#491: 11-20-97 - U.S. and Canada Label Telemarketing Fraud Serious Economic Crime

FOR IMMEDIATE RELEASE					 CRM
THURSDAY, NOVEMBER 20, 1997				 (202) 616-2765
							TDD (202) 514-1888
U.S. and Canada Label Telemarketing Fraud Serious Economic Crime
and Propose Recommendations to Fight Growing Problem

WASHINGTON, DC -- Telemarketing fraud is a serious economic crime which costs U.S. and Canadian citizens as much as $40 billion dollars per year and requires strategic and cooperative law enforcement efforts by the two countries, according to a report released today by the United States-Canada Working Group on Telemarketing Fraud.
The report examines the ways in which telemarketing fraud is committed, legal issues and options, consumer education and prevention and cross-border cooperation and strategy. It stems from a six-month process by the two governments to develop recommendations on ways to counter the serious and growing problem of cross-border telemarketing fraud. The bi-national working group was convened at the direction of President Clinton and Prime Minister Jean Chretien and included law enforcement and policy officials from various federal and state/provincial agencies of the United States and Canada.
The report states that telemarketing fraud "has become one of the most pervasive and problematic forms of white-collar crime in Canada and the United States." It describes a range of fraudulent telemarketing activities, in which telephones are used to defraud victims of money and property or to misrepresent the true value of goods and services being offered by the telemarketers. Senior citizens, who are often targeted by telemarketers, can be deprived of their life savings, and other victims find themselves repeat targets as fraudulent telemarketers often re-use or sell "mooch" or "sucker lists" of people who have been successfully defrauded.
"This report represents a bilateral commitment to deal with the growing problem of cross-border telemarketing fraud," said Attorney General Janet Reno. "The working group's report highlights the serious nature of this crime and lays out a practical series of recommendations to combat it. If we're going to stop this abuse, we need to implement a coordinated solution at all levels of government in both countries."
The report notes that the use of telephones enables criminals to target victims at long distances, and across provincial, state and international borders, creating challenges for law enforcement. In cross-border fraud cases, authorities not only have to conduct an investigation where victims may be widely dispersed and have no good means of identifying the criminals, but also have to contend with differing jurisdictions and legal systems. This makes cooperation between agencies and governments particularly important. Developments in both countries have already demonstrated the benefits of regional and inter-agency cooperation and coordinated strategies at the regional and national levels.
The report also discusses a binational strategy to combat telemarketing fraud. It identifies a number of goals on which specific strategies can be based, including (1) reacting quickly to telemarketing offenses, (2) combining prevention, enforcement, and punishment, (3) making strategies as cost-effective as possible, (4) recognizing the importance of victims' interests, (5) maintaining flexibility in strategies, and (6) including a long-term commitment by agencies to the problem.
The report emphasizes that the most effective approach in each case will depend on the nature and scope of the fraud scheme involved and the resources deployed against it. The report highlights a number of operational approaches as examples of strategies that can be used and combined as the circumstances warrant, including larger- and smaller-scale investigations and prosecutions, disruption of telemarketing criminals' operations, and prevention efforts.
Larger- and smaller-scale investigations and prosecutions. Larger investigations involving many investigators, agencies, jurisdictions and technical resources are often demanded by the geographical scope of telemarketing-fraud schemes, and justified by the large numbers of victims and substantial proceeds generated. This approach may also offer evidentiary advantages if large numbers of individual fraud transactions are combined into a single large case for trial. It may also generate longer sentences, as the courts can be shown the true extent of the operation and the amount of the proceeds. In other instances the use of larger numbers of smaller, less-expensive proceedings may offer other advantages. Smaller investigations can be concluded more quickly, allowing authorities to move more quickly against ongoing frauds.
Disrupting fraudulent telemarketers' operations. A number of enforcement and regulatory options could be used to make the offense more difficult, and less profitable, to commit. Convicted fraudulent telemarketers might be deprived of the telephone services needed for telemarketing, or of their anonymity in using it, for example. Other civil and administrative actions would target proceeds, taking away the basic profit motive and depriving offenders of the resources needed for litigation and starting new fraud schemes.
Prevention. The most cost-effective means to control any crime is to prevent it, since this avoids the costs both to victims and society. Prevention is never completely effective, which makes enforcement and punishment necessary, but educating potential victims has considerable potential in preventing telemarketing fraud. If used effectively, it also has the potential to deter offenders by making the offense less profitable and more risky.
The report concludes that telemarketing fraud has become a serious and expanding problem on both sides of the Canada-U.S. border. No single government, organization or agency in either country, working alone, can solve it. An effective campaign will require cooperation in developing strategies and options and in putting them into effect. With a sound strategy and the right combination of tools and tactics, the United States and Canada can cooperate to meet the increasingly international challenge of this serious white-collar crime.

Following are the key recommendations of the Working Group:

that the governments and agencies of both countries clearly identify telemarketing fraud as a serious crime;

that both countries explore the use of remote testimony in criminal proceedings, by video-teleconferencing or similar means, to reduce costs;

that the legal and technical potential and limits of electronic surveillance as a tool against telemarketing fraud be explored further;

that both governments examine the regulation of telephone services and options for denying telephone services to telemarketing offenders;

that the scope of the existing mutual legal assistance arrangements be considered to determine whether they might be expanded to deal more effectively with telemarketing-fraud cases;

that both governments clarify the circumstances under which mutual legal assistance requests are needed, by providing information and advice to the agencies involved;

that extradition arrangements be examined, and if possible modified, to facilitate and accelerate extradition in telemarketing fraud cases;

that federal deportation laws which might apply to foreign nationals engaging in telemarketing fraud be reviewed, and that enforcement agencies be given information about when deportation may be an option;

that research be conducted into offenders, victims and other aspects of telemarketing fraud to create effective educational materials and strategies to prevent it;

that governments and agencies cooperate as closely as possible in developing, maintaining and disseminating educational materials, and in coordinating education and prevention efforts;

that strategies to control telemarketing fraud be coordinated between the United States and Canada at the agency, regional and national levels;

that an ongoing binational working group serve as an overall coordinator and deal with national and binational telemarketing fraud issues as they arise;

that regional task-forces be encouraged to cooperate across the international border to the maximum extent possible; and

that, to further coordination, governments and agencies examine privacy and other laws relevant to cross-border shared access information systems with a view to expanding access to such systems to the maximum extent possible.

A hypertext version of the report is available on the DOJ Website. The address is: http://www.usdoj.gov/criminal/fraud/uscwgrtf.htm.
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97-491