BIFRANCHISE
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Telemarketing Fraud – a method where a person uses a telephone as the main means of communication to defraud a victim. Telemarketing offences are classified as consumer fraud, yet many businesses are affected by office supply and marketing services scams. The hit-and-run nature of phone rooms, the geographical distances between the crooks and their victims, and the resources and priorities of law enforcement agencies all make enforcement efforts difficult.
1. Telemarketing Terminology:
• Boiler Room – a rented office with the large number of telephones
• Banging or nailing the customer - closing the deal.
• Reloading – selling to the people that have already fallen for the scams.
• Puffing – ability to sound convincing while exaggerating the value of the peddled items.
• Singers or criers – tell potential victims what a great deal they are getting.
• Heat calls – calls from angry customers who realize they have been scammed.
• Consolation – routing calls from irate customers to professionals who placate the caller with more promises and obfuscations.
• Intimidation and Threats – when obfuscation and consolation prizes fail to appease the caller, the con turns to threats and intimidation. This is a favorite method for dealing with senior citizens, especially elderly women. Threats are used not just to keep customers from filing complaints, but to cajole more money out of them.
• Fronter – calls victims and makes the initial pitch.
• Closer – a veteran, identified as the firm’s “manager,” who convinces the person to buy.
• Verifier – reads some vague words about the deal and records the person’s agreement. Verifiers also stall customers who call back to complain (heat calls), finding reasons why a little more patience will solve the problem, and in some cases, convincing the person to send a little more money to help the process along.
2. Common Telemarketing Scams Targets:
• Seniors – vulnerable to pitches promising them extra money and luxury goods because many live on fixed incomes. These lottery-style gambits can seem like an easy way for the elderly to improve their financial status.
• Unemployed – vulnerable for sweepstakes pitches and job search services.
• Bad Credit – vulnerable for pitches to “repair” credit record or get a major card or advance-fee loan scams, which promise loans in exchange for a fee.
• Affinity Fraud – targeting targets groups of people who have some social connection, such as racial minorities and immigrant, religious and professional groups.
• Toll-free 800 Numbers and other toll-free prefixes such as 866, 877, 888, etc. – toll-free line is being advertised and carries a recording which directs customers to a 900 number that charges the caller between $3 and $10 a minute to hear recorded messages.
3. Automatic Debits – setting up an automatic debit to the buyer’s account before victims can change their minds about their purchases. Worse, telemarketers can simply use the information to drain the victim’s account. This information is usually obtained by telling the victim that the account numbers are needed to “verify eligibility” for a giveaway or “biz op.” Banks are not responsible for any losses customers suffer in this way, so there are no chargebacks and little recourse for the swindled customer besides filing a complaint.
4. Business Opportunities (Biz Ops) and Work-at-Home Schemes – besides franchise offers and other miscellaneous business scams, the most prevalent frauds involve “Work-at-Home” schemes. Victims of these phony offerings do not see themselves as part of the telemarketer’s prey. They believe they are making a legitimate business investment. Some business-pitch operations are complete fabrications. They offer envelope stuffing or book-review enterprises that do not really exist. Scammers mail out postcards or buy cheap ads in magazines and newspapers. Some may not even take any phone calls. The ads convince the victims to send money to a mailbox.
5. Fly and Buy – involve ventures such as vending machines, pay phones, and merchandise display racks. They often gain credibility by setting up a front operation and inviting investors for tours.
6. Vending Machine and Payphones – buyers are promised exclusive territories, but find the same area has been sold to many people. Often, the machines do not work or they simply do not make any money.
7. Entrepreneurial Enterprises – a raising of exotic animals like ostriches and emus for luxury items and for slaughter has been a popular scam for a while, including weekend retreats to a model farm for would-be ranchers.
8. 900 telephone number service – convincing victims they can make a fortune charging between $3 and $10 a minute for recorded messages providing entertainment, psychic readings, or information available for free from other sources.
