This text was provided by the NFA (National Futures Association)   


NFA Telemarketing Fraud in commoditiesAlliance Against Fraud in Telemarketing

What is Telemarketing?

Telemarketing is the solicited or unsolicited use of the telephone to sell you something. It is used by both legitimate and illegitimate enterprises and it is your responsibility to know the difference.

Telemarketing fraud is a sophisticated way to reach the public in what has become a billion dollar per-year consumer fraud industry.

Telemarketing can be used to attempt to sell you all manner of products and services, and the calls often originate outside the U.S.

The purpose of this brochure is to inform and help you to protect yourself financially, and help you avoid becoming just another victim of "The Swindlers."

What you should know about Telemarketing Fraud  

  • Many calls are made by legitimate businesses offering valuable products or services.
    But, those whom honest firms contract in search of new customers...swindlers contact also. It is estimated that phone fraud may steal as much as $40 billion per year by "selling" everything from non-existent investments to misrepresented products and services. Everyone with a phone is a prospect...whether you become a victim is up to you.
  • There is no way to determine is a call is legitimate by just a phone conversation.
    No matter what questions, or how many, you ask...skilled swindlers have believable answers. That's why sales calls from persons or organizations that are unknown to you should always be carefully investigated before you buy or invest.
  • Phone swindlers will always know more about you then you know about them.
    Depending on where and how they get your name, they may know your address, your age and income, health and hobbies, occupation and marital status, education, social security number, and whether or not you've bought by phone in the past.
  • Fraudulent callers have one thing in common...they are all skilled liars.
    Their success depends on it. To make a sale, most of them are taught by their supervisors to "say anything it takes."
  • The first reaction of most victims is, "he sounded so believable."
    Phone fraud perpetrators are very good at sounding like they represent legitimate businesses. Never assume that you'll know a phone scam when you hear one. Swindlers convincingly offer attractive investments, products and services, "sell" subscriptions, promote travel and vacation plans, solicit donations...the list seems endless. Even if you already know the most common schemes, innovative swindlers constantly devise new ones.  
  • The motto of a typical phone swindler is "just give me a few good 'mooches'."
    This is the term of contempt they use to describe their victims. In spite of the fact that most victims are otherwise intelligent and prudent people, convicted swindlers express astonishment that so many people "seem to keep their checkbooks and credit cards right by the phone." Sadly, some families appear willing to part with savings they've spent years to accumulate in less time than they take to buy a washing machine!  
  • The swindlers often prefer that you be the one who "initiates" the call.
    It's not uncommon for phone crooks to use direct mailings, or advertise in reputable publications, to encourage their prospects to make the initial contact. But, just because you have written or phoned for information about an investment, product or service does not mean that you should be any less cautious.
  • Victims of phone fraud seldom, if ever, get their money back.
    Despite the efforts of law enforcement and regulatory agencies to provide whatever help they can, there is almost never full recovery, and any recovery at all is usually just a few cents on the dollar.

Tips on Caller Crooks...Things to Listen For

  • High-pressure sales tactics.
    The call may not begin this way, but if the caller senses that you will not be an "easy-sell" he may shift to a "hard-sell" approach. This will be unpleasant and will be unlike legitimate business, most of which respect your right to "just say no." Some callers may resort to insult or argument, questioning your intelligence or warning that "you'll never get rich without taking a chance."
  • A "demand" for an immediate decision.
    High-pressure sales tactics take a variety of forms but the common denominator is usually the stubborn reluctance to accept a simple "no" for an answer. The bottom line is that swindlers often insist that you should or must make your decision "right now!"
  • An offer that sounds too good to be true.
    The oldest advice is still the best: "if it sounds too good to be true it probably is." You should be aware, however, that some phone crooks are very sophisticated. They say things that sound just reasonable enough to keep you from hanging up...and that's the only thing they are really afraid of.
  • Any request for a credit card or bank account number other than to make a purchase.
    A caller may ask you for your credit card or bank account number "for identification" or some other plausible reason. Whatever the ploy, once a swindler has your number it is likely that unauthorized charges or deductions will soon appear on your statements.
  • An offer to send someone to "pick up the money" or any other scheme to get to you more quickly.
    This may be part of an "urgency" pitch. It may also be an effort to avoid federal fraud charges by bypassing postal authorities...or simply an attempt to get your money before you change your mind.
  • Any promise that something is "free."
    This is often followed by an "explanation" that a "token good faith" payment is required on your part. While honest firms may indeed promote free phone offers to attract customers, swindlers usually ask you to pay something to get whatever is "free." Whatever you receive "free," if anything, will probably be worth much less than what you've paid for it.
  • An investment that is "without risk."
    Except for obligations of the U.S. Government, all investments have a degree of risk. Think about it! If there were any such thing as a completely risk-free investment, with big profits assured, the caller certainly wouldn't have to look through the phone book to find investors!
  • Refusal to provide written information or references you can contact.
    Swindlers give many reasons why they can't comply with such requests: "There isn't time for that," or "it's a new offer and the printed material is not available yet." Remember, even with references, be cautious.
  • A suggestion that you make a purchase or investment based on "trust."
    "Trust me," the caller says. But, although thrust is indeed a laudable trait, it should not be given indiscriminately...certainly not to unknown persons, calling on the phone, asking for your money!

