Phone and Telemarketing Fraud: an overview
Phone and telemarketing fraud refers to any type of scheme in which a criminal communicates with the potential victim via the telephone. Because many reputable companies use telemarketing to conduct business, criminals can often effectively use the method as a way to obtain a victim’s credit card information or identity and then use this information to make unauthorized purchases elsewhere. Victims have difficulty distinguishing between reputable telemarketers and scam artists. Frequent victims of telemarketing scams include the poor, the elderly, and immigrants without strong English skills.
One common type of telemarketing scam is called an advanced fee scam. An advanced fee scam occurs when a victim receives encouragement to advance large sums of money with the hope of receiving a large rate of return on those initial advancements. One such notorious scam is the Nigerian Letter scam in which the criminal lures the victim into giving out credit card information to “help purchase travel tickets” for a “Nigerian prince” to escape persecution and come to America. The scam promises to give a large percentage of the prince’s fortune to the victim in exchange for the travel help. The criminal then uses the credit card information to make unauthorized purchases and the victim never sees a dime.
Criminals also frequently use pyramid schemes over the phone. A pyramid scheme requires the victim to pay an initial sum of money and is promised in return to receive sums of money from a number of different people that will exponentially increase the initial investment. While those that join the scheme in the beginning may profit, those at the bottom of the scheme who cannot find any followers will receive no such return.
Overpayment telemarketing schemes involve using the names of legitimate businesses, sending a fake check to the victim, and telling the victim that they were overly paid for an online sale, perhaps on a site like eBay. Then, over the phone, the criminal asks the victim to wire back the extra money, which the criminal then takes. The victim cannot cash the fake check and cannot recover the wired money.
Fraudulent telemarketers also pose often as calling on behalf of charities. They then ask for the victim to make a donation to the charity over the phone. The criminal then takes the credit card information and makes unauthorized purchases with it.
Violators may be prosecuted under: 18 U.S.C. §§ 2325-2327 Telemarketing Fraud
See White-collar crime