29 April 2002
Telemarketing Scandals: Do Not Disturb
“Would you like a quick and easy way to make
up to one thousand dollars a week?”
“I’d like to inform you about our new
credit loss protection plan that will save you thousands!”
“Congratulations, you are one of the lucky few
who has won a fantastic vacation getaway worth two thousand dollars!”
Does any of this sound familiar to you? You may have received one of the 14,000 illegal telephone sales calls that are made in the U.S.
every day (www.fraud.com). Telemarketing involves situations in which companies
call consumers to sell their goods or services, or consumers call companies in response to printed advertisements. When a telemarketer calls one may ask themselves questions such as, “How do I know this sale is legitimate?”
and “How am I protected from these sales?” According
to The National Fraud Information Center, ninety-two percent of adults in the U.S.
report they have received fraudulent sales calls. Something needs to be done
to protect the public from such telemarketing scandals.
According to Frank Geary of the Las Vegas Review Journal, consumers lose an estimated forty billion dollars
each year due to telemarketing scandals and fraud. In Las
Vegas, over half the targets are over the age of fifty and the FTC got 317 complaints adding up a total
loss of 853,904 dollars (24). In 2001 the top ten frauds included work at home
scams, sweepstakes, credit card issuing, advance fee loans, buyers clubs, and credit card loss protection. The highest percentage of people affected nationwide were those between the ages of forty and forty-nine
with the twenty to twenty-nine year old group following close behind (www.fraud.com).
In fact, I belong to the younger generation
of consumers that have been scammed. A few months ago I lost my wallet on the
UNLV campus. As a precaution I made sure to disable all the credit cards I owned in case any thief tried to use them. When I called to cancel my Verizon Visa I was informed about a credit loss protection
plan and said, “Ok, I understand you will mail this information to me.”
I never thought twice about this phone call, I was just glad to have canceled the card before any illegal charges were
made. A few weeks later as I was checking my account balance, I noticed a charge
of $59.95 that I had definitely not authorized. Verizon turned out to be the
only thief and had cheated me into purchasing something I didn’t even want! I
immediately called the Watchguard Company listed under the charge. The woman
that helped me over the phone seemed sympathetic to my problem and told me the charge would be removed. Although I was fortunate enough to have observed the fraudulent purchase made to my account, not everyone
is this lucky.
As you can see, sales fraud is a major
issue that costs the public too much money and different measures are currently being taken to ensure your future protection
from these deceitful companies. The easiest way to decrease fraud is by taking
your own preventive measures. A consumer may protect himself by following a few
tips from the National Fraud Information Center such as working with known and trusted people, understanding the offer, doing
a check of the company’s track record, being careful who information is handed to, and by not entering contests (www.fraud.com). Consumers who want to decrease the number of national commercial calls they receive
my register on a nationwide database with the Direct Marketing Association’s Telephone Preference Service (TPS). By
registering, your name, address, and telephone number are placed on a do-not-call file that is active for five years (www.the-dma.org).
Although it is practically impossible to block out all unwanted
sales calls, the Easy Hang-Up Device is a simple solution to getting rid of telemarketers.
This small box costs fifteen dollars and attaches to your phone. Once
a sales call is heard on the other end of the line, a button can be pushed to play a pre-recorded message telling the seller
their call is not accepted and to take the phone number off their list.
Although most phone numbers are available
to the general public and are the most common way of reaching potential customers, the issues of privacy and ethics are also
major concerns in telemarketing. The Journal of Marketing Practice: Applied
Marketing Science, researched consumer’s attitudes towards privacy and their views about revealing personal information
(Angold 4). The term “information privacy” is somewhat ambiguous
and studies show consumers have different privacy thresholds “depending on who is collecting the information, in what
circumstances, and for what purpose” (5). For example, the United
States had a negative reaction to Market Place, a database holding information on eighty
million U.S. households.
Pressure groups eventually shutdown the company due to complaints from its customers saying they did not want their
personal information made public. Another instance of privacy issues arose when
Pacific Bell was required to withdraw its plans of selling personal information once the company received overwhelming complaints
from its current customers (16). Although some companies are taking positive
action to protect customers’ privacy, the effects are not sufficient.
Even though consumers and companies can reduce instances of fraud, it
isn’t enough. Politicians are also devising laws to ensure privacy and
protection from telemarketing scandals. California Attorney General Bill Lockyer
and Assemblyman Joe Nation have announced a proposal to help eliminate deceptive telemarketing. This bill will target solicitors who offer free trials of a product without informing the customer of any
hidden costs. The seller may use tricky tactics such as talking fast and creating ambiguously worded sentences in order to
increase their chances of selling a product. Buyers may get so flustered with the sales caller that they say, “Ok, send
me the information, I agree.” What they don’t know is the seller
may already have credit card information from other banks and institutions, which is then used to bill the consumer once the
free trial period is over. Unfortunately, most people are not informed that their
credit card number is already in the hands of the telemarketer and end up getting false information or no information at all
about the company or product (Snyder 1). Nation and Lockyer have proposed privacy
bill AB 1775 that would stop banks from selling their clients personal information to other institutions. Sorry to say, this bill would still allow less personal information such as name and telephone number to
be freely exchanged. According to Nation, the bill is currently being made more
modest since no one seems to be happy with the current version of it (Bustillo 16).
