Putting Telephone Scams...On Hold

FTC10749_Brochure_5-11-05.qxd 8/17/05 3:28 PM Page c1

Putting Telephone Scams...

On Hold

Federal Trade Commission Toll-free 1-877-FTC-HELP Federal Trade Commission Toll-free 1-877-FTC-HELP

www.ftc.gov For the Consumer www.ftc.gov For the Consumer FTC10749_Brochure_5-11-05.qxd 8/17/05 3:28 PM Page c3

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. FTC10749_Brochure_5-11-05.qxd 8/17/05 3:28 PM Page 2

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 Fraudulent telemarketers may element: victim participation. We’re reach you in several ways: all potential targets, because fraud isn’t limited by race, ethnic back- • Cold Calls. Operators may get ground, gender, age, education or your number from a telephone income. But, if you’re age 60 or directory, a mailing list or what older, you may be a special target for fraudsters call a “sucker list.” people who sell bogus products and Sucker lists contain information services by phone. The best way to about people who have responded protect yourself is to know the dif- to previous telemarketing solicita- ferences between legitimate offers tions, like their name, phone and fraudulent ones. number and how much money they spent. The lists are bought How Telemarketing Scams Work and sold by promoters. They are The heart of a fraudulent telemarket- invaluable to scam artists, who ing operation is usually a “boiler believe that consumers who have room,” a rented space with desks, been deceived once are vulnerable telephones and seasoned operators to additional scams. who call hundreds of people across the country every day. • 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 promot-

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er with certain information. If reach you when you’re feeling you do, you’ll be called by some- lonely. They may call day after one who may use persuasive sales day – until you think a friend, pitches, scare tactics and false not a stranger, is trying to sell you claims to deceive you and take something. your money. • Some telephone salespeople have • Broadcast and Print an answer for everything. You Advertisements. You may place a may find it hard to get them off call in response to a television, the phone – even if they’re sell- newspaper or magazine advertise- ing something you’re not inter- ment. The fact that you initiate ested in – because you don’t the call doesn’t mean the business want to be rude. is legitimate or that you should be • You may be promised free gifts, less cautious about buying or prizes, or vacations – or the investing on the phone. “investment of a lifetime” – but only if you act “right away.” It How Older People Become Victims of Telemarketing Fraud may sound like a really good deal. In fact, telephone con artists are Fraudulent telemarketers try to take only after your money. Don’t give advantage of older people on the it to them. theory that they may be more trust- ing and polite toward strangers. The Hooks Older women living alone are special • Prize Offers. You usually have to targets of these scam artists. do something to get your “free” Here are some reasons people prize, like attend a sales presenta- become victims of telemarketing fraud: tion, buy something, pay a fee, or • Often it’s hard to know whether a give out a credit card number. sales call is legitimate. Telephone But the prizes are worthless or con artists are skilled at sounding overpriced. believable – even when they’re • Travel Packages. “Free” or “low really telling lies. cost” vacations can end up cost- • Sometimes telephone con artists ing a bundle in hidden costs. You may pay a high price for some 4 5 FTC10749_Brochure_5-11-05.qxd 8/17/05 3:28 PM Page 6

• 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. • Recovery Scams. If you buy into any of the above scams, you’re likely to be called again by some- part of the package – like hotel or one promising to get your money airfare. The total cost may run two back. Be careful not to lose more to three times more than what money to this common practice. you’d expect to pay, or what you Even law enforcement officials were led to believe. Some “bargain” can’t guarantee they’ll recover vacations may never happen at all. your money. • Investments. People lose millions of • Foreign Lotteries. Scam operators dollars each year to “get rich quick” – often based in Canada – are schemes that promise high returns using the telephone and direct with little or no risk. These can mail to entice U.S. consumers to include movies or cable television buy chances in high-stakes for- production deals, Internet gambling, eign lotteries from as far away as rare coins, art, or other “investment Australia and Europe. These lot- opportunities.” The schemes vary, tery solicitations violate U.S. law, but one thing is consistent: which prohibits the cross-border Unscrupulous promoters of invest- sale or purchase of lottery tickets ment fraud rely on the fact that by phone or mail. And you may investing may be complicated, and never see a ticket. many people don’t research the investment process.

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Tip-Offs to Rip-Offs How Can You Protect Yourself? If you hear these – or similar – • Don’t be pressured to make an “lines” from a telephone salesper- son, just say “no thank you,” and immediate decision. hang up the phone. • Don’t give your credit card, checking account or Social “You’ve been specially selected to hear Security number to unknown this offer.” callers.

