It'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.
"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.
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:
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.
"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. Advance-fee 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:
"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.
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:
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:
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 ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.