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Telephone Scams and the Telemarketing Sales Rule

Fraudulent telemarketers often use phrases like:

... "You've been specially selected to hear this offer."
... "You'll get a wonderful free bonus if you buy our product."
... "You've won one of five valuable prizes."
... "You've won big money in a foreign lottery."
... "You must send money right away."
... "This investment is low risk and provides a higher return than you can get anywhere else."
... "You have to make up your mind right away."
... "We'll just put the shipping and handling charges on your credit card."

Straight talk about telemarketing.

It's like clockwork. You sit down to dinner and the phone rings. You answer it. The caller is trying to sell you something or tell you that you've won a fabulous prize. If you're tempted by the offer, get the facts. If you don't, you may be in for a fraud.

Although most phone sales pitches are made on behalf of legitimate organizations offering genuine products and services, many sales calls are frauds. Consumers lose billions of dollars a year to telemarketing fraud. That's why the Federal Trade Commission (FTC) encourages you to be skeptical when you hear a phone solicitation and to be aware of a law — the Telemarketing Sales Rule — that can help you protect yourself from abusive or deceptive telemarketers.

How telemarketing scams work.

The heart of a fraudulent telemarketing operation is usually a "boiler room," where seasoned operators try to scam hundreds of thousands of people across the country every day. Telephone fraud knows no race, ethnic, gender, age, education or income barriers. Anyone with a phone can be victimized by telemarketing scam artists.

Cold calls.

Scammers 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 a fraudster 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.

Play smart defense!

In addition to knowing about the Telemarketing Sales Rule, it's a good idea to keep the following tips in mind whenever you hear a phone solicitation:

* 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 buy something merely because you'll get a "free gift."

* 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."

* 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.

* 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."

Report a scam.

Help fight telephone fraud. Report telephone scam artists to the Federal Trade Commission (FTC) 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 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.

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