“You’ll get a wonderful free bonus if you • Don’t pay for something merely buy our product.” because you’ll get a “free gift.” • Get all information in writing “You’ve won one of five valuable prizes.” before you agree to buy. • Check out a charity before you “You’ve won big money in a foreign lottery.” give. Ask how much of your “You must send money right away.” donation actually goes to the charity. Ask that written informa- “This investment is low risk and provides tion be sent to you so you can a higher return than you can get any- make an informed giving decision. where else.” • Don’t invest your money with an unknown caller who insists you “You have to make up your mind make up your mind immediately. right away.” • If the offer is an investment, “You don’t need to check our company check with your state securities with anyone”– including your family, regulator to see if it’s properly lawyer, accountant, local Better registered. Business Bureau, or consumer protec- • Don’t send cash by messenger or tion agency. overnight mail. If you use cash “We’ll just put the shipping and handling rather than a credit card in the charges on your credit card.” transaction, you may lose your right to dispute fraudulent charges. “You don’t need any written information about our company or references.”

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• Make sure you know the per minute charge for any 900 number call you make. • Be cautious of statements that you’ve won a prize – particularly if the caller says you must send money to claim it. • Don’t agree to any offer where you have to pay a registration or shipping fee to receive a “prize.” • Check out unsolicited offers with The Rule covers most types of tele- the Better Business Bureau, local marketing calls to consumers, consumer protection agency, or including calls to pitch goods, serv- state Attorney General’s office ices, “sweepstakes,” and prize pro- before you agree to send money. motion or investment opportunities. It also applies to calls consumers • Beware of offers to “help” you make in response to materials recover money you may have lost received in the mail or offers made previously. Be wary of callers say- through the Internet. ing they are law enforcement officers who will help you get Keep this information near your money back “for a fee.” your telephone. It can help you determine if you’re talking with The Telemarketing Sales Rule a legitimate telemarketer or a The FTC’s Telemarketing Sales scam artist. Rule requires certain disclosures and prohibits misrepresentations. It gives • It’s illegal for a telemarketer to you the power to stop unwanted call you if you’ve asked not to be telemarketing calls and gives state called. In fact, the federal govern- law enforcement officers the author- ment has created the National ity to prosecute fraudulent telemar- Do Not Call Registry – the free, keters who operate across state lines. easy way to reduce the telemarketing calls you get at home. To

10 11 register, or to get information, investment, or the nature of a visit www.donotcall.gov, or call prize in a prize-promotion toll-free 1-888-382-1222 (TTY: scheme. 1-866-290-4236) from the phone • Telemarketers must tell you the you want to register. You will total cost of the products or receive fewer telemarketing calls services offered and any within three months of restrictions on getting or using registering your number. them, or that a sale is final or non-refundable, before you pay. • If your number is not on the In a prize promotion, they must National Do Not Call Registry, tell you the odds of winning, that you still can ask a company to put no purchase or payment is you on its own do not call list. necessary to win, and any The company must honor your restrictions or conditions of request. receiving the prize. • Calling times are restricted to • It’s illegal for a telemarketer the hours between 8 a.m. and to withdraw money from your 9 p.m. checking account without your • Telemarketers must tell you it’s a express, verifiable authorization. sales call and who’s doing the That means they must tell you selling before they make their the total number of payments, pitch. If it’s a prize promotion, the amount of each payment, the they must tell you that no pur date the payments will be chase or payment is necessary to submitted to your bank, and enter or win. If you’re asked to which account they will charge. pay for a prize, hang up. Free • Telemarketers cannot lie to get is free. you to pay, no matter what • It’s illegal for telemarketers to method of payment you use. misrepresent any information, • You don’t have to pay for credit including facts about their goods repair, recovery room, or or services, the earnings potential, advance-fee loan/credit services profitability, or risk of an

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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 adver- tising, like television or newspaper advertisements. (Calls until after these services have responding to ads for investment been delivered. (Most of these opportunities, credit repair serv- offers are scams. Credit repair ices, recovery room services, or companies claim that, for a fee, advance-fee loans are covered). they can change or erase accurate • Calls placed by consumers in negative information from your response to direct mail advertis- credit report. Only time can erase ing that discloses all the material such information. Recovery information required by the room operators contact people Rule, except calls responding to who have lost money to a previ- ads for investment opportunities, ous telemarketing scam and business opportunities other than promise that, for a fee or dona- those covered by the Franchise tion to a specified charity, they Rule, credit card loss protection, will recover your lost money, or prize promotions, credit repair the product or prize never services, recovery room services, received from a telemarketer. advance-fee loans, or to Advance-fee loans are offered by “upselling.” Upselling is when a companies who claim they can company offers you additional guarantee you a loan for a fee goods or services after the initial paid in advance. The fee may transaction for which you called. range from $100 to several hun- • Catalog sales. dred dollars.) • Calls that are initiated by the

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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.

To R eport a Scam Fight telephone fraud. Report telephone scam artists to the Federal Trade Commission and your state Attorney General. The Telemarketing Sales Rule gives these local law enforcement officers the power to prosecute fraudulent telemarketers who operate across state lines.

The FTC works for the consumer 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 to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.