How to Avoid Becoming a Victim

  • Don't be pushed into a quick decision.
    There may be times when you will want to make a prompt decision. But, those occasions shouldn't involve making a financial commitment to purchase a product or make an investment you're not familiar with from a caller you don't know. No purchase decision should ever be made under pressure.
  • Always request information.
    Ask about the product, service, investment or charity - and about the organization offering it. This should not be a problem for legitimate firms. Swindlers, however, may not be willing to provide such materials and will not want to risk exposure to legal or regulatory authorities. Also insist on having enough time to study any information you receive before being contacted again.
  • Never make any investment or purchase you don't fully understand.
    A great strength of America is the diversity of investment and product opportunities. But that diversity includes the bad as well as the good. Swindlers seek individuals who don't know what they are really doing, and they often attempt to flatter prospects into thinking they are making an informed decision. Unless you understand completely the product or investment you are buying, you can suffer financial loss.
  • Ask what state or federal agencies the firm is regulated by and with whom it is registered.
    If you get such information, ask for a phone number and address so you can contact the agencies and verify the facts. If the firm says they're not subject to registration or regulation, watch out! Increase your level of caution accordingly.
  • Check out the company or organization carefully.
    Don't assume that a swindler will never provide you with information. That is exactly what some of them want you to do. They know that most people do not carefully check or contact a regulatory agency...until it's too late...until they have already been "taken."
  • Ask what recourse you would have should you make a purchase and are not satisfied.
    If there is a warranty or refund provision, it is essential to have it "in writing" and be fully satisfied that the business will honor its guarantees, should that become necessary.
  • Beware of testimonials you have no way of checking.
    They may provide nothing more than a "con" who is paid to speak well of a product, service or organization. There are many ways to check the legitimacy of an enterprise, and it is your responsibility to use the many resources available to become an informed and responsible consumer.
  • Don't provide personal financial information.
    This applies especially to credit card and bank account information. The only time you should give anyone your credit card number is after you have firmly decided to make a purchase and want to charge it to that account. Always be cautious and be certain you are dealing with a reputable company.
  • "If necessary just hang up."
    If you're not interested, if you're subjected to high-pressure tactics, if you can't get the information you want, if you're insulted...or if you hear your own best judgment whispering that you might be making a mistake...just say "good-bye." But don't be surprised if they call back!

What can you do about Telemarketing Fraud?

Help is just a phone call away. Should you receive a suspicious call, contact the National Fraud Information Center 800 number for immediate assistance at no charge, 24 hours a day.

If you believe that you have already been defrauded, and wish to file a complaint, you may call or visit the web site at:

National Fraud Information Center
1701 K Street, N.W., Suite 1200, Washington, DC 20006
(800) 876 7060

Remember, it's far better to act before you are swindled!

The more information you supply...the better results you may expect. Incident reports and complaints received by the Center are entered into the National Electronic Fraud Data Base of the Federal Trade Commission/National Association of Attorneys General, for referral to appropriate enforcement and regulatory authorities.

The Swindlers Are Calling
Prepared as a service to the public by:

National Futures Association
Communications and Education
300 South Riverside Plaza, Suite 1800
Chicago, Illinois 60606-6615

In association with:

Commodity Futures Trading Commission
1155 21st Street, N.W.
Washington, DC 20581

Federal Trade Commission
6th & Pennsylvania Avenue, N.W.
Washington, DC 20580

Alliance Against Fraud in Telemarketing and Electronic Commerce
c/o National Consumers League
1701 K Street, N.W., Suite 1200
Washington, DC 20006

Additional sources to contact:

Better Business Bureau
Call your local BBB office or Council of Better Business Bureaus (703) 276-0100

National Futures Association
For complaints regarding commodity futures only.
(800) 621-3570

North American Securities Administrators Association
To report incidents in your state (202) 737-0900

United States Postal Service
For complaints about bogus mail order investments and purchases solicited by telephone, call the listing in your telephone book under U.S. Government, Postal Service or check the web site

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