9. Employment Services – similar in nature to the biz op. Preying on the unemployed, these scams promise good jobs, many of them overseas with the added enticement of “tax free” wages.
10. Credit and Loan Services – promising that the company will secure a loan for the applicant, regardless of credit history and references, if the person pays an upfront fee.
11. Credit Repair – similar to loan scams: fraudsters say they can “wipe away” or “doctor” or have ways of changing or hiding a person’s credit history.
12. Prime-Rate Credit Cards – assuring victims that they can get major cards for a small fee even if their credit report is poor.
13. Gold Credit Cards – touting (mostly on the Internet) “gold card” status for customers regardless of credit history.
14. Real Estate – the investors are led to believe there is no time to investigate the venture, and that if they hesitate, they will miss the opportunity to make a fortune. Promises of big profits for little or no involvement are the norm in real estate scams. The investor is also misled into assuming they are being let in on a special offer or an exclusive deal by the promoter.
15. Timeshares - selling timeshares in condominiums for vacationers. Telemarketers pass themselves off as brokers to condominium owners and purport to specialize in selling timeshares.
16. Art/Rare Items – tagging worthless paintings as “masterpieces” and/or selling lithographic prints (mass-produced by the thousands) as a “limited edition.”
17. Collectibles and Memorabilia – supposedly valuable objects such as vases, bric-a-brac, war memorabilia, documents and keepsakes from any bygone era, stamps and coins, and figurines are nothing more than cheap, shoddy merchandise.
18. Precious Stones – offering “high-quality” gems for wholesale prices. Victims are told they are being offered a special deal due to fluctuations in the market or because their names are on an industry list.
19. Precious Metals – playing on Market’s instability with offerings of gold, silver, and platinum. Once again, victims are told prices will never be this good again and that if they hesitate, they will miss a singular opportunity to make a fortune.
20. 900 Numbers – psychic hotlines, phone sex lines, and other dubious purposes.
21. International Calls – an offshore version of the 900 number scam. Callers believe they are dialing an international number for free information, usually about travel contests, discount fares, or overseas jobs.
22. Selling Free Information – taking out ads in newspapers and magazines, or buy spots on talk radio, promising they can locate government jobs, get deals on liquidated equipment, or find student loans. All this information is available cheaply or free to the public, through government offices, on the Internet, and from other sources
23. Scholarship Services – selling the information that in reality is available for little or nothing (at most, a $5 or $10 fee) from legitimate institutions.
24. Charity Fronts – groups calling themselves non-profit, charitable concerns and asking money for the advertised cause. However, once the money has been collected, they are divided between the fraudsters.
25. Door-to-Door Promotions – using a charity front offering the possibility of new cars and cash prizes to contributors. The raffle approach—tying the number of “chances” to a set amount—helps drive up how much the victim is willing to give.
26. Prizes, Sweepstakes, Discount Services – give-away known as the “1-in-5.” A postcard arrives in the mail telling the receiver they have already won a prize. A new Lincoln Continental tops the list, along with $5,000 in cash, a diamond necklace, a living room set, and $500 in gift certificates for clothing and household furnishings. The odds of winning any of the prizes are astronomical. Victims are given trinkets or coupons redeemable only for the company’s own shoddy merchandise.
27. Magazine Subscriptions – extracting money from customers through credit cards and bank debits then never delivering the publication. In other instances, the processing fees far exceed the actual value of the subscriptions.
28. Office and Household Supplies – a scam which has recently become prevalent involves copy machine toner. An invoice for toner is sent to a company. The cons have usually called beforehand, gotten the name of the employee in charge of supplies, and addressed the invoice to that person. Although the office never ordered or received any toner, the con men are relying on poor communication to cover their ruse. The invoice will most likely be sent to the accounting department and paid.
29. Recovery Rooms – targeting those who have already lost money to a telemarketing scam and posing as a consumer advocacy group or a law firm, telemarketers offer victims a chance to recover any funds they may have lost and bring the perpetrators to justice. Once the victim agrees, legal, investigative, and other fees will begin to emerge.
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