FTC FACTSfor Consumers

TELEMARKETING

1-877-FTC-HELP

FEDERAL TRADE COMMISSION FOR THE CONSUMER

www.ftc.gov

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.

You may be in for a fraud.

American consumers lose more than $40 billion a year to telemarketing

fraud. It’s no wonder that con artists in foreign countries want in on the action.

In many cases, crooks are sitting across the border – just far enough away from

U.S. laws and jurisdiction to reduce the chances that American victims will ever

recover their money.

Sure, con artists are still swindling consumers with the tried and true

pitches for bogus sweepstakes and vacation packages. But telephone hucksters

also are playing on consumers’ financial vulnerabilities and economic uncertainty. Here are a few of the newest telemarketing pitches that just don’t ring

true.

Credit Card Loss Protection Offers

“I got a call from a woman who said I need credit card loss protection

insurance. I thought there was a law that limited my liability to $50 for unauthorized charges. She said the law had changed and that now, people are liable

for all unauthorized charges on their account. Is that true?”

No. Don’t buy the pitch – and don’t buy “loss protection” insurance.

Telephone scam artists are lying to get people to buy worthless credit card loss

protection and insurance programs. If you didn’t authorize a charge, don’t pay

it. Follow your credit card issuer’s procedures for disputing charges you haven’t

authorized. Your liability for unauthorized charges remains at $50.

Ditch the Pitc h the Pitch:

Hanging Up

on Telephone

Hucksters

I
Facts for Consumers

The FTC says worthless credit card loss

protection is a popular offering for promoters

trying to exploit consumer uncertainty. The

agency recommends that you avoid doing

business with callers who claim that:

• you’re liable for more than $50 in unauthorized charges on your credit card account;

• you need credit card loss protection because

computer hackers can access your credit

card number and charge thousands of

dollars to your account;

• a computer bug could make it easy for

thieves to place unauthorized charges on

your credit card account; and

• they’re from “the security department” and

want to activate the protection feature on

your credit card.

The FTC advises you not to give out

personal information – including your credit

card or bank account numbers – over the phone

or online unless you’re familiar with the business that’s asking. Scam artists can use your

personal information to commit fraud, such as

identity theft – one of the fastest-growing

white-collar crimes in America. That’s where

someone uses your personal information, such

as your credit card account number, Social

Security number, mother’s maiden name, or

birth date, without your knowledge or permission, to commit fraud or theft.

Advance-Fee Loan “Sharks”

“The caller said he could get me a loan,

no questions asked, so I could pay off some

bills. I just needed to pay him $250 up front

and he’d do the rest. I gave him my credit card

number, but that was the last I heard from him.

Now I’m out the $250, and I still owe my

creditors.”

A different breed of “loan shark” is

preying on unwary consumers by taking their

money for the promise of a loan, credit card or

other extension of credit.

Advertisements and promotions for advance-fee loans “guarantee” or suggest that

there’s a high likelihood of success that the

loan will be granted, regardless of your credit

history. But to take advantage of the offer, you

have to pay a fee first. And that’s the catch:

You pay the fee, the scam artist takes off with

your money and the loan never materializes.

Legitimate guaranteed offers of credit

don’t require payments up front. Legitimate

lenders may require that you pay application,

appraisal or credit report fees, but these fees

seldom are required before the lender is identified and the application completed. In addition,

the fees generally are paid to the lender, not to

the broker or person who arranged the “guaranteed” loan.

Legitimate lenders may guarantee firm

offers of credit to credit-worthy consumers, but

they rarely do it before evaluating a consumer’s

creditworthiness.

Advertisements for advance-fee loans

generally appear in the classified section of

daily and weekly newspapers and magazines.

Often, the ads feature “900” numbers, which

result in charges on your phone bill. Advancefee loans also are promoted through direct mail

and radio and cable TV spots. Remember that

just because an ad appears in a media outlet

that you recognize – like your local newspaper

or radio station – it’s no guarantee that the

company behind the ad is legit.

What to do when you see an ad guaranteeing a loan for an advance fee:

• Don’t pay for a promise. It’s illegal for

companies doing business by phone to

promise you a loan and ask you to pay for it

before they deliver.

• Ignore any ad – or hang up on any caller –

that guarantees a loan in exchange for an

advance fee. Legitimate lenders never

“guarantee” or say that you will receive a

loan before you apply, especially if you

have bad credit or no credit record.

