Telemarketing fraud

Telemarketing fraud is fraudulent selling conducted over the telephone. The term is also used for telephone fraud not involving selling.

Telemarketing fraud is one of the most persuasive deceptions identified by the Federal Trade Commission (FTC).^[1] The term is also used for telephone fraud not involving selling. Telemarketing fraud often involves some sort of victim compliance whether it involves the victim initiating contact with the perpetrator or voluntarily providing their private information to the offender, thus fraud victims may experience feelings of shame and embarrassment that could prevent them from reporting their victimization

Older people are disproportionately targeted by fraudulent telemarketers and make up the 80% of victims affected by telemarketing scams alone. Older people may be targeted more because the scammer assumes they may be more trusting, too polite to hang up, or have a nest egg.^[2]

Telemarketing fraud is a type of strategy, which a criminal communicates with a potential victim through the telephone. This is where the criminal will pitch a product or service in order to persuade you into purchasing this good or service, and effectively getting the victim to hand over their credit card details and information/ identity to make unauthorized purchases, telemarketing fraud can also be known as a scam.

How to Detect Telemarketing Fraud

Detecting telemarketing fraud can be difficult, as it can be hard for victims to distinguish the difference between a scammer and a respectable company, as they both use telemarketing to conduct business. Typically, telemarketing fraud is frequently targeted at the elderly, the poor, younger individuals and immigrants who do not have strong English skills (Tehrani, N, 1996).

Usually, scammers can use certain methods to persuade the victim to purchase the product or service. One of these methods is called an ‘Advanced Fee Scam’ which occurs when a victim receives reassurance to advance large sums of cash with the hope of receiving a large rate of return on those first advancements (“Phone and Telemarketing Fraud,”1992).

Another common method that criminal’s use is called a ‘Pyramid Scheme’, this is where the victim is required to pay an initial amount of money and is assured that they will gain in return sums of money from different individuals, which would supposedly would increase the initial investment (“Phone and Telemarketing Fraud,”1992).

Further methods that telemarketing scammers indulge in, are where they use names of genuine firms in advising the victim that they were overpaid for an online sale, therefore the criminal sends a fake check to the victim then over the telephone, asks the victim to transfer the extra amount of money back into their account. Although, by the time the victim has received the fake check for the online sale and tried to cash the check, they will discover that they cannot retrieve the amount of money already transferred to the scammer, this can occur in small or large amount of money being lost.

Alternatively, fake telemarketers can phone victims and pose on behalf of charities, offering the victim to make a donation to support the charity and by doing so paying over the phone. This is where the scammer takes the information from the victim’s credit card to make unconstitutional purchases with it.

