the voice says you've "won" a prize or a sweepstakes. Maybe you never heard of these folks or maybe you dropped a card in a box at a local retail mall or into the mail. The catch is you have to pay "shipping and handling" or some other charge. That request for money (to be sent by check, credit card, money order or any other means) should set off warning bells. Never give out your financial information (credit card number, bank account number, social security number) in response to such calls. If the "prize" even exists (often they don't), it's generally worthless or extremely overpriced. At worst, these folks are using the sweepstakes as a way to obtain your personal information and commit identity theft.
• Phony charities. The outfit calling often uses a name that's very similar to a reputable charitable organization. Ask any charity who makes an unsolicited call to you to send you information in the mail. If they refuse, hang up. If the organization actually sends literature, check it out with such watchdog groups as Give.org, a joint effort of the Better Business Bureau and National Charities Information Bureau (19 Union Square West, New York, NY 10003-3395; 212-929-6300).
• Get-rich-quick, can't-fail "investments." These guys say they are selling an "investment opportunity" that will offer you a high return on your money. In fact, whatever their "investment instrument"—gemstones, art, "collectible" coins, gas, oil and mineral leases, precious metals, unknown stocks, and foreign currency are a few common offerings—the only pocket enriched is theirs. Their commodity or stock is usually worthless, if it even exists. The simplest way to guard against these scams is to say no immediately to any unsolicited "investment" calls. Ask them to "put this number on your do not call list." If they call again, they've broken the law. Report them to the FTC.
• Protection Against Credit Card Loss. This ploy has grown in popularity during the recent recession. According to the FTC, these folks often lie by saying that you need to pay for extra protection because a) you are liable for more than $50 in unauthorized charges on a credit card, b) computer hackers can get at your card number and charge thousands (or a variation on this theme) or c) they claim they are "from 'the security department' and want to activate the protection feature on your credit card." That's all a pack of lies. The law still limits liability to $50 for unauthorized use. Every card issuer provides procedures for disputing unauthorized claims. (Most consumer experts advise that you probably don't need the "protection plans" offered legitimately by the card issuers, either—but that's another story.)
• Advance-Fee Loan Offers. This unsolicited call offers to get you a loan to pay off bills or buy anything you like—success is practically guaranteed, they say. All you have to do is pay a small advance fee first, before you fill out any applications—say $250 or $300 or so. Those warning bells ought to be ringing again. Any legitimate offer of credit never asks for money UPFRONT before you complete an application. Don't even consider these offers—hang up on them. If you feel you need a consolidation loan, consult CCU, your credit union, first. They can help you look at your best options in an unbiased way.
• Free or cheap travel offers. How'd you like a free weekend in the mountains or a cheap week at the beach? These calls seem to offer fun for little cost, but are filled with hidden charges. At best you'll have to listen to a sales spiel and have poor accommodations; at worst the scammers just take your money and run. Your best bet is to say no to these calls. If you fancy a low-cost vacation, see what bargains your local travel agent can offer. Then check those offers out carefully.
• Loss Recovery Scams. If you've lost money before in a telemarketing scam, you may hear from these folks. They buy "sucker" lists that identify what you've lost, and they say that for a fee they'll get that money back for you. Wrong. Accept this offer, and you'll just throw more money away. Nobody, not even law enforcement, can promise to get your money back. Don't even listen to these calls.

How to recognize fraudulent calls

Telemarketing con artists typically use some of these techniques, regardless of what scam they are running.

• They pressure you to act today or "right now" or miss out on the offer. Their manner may be polite and charming or pushy, but the pressure to do it now is there.
• You have to pay some sort of charge for an offer that's described as "free."
• You are asked by some one who called you cold (you didn't initiate the call) to provide personal information—social security number, bank account number, credit card number, or even name and address. They may offer any number of logical sounding reasons they need the info. But legitimate businesses don't work this way. Don't give out your personal information.
• You are asked to send money by overnight express, by wire or to have it picked up by courier. Again, don't do it.
• They refuse to provide information about their company or offer in writing to you or insist that you don't need it.
• They keep calling back even if you say no.
• They call before 8 a.m. or after 9 p.m.—calling outside those hours is illegal. Even if the company is legitimate, they are breaking the law.

How to say no to telemarketing calls

• Place your phone numbers on the National Do Not Call Registry. This will stop many telemarketing calls. Go to www.donotcall.gov or call toll-free 1-888-382-1222 (TTY, 1-866-290-4236) from the phone you wish to register.
• Screen your calls. Use Caller ID or an answering machine. There are also some new machines available that promise they can screen out all telemarketing calls, but few independent reviews of their effectiveness are available yet.
• Hang up. As soon as the caller identifies themselves, interrupt and say, "I am not interested. Please put this number on your do not call list." Then hang up. If they call again, get the company name and number and report them to the FTC.
• Sign up to be removed from telemarketing lists. The FTC Consumer Alert: Unsolicited Mail, Telemarketing and Email: Where to Go to "Just Say No" provides information on how to opt out of various marketing lists.

Read more about it.

Here's a sound, informative site:

• Federal Trade Commission articles on telemarketing

Prepared for Corning Credit Union by Remar Sutton & Associates, June 2003. Reviewed and updated March 2007. All rights reserved.