Not only is California taking political action against telemarketers,
Minnesota is also involved in this fight against scams. In fact, the state of Minnesota was involved in a legal battle
where privacy bill AB 1775 may have been helpful in preventing fraud. Attorney
General Hatch filed a lawsuit grounded on consumer fraud, deceptive advertising, and a violation of the federal Fair Credit
Reporting Act against the telemarketing company that paid U.S. Bancorp for personal information of credit card holders. The company under scrutiny was charging consumers without authorization and failing
to mail out important information explaining the product they had just purchased. This lawsuit was dropped after the company
agreed to stop releasing the personal information and pay money to the state (Snyder 1).
This is an absurd way of dealing with the huge problems caused by telemarketing scams.
What is going to be solved by giving money to the state for such fraudulent charges?
No money is going to the citizens of the state who are really the ones affected by the problem.
Another example of the nation’s
top ten telemarketing scandals hit hard in Missouri. BDP, a California-based
long-distance company, participated in a phone slamming scam by informing customers they were from AT&T. BDP claimed their long distance rates would be less than other competition, although they were actually
higher, and then would switch the consumer’s long distance service without consent, even after being told not to switch
it. The company refused to help customers with questions and marketed even after
being ordered to stop (www.ago.state.mo.us). It always amazes me that these companies can get away with such deliberate
fraud. It almost seems like a form of shoplifting, except now the consumers are
being ripped off. Most large corporations such as Target and Wal-Mart are allowed
a 1% loss due to shoplifting. Are consumers now supposed to accept this 1% loss
due to telemarketing fraud and scams?
Not only does telemarketing affect states such as California, Minnesota,
and Missouri, it also hits home in Nevada. Research done by Natalie Patton of the Las Vegas Review Journal indicates that
Nevada state universities are currently involved in a privacy battle with students
who are concerned about the selling of their personal information. University
officials have told UNLV’s Board of Regents to stop releasing student names and addresses for outside telemarketing.
The University is in its fifth year of a five-year contract with Delaware based
credit card company, MBNA, which allows two mailings and two sales calls to each student and alumni. Last year the university made 100,000 dollars off of student purchases.
This worries some officials because the rate student debt is increasing
nationally. “We do not want in any way to appear to be doing anything that would encourage students to get further into debt,” said Chancellor Jane Nichols (1).
Contradicting that thought, the only thing informing students of their privacy protection is “a note in the back
of UNLV's class schedules letting students know their personal information
may be released to outside parties. If they wish to stop that from occurring, they need each semester to inform the UNLV registrar
in writing.” It is outrageous that the only way students are informed of this is in
a catalog they must purchase. Not only is this catalog not free to students,
the disclaimer is thrown to the back of the catalog on page 598. To make matters
worse, the only way to have your information undisclosed is by writing the registrar’s office. Information given to them is constantly being lost or misplaced and I have known the registrar to loose
more than a few transcripts. University officials stated it may be a wise idea
to ask students for their consent. Regent Steve Sisolak of Las
Vegas said regents should at least require campuses to ask students
for their consent. "I think we need to ask them if we can release their names," he said. "When registering, there could be a box students
could check or something (2).” So if making a check box will solve the highly debated privacy
problem, why isn’t one created? I think this just proves UNLV is a money
hungry business that isn’t willing to give up that extra $100,000 income so easily.
Telemarketing affects everyone including
young adults, college students, baby boomers, and senior citizens. State governments,
consumers, and a handful of businesses are beginning to take action since the problem has become so widespread. No-call lists and the Easy Hang-up device are only beginning answers to stop sales calls. Other solutions such as the bill AB 1775 need to be passed and enforced to legally
protect the public from the scandals that cost us millions of dollars a year. Although
consumer privacy is obviously an issue to many telemarketing companies, more governing agencies need to continue researching
the problem in order to protect the people. So the next time you sit down to
dinner and the phone rings think about what you are going to do. Whether you
answer the phone, let the answering machine pick up, or press a button on the Easy Hang-Up device, don’t get scammed.
1) Ahern Rentals. April
22, 2002. www.ahernstore.com/phonex.html.
2) Angold, Steven, et al.
“Relationship Marketing and Privacy: Exploring the Thresholds.” Journal of Marketing Practice: Applied
Marketing Science Vol. 5 (1999): 4-20.
3) Bustillo, Miguel.
“Panel Oks Bill to Protect Consumer’s Privacy.” LA
Times 16 April
business used deceptive telemarketing tactics to slam long distance
customers, Nixon charges in lawsuit. Press Release. June 19, 1998.
5) Direct Marketing Association. Copyright 1999. http://www.the-
6) Geary, Frank. “Legislature
urged to ban unwanted telemarketers.” Las Vegas
Review Journal 20 March 2002: 24-25.
7) Patton, Natalie.
“Official seeks halt to release of student data.” Las
Vegas Review Journal 11 Jan. 2002: 1-2.
8) Snyder, Jim. “Hatch
files lawsuit against telemarketing company.” 1-4. www.legal ledger.com/archive/728hatch.htm.