Types of fraud

• Advance fee fraud – They will typically require upfront payments in exchange for goods and services. This is also a popular technique used in lottery and student scholarships scams.^[3] Once you have provided your personal information, the fraudsters will ask you to pay various fees – for example: taxes, legal fees, banking fees, etc. – so that they can release your non-existent winnings.^[4]
• Pyramid Schemes – Work by recruiting “members” to invest into a scheme. Most of the money is made by recruiting new members and a prime characteristic of the scam is the product is of little value. The people at the bottom of the pyramid pay the people at the top. Inevitably they will run out of new recruits and the scheme will collapse.^[5] Some individuals may profit from pyramid schemes, but the vast majority of those who join later on in the scheme will not.^[6]
• Credit card Fraud – Fraudsters will call with promises to repair their credit ratings, provide credit options or credit facilities, credit cards with zero or very low interest, or instant and unlimited loans without credit checks or security. Such offers, if followed up, tend to come at a considerable cost to victims in terms of high interest rates or exorbitant fees. It is common for scammers to target people who have bad credit and are therefore more susceptible to take the offer in hopes to pay off debts or to increase their credit rating.^[7]
• Overpayment fraud - One of the most popular scams making the rounds. A generous overpayment is made to the victim typically using a fake cheque. This can vary in goods but is popular among online auctions or classifieds. But before the cheque has been cleared by a bank and the victim discovers that the cheque has bounced, the scammer will request to have the difference refunded ^[8] Usually through an online banking transfer, pre-loaded money card, or a wire transfer such as Western Union. Therefore, victims lose both the money they send along with the item itself ^[9]
• Charity Fraud – Telemarketers claiming to represent charities call asking you for a donation. Fake charities try to take advantage of people’s generosity and compassion for others in need. Scammers will steal the money by posing as a genuine charity They may even try to use recent events, such as natural disasters, to make their phony pleas for donations sound more believable.^[10] These scammers use aggressive high pressure techniques made to make the victim feel guilty or selfish if they do not want to donate.
• Cramming – Small charges that are secretly inserted into customer’s credit card bills for services they did not order, buried so deep in credit card bills that many do not notice,^[11] usually with fake fees by vague financial services. Sometimes a one-time charge for entertainment services will be crammed onto phone bills. Other times it may be a recurring monthly charge. Cramming of recurring charges falls into two general categories: club memberships, such as psychic clubs, personal clubs, or travel clubs; and telecommunications products or service programs, such as voice mail, paging, and calling cards.^[12]
• Summer Jobs Fraud – Much like an advance fee fraud, these scams are aimed at teenagers or young adults looking for work over the summer period. Telemarketers seek out the victims by scanning student job searches. The telemarketer will then claim the victim has been singled out and specially selected to be hired for a particular job. But before they can start work they are told to have to pay various fees to cover training, materials and insurance. When they eventually realize the job is a scam, it is already too late, they have lost the money they paid for in fees as well as the time it would take to find a new job.^[13]
• Office supply scam – A very common scam where a telemarketer will target business managers responsible for purchasing office supplies,^[14] falsely representing their identity and the cost of office supplies – the most popular being toner.^[15] The caller might mislead a company’s employees into thinking that an order for office supplies has already been placed, either by an existing or former colleague, and that they are calling to chase up a signature for the order form to help them keep complete records. The company is then invoiced for unwanted, and overpriced, stationery and office supplies.^[16]
• Magazine Subscriptions Scam - Scammers call victims with an intriguing offer and that for a small payment they can get a yearly subscription to their favorite magazine, even though they have no affiliation with the magazine's publisher. When victims agree, the scammers will send random magazines with grossly inflated prices. Another way they extract money is by falsely telling callers it is time to renew their magazine subscriptions in an attempt to get their credit or bank account information.^[17]

Deceitful Marketing

• Caller id spoofing - Allows the caller to present any number they want to put up on the screen including existing numbers while keeping the real number they call from to remain private. Caller I.D. spoofing is a low cost option to help ensure anonymity.^[18] The same devices can also change voices to sound like a male or female^[19]
• Robo calls - Technology has made it cheap and easy for robo callers to make calls from anywhere in the world.^[20] Most of these calls originate overseas, many in boiler rooms in India, and they are surprisingly effective.^[21] Robocalls have been used for legitimate campaigning and public opinion polling, but have also been used for vote suppression, false endorsements, and negative campaigning that borders on fraud. The federal regulatory regime currently excludes political robocalls from most telemarketing regulations. Presidential campaigns and national interest groups have accidentally violated state laws in trying to communicate with voters by using robocalls.^[22]
• Crawler devices - A majority of fraudulent calls originate from Nigerian phone scammers, who claim a whopping $12.7 billion dollars a year off phone scams.^[23] Some callers have to make up to 1000 calls per day. So to help with speeding things up they will sometimes use crawler devices which is computerized to go through every area code calling each and every number. If the caller does not reach, they mark the lead as "no answer" and the system programs it so they get called again a few days later. If the company does not have a large lead pool, they may get called as soon as 12 hours later. As with email spammers, they know that a certain proportion of their hits will score.^[24]
• False Identity – Fraudulent Telemarketers use aliases to cover their tracks and prevent detection from the law. Some fraudulent telemarketers are deliberately located in other countries, as it is more difficult for law enforcement agencies to pursue them. Typically, scammers will use common western names in a bid to reassure callers they are calling from the same country^[25]

How to Protect Yourself from Telemarketing Fraud

Every year consumers lose up to $40 billion due to fraudulent telemarketers, according to data from the ‘National Fraud Information Centre (NFIC)’ (“Congress acts on telemarketing fraud,”1994).

If a victim receives a phone call with a telemarketer offering you a service or product that sounds too good to be true, it is most likely to be a scam and the victim should hang up immediately.

To protect yourself from becoming a victim of telemarketing fraud, an individual should not give out personal information about themselves, such as credit card/ bank account details or their social security number over the telephone. If the victim is interested about the caller’s product or service, request for more information to be sent in the mail, as most genuine companies will be happy to send you more information.

If you receive a telephone call at unusual times, either calling too late or too early during the day or night and is refusing to pinpoint the origin of the call, then there is a high chance the caller is a scammer.

