FTC FACTS for Consumers

FOR THE CONSUMER 1-877-FTC-HELP

ftc.gov FEDERAL TRADE COMMISSION

Straight Talk About 

Telemarketing

t’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. 

The Hooks

Prize offers. You usually have to do something to get your “free” prize, like attend a sales 

presentation, buy something, pay a fee, or give out a credit card number. But the prizes are worthless 

or overpriced. 

I
Facts for Consumers 

Tip-Offs to Telephone Rip-Offs

Fraudulent telemarketers often use phrases like 

these — 

“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.”

Travel packages. “Free” or “low cost” vacations 

can end up costing a bundle in hidden costs. You 

may pay a high price for some part of the package 

— like hotel or airfare. The total cost may run two 

to three times more than what you’d expect to pay, 

or what you were led to believe. Some “bargain” 

vacations never happen at all.

Investments. People lose millions of dollars each 

year to “get rich quick” schemes that promise high 

returns with little or no risk. These can include 

movie or cable television production deals, Internet 

gambling, rare coins, art, or other “investment 

opportunities.” The schemes vary, but one thing is 

consistent: Unscrupulous promoters of investment 

fraud rely on the fact that investing can be 

complicated, and many people don’t research the 

investment process. 

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 placed in a sucker list and 

be called again by someone promising to get your 

money back. Be careful not to lose more money 

to this common practice. Even law enforcement 

officials can’t guarantee they’ll recover your money. 

The Telemarketing Sales Rule

The FTC’s Telemarketing Sales Rule requires 

certain disclosures and prohibits misrepresentations. 

It gives you the power to stop unwanted 

telemarketing calls and gives state law enforcement 

officers the authority to prosecute fraudulent 

telemarketers who operate across state lines. 

The Rule covers most types of telemarketing calls to 

consumers, including calls to pitch goods, services, 

“sweepstakes,” and prize promotion or investment 

opportunities. It also applies to calls consumers 

make in response to materials received in the mail, 

or offers received through the Internet.

Keep this information near your telephone. It 

can help you determine if you’re talking with a 

legitimate telemarketer or a scam artist. 

• It’s illegal for a telemarketer to call you if 

you’ve asked not to be called. In fact, the 

federal government has created the National 

Do Not Call Registry — the free, easy way to 

reduce the telemarketing calls you get at home. 

To register, or to get information, visit 

www.donotcall.gov, or call toll-free 

1-888-382-1222 (TTY: 1-866-290-4236) from 

the phone you want to register. You will 

receive fewer telemarketing calls within three 

months of registering your number. It will 

stay in the registry for five years or until it is 

disconnected or you take it off the registry. 

After five years, you will be able to renew 

your registration.

• It’s also against the law to call you before 

8 a.m. and after 9 p.m. 

• If your number is not on the National Do Not 

Call Registry, you still can ask a company 

to put you on its own do not call list. The 

company must honor your request.
Facts for Consumers

Defensive Moves

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.”

• Telemarketers must tell you it’s a sales call and 

who’s doing the selling before they make their 

pitch. If it’s a prize promotion, they must tell 

you that no purchase or payment is necessary 

to enter or win. If you’re asked to pay for a 

prize, hang up. Free is free. 

• It’s illegal for telemarketers to misrepresent 

any information, including facts about their 

goods or services, the earnings potential, 

profitability, or risk of an investment, or the 

nature of a prize in a prize-promotion scheme. 

• Telemarketers must tell you the total cost 

of the products or services offered and any 

restrictions on getting or using them, or that a 

sale is final or nonrefundable, before you pay. 

In a prize promotion, they must tell you the 

odds of winning, that no purchase or payment 

is necessary to win, and any restrictions or 

conditions of receiving the prize. 

• It’s illegal for a telemarketer to withdraw 

money from your checking account without 

your express, verifiable authorization. That 

means they must tell you the total number of 

payments, the amount of each payment, the 

date the payments will be submitted to your 

bank, and which account they will charge. 

 • Telemarketers cannot lie to get you to pay, no 

matter what method of payment you use.

• You do not have to pay for credit repair, 

recovery room, or advance-fee loan or credit 

services until after these services have been 

delivered. (Most of these offers are scams. 

Credit repair companies claim that, for a fee, 

they can change or erase accurate negative 
Facts for Consumers

April 2004

Federal Trade Commission

Bureau of Consumer Protection

Division of Consumer and Business Education

information from your credit report. Only time 

can erase such information. Recovery room 

operators contact people who have lost money 

to a previous telemarketing scam and promise 

that, for a fee or donation to a specified 

charity, they will recover your lost money, 

or the product or prize never received from a 

telemarketer. Advance-fee loans are offered by 

companies who claim they can guarantee you 

a loan for a fee paid in advance. The fee may 

range from $100 to several hundred dollars.) 

• If you have the slightest doubt about a 

telephone offer, wait until you can get 

information in writing and check it out! 

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 advertising, like television or 

newspaper advertisements. (Calls responding 

to ads for investment opportunities, business 

opportunities other than those covered by 

the FTC’s Franchise Rule, credit card loss 

protection, credit repair services, recovery 

room services, or advance-fee loans are

covered.)

• Calls placed by consumers in response to direct 

mail advertising that discloses all the material 

information required by the Rule, except calls 

responding to ads for investment opportunities, 

business opportunities other than those 

covered by the Franchise Rule, credit card 

loss protection, prize promotions, credit repair 

services, recovery room services, advance-fee 

loans, or to “upselling.” Upselling is when 

a company offers you additional goods or 

services after the initial transaction for which 

you called.

• Catalog sales. 

• Calls that are initiated by the 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 Report 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.

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