Telemarketing Fraud Against Seniors

The Facts

Every year, Americans lose more than $40 billion to telemarketing fraud. More than one-half of the victims of these crimes are older people. Illegal telemarketers direct anywhere from 56 to 80 percent of their calls at older consumers1. As the number of Americans over age 65 dramatically rises in the next two decades, seniors will become an increasingly inviting target for criminals who steal with telephones.

Studies show that many older people do not make the connection between illegal telemarketing and crime. They may not understand that dishonest telemarketers are not shrewd business people but criminals who are trying to steal their life savings.

Why Target Seniors?

Fraudulent telemarketers target older people because they have resources. Many older people own homes and have pensions, investments, and Social Security income. Seniors are also accessible to telemarketers because many older people are retired and likely to be at home during the day. The seniors targeted by fraudulent telemarketers are not necessarily isolated or ill-informed. A 1996 AARP survey found that older fraud victims are relatively educated, affluent, and connected to extensive networks of family and friends2.

Yet most seniors are deeply concerned about their financial futures. They worry about losing their financial independence or their health, of outliving their savings, and of not having resources to pass on to their children and grandchildren. Such concerns increase their vulnerability to fraud and exploitation3.

The AARP study found that seniors who became fraud victims shared several common characteristics:

• Susceptibility to pitches: Victims were likely to believe fraudulent sales pitches. They did not suspect callers who claimed that victims had "won" a contest but had to pay fees to qualify for the award. Victims thought that these "small fees" were a bargain (rather than a sign that the contest was fraudulent).

• Inability to detect dishonest pitches: More than two-thirds of respondents reported they had difficulty distinguishing between fraudulent and legitimate pitches, even though 90 percent had heard about telemarketing fraud.

• Difficulty ending phone conversations with telemarketers: Even when victims knew the offer was fraudulent, they had trouble ending phone conversations with telemarketers.

1. Sweepstakes and Prize Offers:
   
   Pitch: You have won a fabulous prize, but to receive it, you have to pay taxes or fees or buy something.
   Scam: Consumers who pay either get nothing or receive a cheap trinket.
   Danger Sign: Request for money: It's illegal for a telemarketer to ask you to pay to win something or claim a prize. Winners of legitimate contests have taxes deducted from winnings or pay them directly to the government.
   
   
2. Magazine Sales:
   
   Pitch: Subscribe for pennies a day or renew your current subscription at a low rate.
   Scam: The magazine costs much more than you realize, or the caller pockets your money, and you do not get a magazine.
   Danger Sign: Pressure to act immediately or refusal to provide contact information for the publisher so you can verify the offer.
   
   
3. Credit Card Loss Protection Plans:
   
   Pitch: You need this protection because you could lose a great deal of money if someone steals your credit card and uses it.
   Scam: Consumers are liable for only $50, and most credit card companies will remove fraudulent charges if you notify them right away.
   Danger Sign: Scare tactics or claims that the caller is affiliated with your credit card issuer.
   

Other Common Scams

• Charity Scams: Fraudulent telemarketers represent themselves as soliciting funds for worthy causes, such as the victims of the September 11 attacks or of natural disasters such as floods or tornadoes. Some scam artists claim to represent police or fire departments.
  
  
• Work-at-Home Scams: Fraudulent telemarketers sell kits to stuff envelopes, make jewelry, or perform other work-at-home tasks. Buyers may have to spend their own money to place newspaper ads or buy the envelopes, paper, stamps, and other supplies to do the job. Sponsoring companies may also require that the buyer pay for instructions or "tutorial" software.
  
  
• Advance Fee Loans: Lenders charge exorbitant fees, sometimes hundreds or even thousands of dollars as an advance fee for a "guaranteed" loan. The "lenders" pocket the fee, and the borrower gets no loan.
  
  
• Telephone Slamming: Telephone slamming is unauthorized switching of telephone service from one company to another, usually involving a great increase in costs to consumers. Usually, the consumer receives a call from someone offering to consolidate all the consumer's telephone carriers on one bill. When the consumer agrees, his or her service is switched to another company. Or, the consumer might be offered a discount on current service, only to discover that the service has been switched to another company.
  
  
• 900 Numbers or Pay-per-Call Services: These scams entice consumers to make calls to receive information (such as how to save money on groceries or receive free credit cards). Those who call the numbers are charged exorbitant rates for the calls.
  
  
• Travel Packages: "Free" or "low-cost" vacations often turn out to cost two to three times more than the "winner" might expect to pay, given all the hidden costs associated with accepting the "prize."
  
  
• Recovery Scams: Telemarketers prey on people who have already been victimized by other dishonest telemarketers. For a large fee, the caller promises to recover the money the victim lost to the previous scam. The telemarketers pocket the fee, and the victim is revictimized.
  

Common "Lines" Used by Fraudulent Telemarketers:

• You must act now or the offer won't be good.
  
• You've won a "free gift," vacation, or prize, but you have to pay for "postage and handling" or other charges.
  