Although, telemarketer’s tactics are to make you rush your decision, this is because it will make a victim more likely to fall into the scheme of purchasing the good or service. An individual should not feel pressured into making a decision immediately, and if you feel that the caller is pressuring you then simply just hang up (“Telemarketing Fraud,”1996).

Popular Scams

The Grandparent Scam

A telephone call is made to an elderly person with a family member who is in some kind of trouble, usually claiming to be a grandson or granddaughter. It’s often late at night or early in the morning when most people aren’t thinking that clearly. Callers assume that they have grandchildren and will usually have several people in on the scam (bail bondsman, arresting police officer, a lawyer, a doctor at a hospital, or some other person)^[26] – the first voice on the phone is usually by the grandchild sounding upset and typically states there are only a few moments to talk. The caller may say that they have a cold if the victim does not quite recognize their voice. Their story generally follows a familiar line: they were traveling in another country with a friend, and after a car accident or legal infraction, they are in jail and need bail money wired to a Western Union account as soon as possible for their quick release.^[27] The caller does not want anyone told about the incident especially not family. Before the victim can ask too much about the situation the phony child will hand the phone over to the accomplice who will then request money to be transferred to release the grandchild from jail. While it’s commonly called the grandparent scam, criminals may also claim to be a family friend, a niece or nephew, or another family member.^[28]

Microsoft Scam

A telephone call is made saying typically that virus activity has been detected on the victim's computer; Overseas caller states they are from Microsoft or a Microsoft certified technician. Callers assume that the victim has a computer running a Microsoft Windows Operating System (users of other operating systems, such as Linux, are a minority and are likely to be technically knowledgeable). They will get the computer owner to give the caller remote access using a genuine networking service or website like ammyy.com or TeamViewer. They will use the ‘Event Viewer’ tool on the computer to highlight the Red-X Errors and Yellow Warnings which are supposedly signs of an infection,^[29] when in fact these are normal and harmless logs.^[30] They also encrypt the owner’s password database, preventing access to the computer without the scammers password - essentially locking the victim out of their own computer and ensuring that they themselves will be paid. At this stage the caller then has complete control over the computer, and can display further alarming displays, and install malware. The cold caller will then offer to remove the viruses and malicious malware (some they have installed themselves) and install security software and provide an ongoing support service costing anywhere up to $500.^[31]

Donald Trump Robo Calls

In January 2016 it was revealed that Iowa and New Hampshire state residents were receiving robo calls^[32] from a group of white Supremacists associated with the American National Super Pac.^[33] The calls were recorded by several members of the group in a bid to sway voters to vote for Republican Presidential Candidate Donald Trump in the Presidency election. In one of the 50-second robo calls, William Johnson (leader of the American Freedom Party, along with Christian talk show host Ronald Tan and white supremacist magazine "American Renaissance" founder Jared Taylor, urges listeners to support Trump.^[34] The calls start off simple enough, an automated man’s voice asking the voters age and gender, then quizzing them on which Republican candidates they like. However the calls would then become aggressive if the voter mentioned their support for another candidate other than Trump.^[35] Johnson, who describes himself in the calls as “a farmer and white nationalist, stated the robo calls were not authorized by Trump.^[36]

What to do if You're a Victim of Telemarketing Fraud

^[37] It always difficult to get the money back from a telemarketing scam. Even so, there are several practical ways that help you to minimize your losses and avoid future scams. Firstly, if you experienced a fraudulent, you should always report telemarketing fraud. The National Fraud Information center is helpful. Call the Center at 1-800-876-7060 or go to www.fraud.org(link is external) You can fill up the file complaints with government agencies such as the Federal Trade Commission (FTC), FBI, local consumer protection program, and your state attorney general in the Center or you can also directly file a complaint with these agencies. Maybe you can not get the money back, but you can help others to take caution to avoid the scam. In some situations, the government agency may against a company and even get some refunds. If you report the fraud, then you make sure your name is on the list of victims and get your refunds. Secondly, according to Federal Law, if your credit card was used by the fraudulent telemarketer, you can dispute charges for the goods that never appear. There are TWO methods you can do this: Option 1-You can apply for a compensation with your credit card company about the telemarketer's fraud if you satisfy the following 3 requirements: 1) The amount is more than $50; 2) The transaction occurred in the same state or under 100 miles of your current address (You should argue that the telephone transaction occurred in your home state since that is where the telemarketer initiated the sale); and 3) You have made a good faith effort to resolve the problem with the telemarketer. Then you can write a letter about the situation to the credit card company and explain how you be deceived and how hard you have tried to resolve it. You should not pay the money because the payment violates your right. Option 2-If you cannot satisfy the requirements of Option 1or have already paid the disputed charge, you can still complain that the charge is a billing error. The credit card company is required to protect people’s assets right and provide warranties. You must get to know the Information on how to notify your credit card company about a billing error and it should be included yin our monthly credit card statements. Lastly, If the fraud involves a 900 number or pay-per-call service, the charge will appear in your local telephone bill. Obviously, this is not your local telephone bills company charges. Based on federal Law, you can not be disconnected by your local telephone company or long distance carrier for failing to pay these charges. The law also requires telephone companies to offer you the option of blocking access from your phone to pay-per-call services. The Law may also protect you from abusive 900 number practices. The practice of adding unofficial, misleading, or deceptive charges to your phone bill is called cramming and it's illegal. You have to always check your telephone bill carefully and call your local or long distance telephone company if you see any charges that you don't understand.

