How Telemarketing Fraud Works

Telemarketing fraud is still the scam of choice for most con artist. Email and Web sites are the new friends of scam artists, however the telephone remains the swindler's weapon of choice. A phone scammer can use the telephone to contact 100 or more potential victims in a single day. These swindlers use the phone as a weapon in much the same way that a mugger uses a weapon. Dababases are used to generate special lists of people who may be more likely than others to fall into the trap of a particular investment scam. Con artists who operate by phone are often said to be engaging in "boiler room" operations. this term for the calling center is used because it is where swindlers "turn up the heat" on their potential victims.

Fraudulent sales callers have one thing in common: They are skilled liars and experts at deceit. Their success depends on it. Many are coached to say whatever it takes to get the victim's money. The callers make hundreds of repetitious calls, hour after hour.

How can one tell a legitimate telemarketing call from the seductive sales pitch of a swindler? There is no way to determine whether a sales call is honest simply by talking with someone on the phone. No matter what questions are asked, skilled swindlers will have ready answers. That's why sales calls from unknown persons should always be throughly researched before investing.

Phone swindlers are likely to know more about their potential victims than will be known about them. Con artists may know all about the people they call: age and income, health and hobbies, occupation and marital status, education, the cost of their home, what magazines are subscribed to ,and whether they have bought by phone in the past. They assume that everyone wants more income, are receptive to a bargain, and will be reluctant to be discourteous to someone on the phone.

Phone swindlers are extremely good at sounding as though they represent legitimate businesses. They offer investments, describe employment opportunities-the list goes on. One can never assume they will immediately recognize a phone scam. Innovative swindlers constantly devise new schemes.

Here are the hallmarks of phone-based investment scams:

*Sales pitches with slick talk about little or no risk, secret tips, and and unrealistically high rate of return. The rate is usually much greater than that from more traditional investment opportunities.

*Demand for immediate action. The last thing a phone swindler wants is for a potential victim to have time to reflect upon the phony investment or, even worse, seek the advice of a trusted, knowledgeable third-party, such as an accontant, broker, securities regulator or banker. Swindlers often push victims to send money immediately or offer to pick it up by courier or delivery service.

*No disclosure of the street adress of the boiler room operation. Instead, con artists will frequently use a mail drop. This decreases the chances of being caught by local law enforcement officials.

*No use of the U.S. mails. Many con artists fear that federal mail fraud statutes will be invoked against them as a result of their schemes, so they commonly resort to alternate delivery methods, including overnight delivery services and couriers to pick up the money.

*Stalling suspicious investors who suspect that they have been defrauded. This process may involve lull letters, in which the promoter of the scam blames the temporary delay in the promised high returns on various factors, including weather, union problems, delayed equipment delivery, labor problems, government red tape, and so on. Such excuses may provide the con artist wiith valuable additional weeks or months in which to swindle hundreds of additional victims.

*Pulling a vanishing act. When the heat is on, telephone con artists move on to the next city or stae. Very often, tis will also involve a switch in scams, so someone who is a precious metals salesperson today may be selling $99 round trips to Hawaii next week.

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