The Daily Record, July 2015

Sometimes it can be difficult to tell the difference between a trustworthy telemarketer and a scammer who uses the phone to lure people in. With the help of internet software, callers are able to operate from just about anywhere in the world, and the phone number coming through looks legitimate. A report published by Pindrop Security, a company providing solutions to protect enterprise call centers and phone users, reviewed phone fraud activity affecting financial institutions, retailers, and consumers from 2014-2015. Their report found that across financial and retail institutions, one in every 2,200 calls is fraudulent, which is an increase of more than 30% since 2013. The report also noted that on average, financial institutions risk exposing an average of 7 to 15 million dollars to phone fraud, per institution. Of all the financial institutions, credit card issuers face the highest rate of fraud calls, with one fraud call per every 900 calls. With regard to consumers, it was estimated that approximately 17.6 million Americans lost a total of $8.6 billion to phone fraud in 2013 alone. Scammers are now using robodialers more frequently to increase their efficiency in targeting consumers. A robodailer uses a computerized system to deliver a pre-recorded message. According to Pindrop’s report, one in six phone numbers calling a consumer is a robocaller. 

In the news

Recently, a telemarketer from the company Vacation Max pled guilty to assisting in the operation of a timeshare resale scam. The Company falsely represented that they had found corporate buyers interested in acquiring blocks of timeshare units including the consumer’s timeshare unit. The company solicited fees of up to several hundred thousand dollars from each timeshare owner for alleged closing costs and related expenses. The scheme was operated from December 2006 through January 2012. In that time, approximately $10 million was stolen from over 3,000 victims. In addition, the IRS reported that they saw the largest increase in tax phone scams during this past tax season. Callers pretending to be someone from the IRS, claiming that the victim owes money and threatening them with jail time if they do not pay immediately. Federal authorities estimated that scammers swindled more than $15 million in the past two years with fake IRS calls. Due to the frequency of these calls, it is important to be aware of the different types of telemarketing scams and know how to recognize the warning signs pointing to fraud. 

Different types of phone scams

According to the Better Business Bureau, the following are several examples of common telemarketing scams:

• Free or low cost travel packages: Promoters notify you by telephone that you have been selected for a “free vacation” or free airfare, etc. However, consumers have reported that these “free” vacations can end up costing a significant amount of money as the offer was misrepresented.
• Payday loans: Ads offering cash advance loans to hold you over until you get paid. However, these short-term loans come at a very high price.
• Exaggerated business and investment opportunities: Callers offering low risk, high return investments. They try to take advantage of people who do not research the investment opportunity, asking them to commit right away.
• Urgent charity/donation requests: Callers asking for an immediate donation for recent disaster relief efforts.
• Foreign lotteries: Scammers call and notify you that you have won a significant amount of money in a foreign lottery. However, they require you to pay money up front to cover processing fees and taxes.
• Extended car warranties: Callers claiming to be representatives of a car dealer or manufacturer telling you that the warranty on your automobile is about to expire, urging you to sign up for an extended warranty.
• Free trial offers: Companies offering consumers “free trials” of their products. But, if you look closely at the terms and conditions, most will charge you for additional product if you don’t cancel within a certain number of days.

How to recognize a phone scam

Telemarketing scammers try not to give you the time to think about their pitch, but just want to get you to say “yes”. The Federal Trade Commission (“FTC”) released the following list of red flags to help consumers recognize a phone scam:

• If the caller says you’ve been specially selected for the offer
• They tell you that you’ll get a free bonus if you buy their product
• The caller informs you that you’ve won one of five valuable prizes
• The caller says you’ve won big money in a foreign lottery
• They tell you that the investment is low risk and provides a higher return than you can get anywhere else
• The caller tells you that you have to make up your mind right away

If you happen to receive a call and suspect that it may be a scam, the FTC also recommends asking yourself the following questions to assist in determining whether or not the call is a scam:

• Who is calling, and why? The law requires telemarketers to inform you that it is a sales call, the name of the seller, and what they are selling before they make their pitch. If you don’t hear this information, just simply hang up.
• What’s the hurry? Most legitimate businesses will give you time and written information about an offer before you commit. If the person on the phone is using pressure tactics to get you to say yes right away, most likely it’s a scam.
• If it’s free, why are they asking me to pay? Question any fees you have to pay to redeem a prize or gift.
• Why am I confirming my account information, or giving it out? Some callers may have your billing information before they call you. They may be trying to get you to say yes so they can claim you approved a charge.
• What time is it? The law allows telemarketers to call only between 8:00a.m. and 9:00p.m. If the caller is ignoring this rule, you should say no thanks and hang up.

What can you do?

The website ScamDetector.com has officially partnered with the Better Business Bureau to publish a weekly top ten list of the latest scams in every industry. This could be a great resource to check if you suspect you received a fraudulent call. It is also a good idea to put your number on the national “do not call” registry to stop most telemarketing calls. You can report violations of your “do not call” rights through their website. You can also report your complaint to the Federal Trade Commission.