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Telemarketing Fraud

Warning Signs

Fraudulent Telemarketing

  • "You MUST act NOW or you will miss the offer"
  • "You have won a free prize! But you must pay a processing fee/shipping and handling in order to get it"
  • "There is no need to do any research on this company or offer.......We are completely legitimate"
  • "All we need is your personal info and credit card number to make sure you qualify for this offer.......We will get back to you as soon as possible"
  • "This is a once in a lifetime opportunity"

Telemarketing used in a fraudulent way!

Ways to Prevent Falling Victim

  • Don't buy from unfamiliar companies
  • Obtain ALL information from the telemarketer
  • Don't make a payment until you have received the item
  • Do not pay for a "free prize"
  • Never respond to an offer you do not understand completely
  • Do not give out your personal info until you know the company is ligament
  • Think things through before making a decision

Two Types of Telemarketing

  • Inbound - When customers contact the telemarketer themselves

Telemarketing

  • Outbound- When the telemarketer contacts the customer
  • The process of direct marketing by the use of a telephone
  • The most popular form of marketing today
  • Can be a live caller, a prerecorded voice message, email or fax
  • Goal is to make a large number of sales as well as gain customers to purchase in the future

Laws

Telemarketing and Consumer Fraud and Abuse Protection Act of 1994

Telephone Consumer Protection Act of 1991

Ways to Commit Telemarketing Fraud

  • The Federal Trade Commission created the Telemarketing Sales Rules
  • Places regulations of the telemarketing activities
  • Prohibits deceptive and abusive
  • Provides do's and don'ts when dealing with telemarketing soliciting
  • Regulated by Federal Communication Commission on December 20, 1991
  • Set restriction on telemarketing use and the use of automated telephone equipment
  • Created the Do-Not-Call List
  • It is a federal statute but functions as a state law due to federal courts lacking federal question jurisdiction
  • Fake check scam
  • Phishing
  • Charity solicitations
  • Prizes and sweepstakes
  • Advanced Fee Loans
  • Foreign lotteries
  • Buyer's clubs
  • Nigerian letter
  • Scholarships and education grants

History

Cases and Examples

Fifty States Distributors

Raymond Payne

Geoffrey Gallagher

  • First major illegal telemarketing company
  • Began in 1975, in Las Vegas but eventually spread throughout the west
  • Sold specialty advertising products to businesses
  • One-in-five scam
  • Was shut down in 1979 by FBI
  • Former employees started there own scam operations throughout the country
  • Originated in 1920's in what was called "boiler rooms"
  • Six stages of a boiler room operation = Soliciting, sales, verification, collection, shipping, and customer service
  • Now fraudulent telemarketers use temporary locations and move around a lot to help conceal their activities

  • Used West Coast Gallery to scam elderly individuals
  • Offered to sell collectables for profit
  • Made false statements to victims
  • Promised refunds on items that did not sell---but never sent them
  • Vice President of HSBC Bank
  • Conspired with First Choice telemarketing company
  • Offered poor-credit individuals credit cards and would take their account info. and transfer funds
  • Payne never told the bank's management of the scheme and sold First Choice names of bank customers

Nathan J. Matalon and George Francis Kunkel, Jr.

  • Used Public Telephone Corporation (PTC) to scam customers on payphone purchases
  • Misrepresented future profit of the payphones and represented themselves
  • Charged with conspiracy
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