• To take advantage of the offer, you must send money; give a credit card, bank account number, or Social Security number; or have a check picked up by a courier.
  
• You can't afford to miss this "high profit" and "no-risk investment."
  
• You don't need to check out the company or seek any written information about it.
  

• Receiving lots of junk mail for contests, "free" trips, prizes, and sweepstakes.
  
• Receiving frequent calls from strangers offering awards and "great money-making opportunities," or requesting contributions.
  
• Requests to send payment through courier services.
  
• Receiving cheap items such as costume jewelry, pens and pencils, small appliances (often purchased to "win" a more valuable prize.
  
• Receiving calls from organizations that offer to recover money previously paid to telemarketers, for a fee.
  

• Handle telephone callers the same way you handle strangers. Don't trust anyone until you have established that the caller is legitimate.
  
• Tell the caller that you want to check out the offer, and ask for a number to call back. If the caller refuses to give a number or insists on an immediate decision, hang up.
  
• Get all information in writing, including any refund policies, before you buy something over the phone.
  
• Check out the caller with the Better Business Bureau.
  
• Check out a charity before you give. Ask the charity how much of your donation actually goes to the charity.

Take Control

• Take your time making a decision. Remember that if the offer is legitimate, it will be there tomorrow.
  
• If you don't completely understand the terms of the offer, don't accept it.
  
• If the offer is "free," refuse to pay any fees or costs. Free means no costs.
  
• Never give your credit card, bank account, or Social Security number to an unknown caller.
  
• Never do business with marketers who want to send special couriers to pick up your money.
  
• Register your telephone number with the federal and state "do-not-call" registries. Once you are on the list, you can sue telemarketers in small claims court for $500 if they call again. (See Resources below.)
  

• HANG UP the phone. Don't worry about being rude.
  
• Call the National Center for Victims of Crime 1-800-FYI-CALL (www.ncvc.org) or the National Fraud Information Center 1-800-876-7060 (www.fraud.org).*
  
• Contact your state's attorney general's office or your local police.
  
  

AARP, Criminal Justice Services
601 E Street, NW, Washington, DC 20049
(202) 434-2222
www.aarp.org

AARP serves members through legislative representation, occupational and community service programs, and direct membership benefits. AARP also has the AARP Foundation Litigation that conducts high-visibility litigation to benefit AARP members and other people over 50. Information on AARP studies on elders and fraud is available at the AARP Web site, www.aarp.org.

National Association of Attorneys General
750 First Street, NE Suite 1100
Washington, DC 20002
(202) 326-6000
www.naag.org

The National Association of Attorneys General offers consumer information at its National Consumer Law Center at (617) 542-8010 or www.consumerlaw.org.

National Center for Victims of Crime Helpline
2000 M Street NW, Suite 480
Washington, DC 20036
www.ncvc.org
1-800-FYI-HELP

The Helpline offers crime victims, victim service providers, criminal justice officials, attorneys, and concerned individuals practical information on the closest, most appropriate local services for victims of crime. Victims can speak directly with victim advocates who provide supportive counseling, comprehensive information, and timely referrals to local service agencies.

National Consumers League
National Fraud Information Center
1701 K Street, N.W., Suite 1200
Washington, D.C. 20006
Fraud Hotline: 1-800-876-7060
www.nclnet.org

The National Consumers League, the nation's oldest consumer organization, is a private, nonprofit advocacy group representing consumers on marketplace and workplace issues. The nation's oldest consumer organization, NCL runs a
National Fraud Hotline and offers extensive information on all kinds of fraud (www.fraud.org).

Office of the Attorney General
State of Maryland
200 St. Paul Place
Baltimore, MD 21202
(410) 576-6300 or 1 (888) 743-0023 toll-free in Maryland
www.oag.state.md.us

Beginning in 1998, the attorney general of Maryland began a campaign to crack down on mail and telemarketing fraud against seniors. His staff enlisted 500 senior volunteers across Maryland to save their mail solicitations and log all telephone solicitations for one month. As a result of the information collected, Maryland has successfully prosecuted many fraudulent telemarketers and sued companies that promote their schemes. The Office of the Attorney General has recently published a booklet, A Consumer Guide for Seniors, available from the office by mail or on-line at www.oag.state.md.us/Consumer/seniors.pdf

U. S. Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, DC 20580
Information Locator: 202-326-2222
www.ftc.gov

The U.S. Federal Trade Commission is the U. S. government's consumer protection agency. The FTC enforces federal consumer protection laws that prevent fraud, deception and unfair business practices. The Commission also enforces federal antitrust laws that prohibit anticompetitive mergers and other business practices that restrict competition and harm consumers. The FTC also offers extensive information on scams and frauds.

U. S. Federal Trade Commission's "Do-Not-Call" Line
The FTC runs the national "do-not-call registry." Consumers may register on-line at www.donotcall.gov or by phone by calling 1-888-382-1222 (TTY 1-866-290-4236). They must call from the telephone number they wish to register. Consumers who want to know if their state has such a list and how it may protect them may call their state attorney general or state consumer protection program.

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