1-800-876-7060

     The NFIC handles between 300 and 350 calls each weekday. A small number of inquiries about telemarketing solicitations are also received via mail and e-mail. Though the NFIC does not provide information to the public about specific companies, its skilled counselors help consumers identify the danger signs of fraud and teach them how to deal with telemarketing solicitations.

     Consumers can also report suspected fraud through the NFIC's hotline, web site, or by writing to its post office box. Approximately twenty-five percent of the people who contact the NFIC are either actual victims of telemarketing fraud or want to report attempted fraud. Their reports are entered into a database and immediately transmitted to one or more of the 160 local, state and federal law enforcement agencies who have arranged to receive data from the NFIC system.

1997 NFIC Telemarketing Fraud Statistics

1. Prizes/Sweepstakes-- phony prize awards that require payment of fees first -- and never materialize.
2. Advance Fee Loans-- empty promises of personal or business loans, often targeted to people with financial problems, requiring payment of fees in advance.
3. Work-at-Home Plans-- kits sold to stuff envelopes, fabricate jewelry, or perform other work-at-home for which false promises of profits are made.
4. Pay-Per-Call Services-- cost of calls to access information or entertainment services through 900 numbers, 800 numbers or international phone numbers are not adequately or accurately disclosed.
5. Slamming-- consumers are tricked into switching their phone service to another carrier without their knowledge or consent.
6. Magazine Sales-- telemarketers falsely represent that they are calling on behalf of the publisher to renew the consumer's subscription and never deliver the magazines, or misrepresent the total cost.
7. Credit Card Offers-- phony promises of credit cards, often targeting people with poor credit histories, requiring payment of fees in advance.
8. Lotteries-- illegal promotions for foreign lotteries or for lottery clubs that supposedly improve chances of winning.
9. Business Opportunity/Franchises-- exaggerated claims for amount of potential profits through investments in prepackaged businesses or franchises.
10. Travel/Vacations-- offers of free trips or discount travel that never materialize.

     Sweepstakes and prize offers also ranked #1 in 1996 and 1995. Many of the other categories in the top ten were the same from year to year, though the ranking changed.

     Here is a year-to-year comparison:

     This comparison illustrates how fraudulent telemarketers vary their pitches according to what is "hot" at the moment. Bogus investment opportunities in FCC licenses were popular scams in 1995 and 1996 when the Federal Communications Commission was offering licenses in new telecommunications products and services, but dropped to #29 in 1997 when that program ended.

     Complaints against "recovery"" firms that offer to get consumers' money back from other fraudulent telemarketers -- for an advance fee -- dropped to #16 in 1996 and #27 in 1997, perhaps because of provisions in the federal Telemarketing Sales Rule, which took effect December 31, 1995, barring up-front fees for recovery services. On the other hand, advance fee loans and offers of credit for fees paid up-front, which are also prohibited under the telemarketing rule, have risen sharply. Apparently con artists recognize the fact that, despite generally good economic times, many people are having credit problems and can be convinced to send their last dimes for loans or credit cards that, unfortunately, they will never receive.

     Pay-per-call problems have also increased, rising from #13 in 1995, to #12 in 1996, to #4 in 1997, despite the fact that the Federal Trade Commission's 900 Number Rule, which took effect in 1993, requires clear disclosures of the costs and services. Many pay-per-call complaints involve abuses of 800 numbers, which are generally toll-free unless a specific agreement is made to pay for services accessed through such numbers, and international numbers, which are not covered by the 900 Number Rule.

     Slamming, which was not a category in 1995 and 1996, emerged as a significant problem in 1997. Other categories have changed over time; for instance, magazine and book sales, which were combined in 1995, were divided into separate categories in 1996 because the scenarios are somewhat different.

     More consumers in California reported telemarketing fraud to the NFIC in 1997 than any other state. The top twenty locations of consumers were:

1. California
2. Florida
3. Texas
4. New York
5. Pennsylvania
6. Illinois
7. Michigan
8. Ohio
9. North Carolina
10. Indiana
11. Virginia
12. Georgia
13. New Jersey
14. Maryland
15. Missouri
16. Washington
17. Kentucky
18. Louisiana
19. Wisconsin
20. Colorado

     California consumers also topped the lists in 1996 and 1995. Many of the other states have consistently ranked in the top twenty, though the order has varied slightly from year to year.

     Continuing a trend over the past few years, many telemarketers that attempted to defraud U.S. consumers were located elsewhere. The top twenty company locations were:

1. California
2. Florida
3. Texas
4. Ontario Canada
5. New York
6. Quebec Canada
7. Georgia
8. British Columbia Canada
9. Washington
10. countries outside the U.S. or Canada
11. Alberta, Canada
12. Missouri
13. Nevada
14. Arizona
15. Pennsylvania
16. New Jersey
17. Illinois
18. Ohio
19. Virginia
20. District of Columbia

     California has consistently ranked as the #1 location for fraudulent telemarketers in 1995, 1996 and 1997. But Ontario, which ranked #20 in 1996 and #8 in 1996, rose to #4 in 1997. Quebec went from #25 in 1995 to #3 in 1996 and fell slightly to #6 in 1997. British Columbia has edged up over the years, from #10 in 1995, to #9 in 1996, to #8 last year. Alberta jumped from obscurity in 1995 to #29 in 1996 and #11 in 1997. Moreover, countries outside the United States and Canada, which ranked #43 in 1995, rose to #14 in 1996 and #10 in 1997. Clearly, fraudulent telemarketers are attempting to skirt U.S. law by operating their schemes from other countries and targeting U.S. residents.

     Some consumers who report telemarketing fraud to the NFIC have not actually lost money. In fact, one of the most important functions of the NFIC is to prevent fraud by providing advice to consumers who are in many cases on the brink of sending con artists their payments.

     Of the consumers who reported making payments to fraudulent telemarketers in 1997:

• 36.78% paid by check
• 19.15% paid via telephone bill.
• 16.53% paid by money order
• 12.02% paid by credit or charge card
•   4.43% paid by cashier's check
•   4.33% paid by bank account debit
•   4.19% paid by cash or cash advance
•   2.53% paid by wire transfer

     Private courier services were used by twenty-three percent of the consumers who sent the telemarketers their payments (as opposed to paying by phone or in person), seventy-seven percent of those deliveries were made by U.S. or Canadian mail service.

Respectfully submitted:

Susan Grant
Director, NFIC
National Consumers League
1701 K Street NW, Suite 1200
Washington, DC 20006

For more information, write or call the National Consumers League at 1701 K Street, NW, Suite 1200, Washington, D.C. 20006, (202) 835-3323. Log onto NCL at http://www.natlconsumersleague.org

For
      Media. About. More
      Resources for Consumers. Search. NCL. Privacy.

NFIC is a project of the National Consumers League. 
All rights reserved. © 1998.