• Never give your credit card or bank account

numbers or Social Security number on the

telephone unless you are familiar with the

company and know why the information is

necessary.
Facts for Consumers

International Lottery Scams

“Congratulations! You may receive a

certified check for up to $400,000 U.S. CASH!

One Lump sum! Tax free! Your odds to WIN

are 1-6.”

Hang onto your wallet. It’s a fraud.

What’s more, it’s illegal for U.S. citizens to

enter foreign sweepstakes and lotteries. Even

so, scam operators – often based in Canada –

are using the telephone and direct mail to entice

U.S. consumers to buy chances in high-stakes

foreign lotteries from as far away as Australia

and Europe.

The FTC says most promotions for foreign

lotteries are likely to be phony. Many scam

operators don’t even buy the promised lottery

tickets. Others buy some tickets, but keep the

“winnings” for themselves. In addition, lottery

hustlers use victims’ bank account numbers to

make unauthorized withdrawals or their credit

card numbers to run up additional charges.

If you’re thinking about responding to a

foreign lottery, don’t do it. Here’s why.

• It’s illegal to play a foreign lottery –

through the mail or on the telephone or

Internet.

• By buying just one foreign lottery ticket,

you’ve opened the door to many more

bogus offers for lottery or investment

“opportunities.” Your name will be added

to “sucker lists” that fraudulent

telemarketers buy and sell.

• Don’t share your credit card and bank

account numbers. Scam artists often ask for

them during an unsolicited sales pitch, and

then use them to commit other frauds

against you.

• Ignore all mail and phone solicitations for

foreign lottery promotions. If you get what

looks like lottery material from a foreign

country, turn it over to your local postmaster.

Putting Cold Calls on Ice

So just how did they get your number?

Fraudulent telemarketers may get your phone

number from a telephone directory, mailing list

or “sucker” list. Sucker lists include names,

addresses, phone numbers – even how much

money you may have spent on telemarketing

scams in the past. Unscrupulous promoters buy

and sell sucker lists on the theory that consumers who have been deceived once are easy prey

for additional scams.

The FTC’s Telemarketing Sales Rule helps

protect you from abusive and deceptive telephone sales practices. The Rule restricts calling

times to the hours between 8 a.m. and 9 p.m.,

and puts other limits on telemarketers, too. For

example:

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

the name of the seller and what they’re

selling before they make their pitch.

• It’s illegal for telemarketers to lie about

their goods or services; earnings potential,

profitability, risk, or liquidity of an investment; or the nature of a prize in a prizepromotion scheme.

• Before you pay, telemarketers must tell you

the total cost of the goods they’re selling;

any restrictions on getting or using them;

and if a sale is final or non-refundable. 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.

• 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 credit services until these

services have been delivered.

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

you have asked not to be called.
Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

October 2001

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

1-877-FTC-HELP www.ftc.gov

Facts for Consumers

You may not be able to put a freeze on

cold calls, but you can learn how to spot those

that spell f-r-a-u-d. Here’s how:

• Say no to high-pressure sales tactics. Legitimate businesses respect the fact that you’re

not interested.

• Tell callers if you don’t want to hear from

them again. If they call back, they’re

breaking the law. You can feel comfortable

hanging up.

• Take your time when you’re presented with

a sales “opportunity.” Ask for written

information about the product, service,

investment opportunity, or charity that’s

being pitched. Don’t talk with a salesperson

if it’s not convenient for you. A reputable

salesperson should be willing to call you

back at a time you choose.

• Talk to a friend, relative or financial advisor before you respond to a cold call. Any

investment you make may have serious

financial consequences for you – and the

people you care about.

• Hang up if you’re asked to pay for a prize.

Free is free.

• Don’t send money – cash, check or money

order – by courier, overnight delivery, or

wire to anyone who insists on immediate

payment.

• Keep information about your bank accounts

and credit cards to yourself – unless you

know who you’re dealing with.

• Hang up if a telemarketer calls before

8 a.m. or after 9 p.m. That’s a tip-off to a

rip-off.

• Check out the company with your state and

local consumer protection office before you

buy any product or service, or donate

money.

• If you suspect a scam, call your state

Attorney General.

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-FTCHELP (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.