Telemarketing Fraud By Xavier Lopez

Explanation Telemarketing fraud is fraudulent selling conducted over the telephone; the term is also used for telephone fraud not involving selling as such. Elderly people may be more likely to be taken in; people identified as being gullible may receive an increasing number of such calls. Many frauds can be conducted wither by telephone or other means.

Examples In the spring of 2002, the Federal Trade Commission conducted a telemarketing fraud sweep, "Dialing for Deception," and roped in a lot of violators. One of the cases settled by the FTC is with two brothers, Harvey and Tye Sloniker, who allegedly used unfair and deceptive practices to bilk consumers out of millions of dollars. The Slonikers employed and trained a large number of telemarketers to deceive consumers. They telemarketed non-existent, advance-fee, low interest credit cards. To make matters worse, they also sold bogus identity theft and telemarketing fraud protection services. The Slonikers will have to pay a $525,000 judgement and are banned from anything resembling the telemarketing business. The FTC also settled a case involving an advance fee credit scheme. This case involved advance-fee credit cards. Your customer service staff should be trained to advise customers never to pay in advance for a product - especially if the offer is telemarketed and sounds too good to be true.

Tips for Avoiding Don’t buy from an unfamiliar company. Legitimate businesses understand that you want more information about their company and are happy to comply. Always ask for and wait until you receive written material about any offer or charity. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. But, unfortunately, beware – not everything written down is true. Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, state Attorney General, the National Fraud Information Center, or other watch dog groups. Unfortunately, not all bad businesses can be identified through these organizations. Obtain a salesperson’s name, business identity, telephone number, street address, mailing address and business license number before you transact business. Some con artists give our false names, telephone numbers, addresses, and business license numbers. Verify the accuracy of these items. Before you give money to a charity or make an investment, find out what percentage of the money is paid in commissions and what percentage actually goes to the charity or investment. Before you send money, ask yourself a simple question. “What guarantee do I really have that this solicitor will use my money in the manner we agreed upon.”

Statistics 98% of 1.78 million responding to one on-line survey said telemarketing calls made them “angry”. Half of Californians polled in a survey said interruptions from telemarketers irked them more than sitting in traffic, doing their taxes, or waiting in line at the DMV. The Federal Trade Commission received 17,423 complaints about telemarketers in 1999 – an eight-fold increase over the 2,260 reported in Telemarketers place 148 million junk calls a day according to Private Citizen. In 2000 the Direct Marketing Association reported receiving 3,789 telemarketing complaints in one 35-day period. Telemarketing is a nearly $500 billion a year business. Americans lose $40 billion a year to fraudulent telemarketers according to the National Fraud Information Center. Investment scams alone amount to losses of $1 million an hour. The National Association of Attorneys General estimates about 5,000,000 Americans are defrauded by telemarketers every year and one of five of them do not report the fraud, usually because they are embarrassed.

Frequently Asked Questions How do I stop unwanted calls from telemarketers? Vermonters who do not want to be called by telemarketers can sign up with the Federal Trade Commission’s registry online at or by calling toll-free from the number you wish to register (TTY ). Are all telemarketing calls prohibited? Certain calls are not covered by the federal registration law, including calls from political organizations, charities, telephone surveyors, and companies from which you have bought something or received a delivery in the past 18 months. If you do not want to get calls from companies that fall into any of these groups, tell the company or charity to put your phone number on their own “Do Not Call” list. Every company and charity is obliged to keep such a list. What can I do if I continue to get unwanted calls? Telemarketing calls made to a number which has been listed on the federal registry for three months, or which are on a company’s “Do Not Call” list, violate Vermont law. If you get a call from a telemarketer that violates Vermont law, you have the right to sue the telemarketer for actual damages or $500 for a first violation ($1,000 for each subsequent violation), whichever is greater. Is unwanted telemarketing a crime? Yes. Vermont law also imposes criminal penalties on telemarketers who call a Vermont telephone number without having first registered with the Vermont Secretary of State, unless the company is a federally-regulated financial institution (e.g. a federal bank), or is already regulated by, or registered or licensed with, one of the following Vermont governmental agencies: Secretary of State, Public Service Board, Department of Banking, Insurance, Securities and Health Care Administration, or Department of Taxes.

Penalties A person who is convicted of an offense under section 1028, 1029, 1341, 1342, 1343, or 1344, or a conspiracy to commit such an offense, in connection with the conduct of telemarketing— (1) shall be imprisoned for a term of up to 5 years in addition to any term of imprisonment imposed under any of those sections, respectively; and (2) in the case of an offense under any of those sections that— (A) victimized ten or more persons over the age of 55; or (B) targeted persons over the age of 55, shall be imprisoned for a term of up to 10 years in addition to any term of imprisonment imposed under any of those sections, respectively.

Citations