References

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6. "Pyramid Scheme". Investopedia. Retrieved March 30, 2016.
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14. Wall, David S (October 2010). T. Holt, T., and B. Schell, ed. "Micro-Frauds: Virtual Robberies, Stings and Scams in the Information Age". Corporate Hacking and Technology-Driven Crime: Social Dynamics and Implications: 68–85.
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17. Harris, Sheryl (September 12, 2009). "Magazine sales calls likely to be scams; Telemarketing Sales Rule can help you tell real calls from fake". Cleveland. Retrieved March 30, 2016.
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20. "What are Robocalls". Verizon. Retrieved March 30, 2016.
21. Saltzman, Aaron (November 25, 2015). "Endless telemarketing calls, scams and how the big telcos could stop them". CBC. Retrieved March 30, 2016.
22. Miller, Jason, C (May 28, 2009). "Regulating Robocalls: Are Automated Calls the Sound of, or a Threat to, Democracy?". Michigan Telecommunications and Technology Law Review 16 (1).
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25. "Telemarketing Fraud". Georgia Department of Law. Retrieved March 30, 2016.
26. "The Grandparent Scam Don’t Let It Happen to You". FBI.gov. 2 April 2012. Retrieved March 30, 2016.
27. Schneider, Alex (December 2015). "How Could They Know That? Behind the Data that Facilitates Scams Against Vulnerable Americans". Virginia Journal of Law and Technology.
28. "The Grandparent Scam Don’t Let It Happen to You". FBI.gov. 2 April 2012. Retrieved March 30, 2016.
29. Wall, David, S (October 2010). "Micro-Frauds: Virtual Robberies, Stings and Scams in the Information Age". Corporate Hacking and Technology-Driven Crime: Social Dynamics and Implications.
30. "Event View Scam". Microsoft. June 11, 2012. Retrieved March 30, 2016.
31. "Microsoft NZ and NetSafe issue warning about phone scammers". Microsoft. September 14, 2015. Retrieved March 30, 2016.
32. Medra, Chad (January 12, 2016). "White Nationalist PAC plans expanding pro-Trump robocalls". National.suntimes. Retrieved March 30, 2016.
33. Wright, David (January 11, 2016). "White nationalist group urges Iowans to vote Trump". CNNpolitics. Retrieved March 30, 2016.
34. "AUDIO: White Nationalist PAC Inundates Iowans With Robocalls To Support Donald Trump". Freakoutnation. January 11, 2016. Retrieved March 30, 2016. |first1= missing |last1= in Authors list (help)
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Phone and Telemarketing Fraud. (1992). Retrieved March 25, 2016, from

https://www.law.cornell.edu/wex/phone_and_telemarketing_fraud

Tehrani, N. (1996). Eliminating fraud, the greatest threat to telemarketing's reputation. Telemarketing & Call Center Solutions, 14(8), 2. Retrieved from http://ezproxy.aut.ac.nz/login?url=http://search.proquest.com/docview/208151725?accountid=8440

Telemarketing Fraud. (1996). Retrieved March 25, 2016, from http://criminal.findlaw.com/criminal-charges/telemarketing-fraud.html

Congress acts on telemarketing fraud. (1994). Bank Insurance & Protection Bulletin, 1(1), 3. Retrieved from http://ezproxy.aut.ac.nz/login?url=http://search.proquest.com/docview/204247967?accountid=8440

• Competition Bureau of Canada and Royal Canadian Mounted Police (2006). "PhoneBusters: Recognize It". Archived from the original on November 26, 2006.
• United States Department of Justice (1998). "What Kinds Of Telemarketing Schemes Are Out There?".