Phone Frauds

Telephone Scams

The telephone is an increasingly important marketing tool for legitimate business, and telemarketing is an important, growing industry. But the telephone in the wrong hands is also becoming a very effective tool to defraud innocent consumers.

Fraudulent schemes range from peddling water purifiers, vitamins, and make-up kits to stock investments and abusive "900" numbers. According to the Alliance Against Fraud in Telemarketing (AAFT), Americans lose an estimated $40 billion each year to telemarketing fraud. Con artists and swindlers use the telephone more and more as their "weapon" to hold up victims.

If a sales pitch sounds too good to be true, just hang up. If you don't, you may become the next victim of telephone fraud.

Top Phone Scams

While some of the following products and services can be and are legitimately sold by reputable telemarketers, the Division of Consumer Protection has identified seven areas where fraud can occur and does the most damage to the consumer's wallet:

• Free Prize Offers
  If you receive a phone call that you have won a free prize, be cautious! Usually there are conditions to securing those offers such as substantial handling fees, shipping charges, membership fees and/or the purchase of other merchandise.
  
  Ask the telephone solicitor what the prize is worth. It may be of little value, and it may not be worth the money you will have to spend to receive it. A "contest" or an offer of a "free" prize or gift is only a sales tactic. No one is in business to give things away. Look for strings attached. Telemarketers must be registered with the Division of Consumer Protection. Call the Division to verify current registration.
  
  
• Charitable Solicitations
  Telephone solicitation is one method used by charitable organizations to raise funds from generous consumers. Unfortunately, fraudulent charitable operators may call you, too. Utah law requires charities to inform donors if they are registered with the state, what the permit number is and what percentage of your donation will actually go to the charity. Call the Division of Consumer Protection to verify the information they give you.
  
  When you make a donation, it is a good idea to pay by check and make the check out to the organization, not the person collecting the donation. Be cautious of organizations that pressure you to pledge money on the spot or tell you they will send a representative immediately to your home to pick up your donation. A legitimate charity will gladly accept your donation today, tomorrow, or a month from now.
  
  
• Travel Offers
  It can be quite tempting to purchase a bargain-priced travel package over the telephone, but be careful. Many of these scams operate by enticing people to join " vacation clubs" or offering consumers "free trips." Often the vacation club or free trip has many hidden costs or conditions attached. Your bargain or free trip could end up costing you a lot of money.
  
  
• Investment Fraud
  Many unsound investment opportunities are peddled over the telephone. Fraudulent sales pitches usually involve such statements as "you must act now," "there is no risk" or "this must be kept a secret." Promoters will often try to make you feel guilty or silly for asking questions or exhibiting doubt. Stop and think before you quickly turn your money over to an investment promoter calling on the phone. Ask for written information. And, if you are receiving undue or uncomfortable pressure, or if other "warning flags" arise during the conversation, hang up.
  "900" Numbers: When you call a "900" number, you are charged either a fee for the number of minutes you are on the phone or a flat fee for the entire call. These fees can add up rather quickly after you have spent more than a few minutes on the telephone. Some services will keep you on the line for an extended length of time before you get all of the information you called for, making it a very expensive phone call. Find out the costs of the call before you make it, and never call any "900" numbers that doesn't disclose the costs up front.
  
  Recently, unscrupulous telemarketers began transferring calls made to toll-free "800" numbers over to "900" numbers. This improper practice makes it more important today then ever before to know who you are calling. You should also listen carefully to any recorded information at the beginning of the call.

Tip-Offs to Phone Fraud

Telephone con artists spend a lot of time polishing their "lines" to get you to buy. You may hear this:

• You must act "now"--or the offer won't be good.
• You've won a "free" gift, vacation, or prize--but you pay for "postage and handling" or other charges.
• You must send money, give a credit card or bank account number, or have a check picked up by courier--before you've had a chance to consider the offer carefully.
• You don't need to check out the company with anyone--including your family, lawyer, accountant, local Better Business Bureau, or consumer protection agency.
• You don't need any written information about their company or their references.
• You can't afford to miss this "high-profit, no-risk" offer.

If you hear these--or similar--"lines" from a telephone salesperson, just say "no thank you," and hang up the phone.

First Line of Defense

Follow some basic rules, and arm yourself with the tools to safeguard your hard-earned money from telephone con artists.

Keep these tips by the telephone:

• Be wary of investing with a stranger over the telephone.
  
• Don't give in to high-pressure sales tactics.
  
• Ask the solicitor if you have the right to cancel your purchase after you order.
  
• Ask the solicitor for the name, address and telephone number of the company for whom they work.
  
• Call Consumer Protection to verify the information.
  
• Verify exactly what the solicitor is trying to sell you.
  
• Get the solicitor to repeat anything that isn't clear.
  
• Be extremely cautious of giving your credit card number over the telephone.