Beware These Telemarketing Schemes and Scams

Telemarketing has become an extremely popular way to contact numerous potential customers quickly and easily in an effort to sell a variety of products and services. Home improvements, security systems, insurance policies, light bulbs and newspaper and magazine subscriptions are examples of products sold by the telephone. You may be contacted due to past purchases or charitable contributions or because you have been identified as a new homebuyer who may need a security system or insurance, or simply because you happen to have a telephone.

At the same time telephone marketing has risen in popularity as a legitimate way of selling, it has also become a common mode of defrauding the public. Some schemes are aimed specifically at businesses while others prey on individual consumers. This article explains the most common telemarketing frauds, legal actions being taken against dishonest operators, and what you can do to protect yourself from being victimized.


Vacation certificate promoters notify you by telephone (or sometimes by mail) that you have been selected for a “free vacation” in the Bahamas or a cruise to some other luxurious travel spot. Or the vacation offer may include free airfare for one person with the purchase of a second fare. To receive the vacation certificate, you may be required to attend a sales promotion at a timeshare resort or membership campground or to purchase a membership in a travel club.

Consumer complaints to Better Business Bureau concerning vacation certificates have claimed that consumers received incomplete information regarding airfare and/or hotel costs and accommodations or claimed that the offer was misrepresented. “Free” vacations can end up costing hundreds or even thousands of dollars in regular coach airfares that must be purchased for the second traveler, inflated prices for hotel accommodations that must be obtained only through the promoter, and other extra charges which need to be paid in order to take advantage of the certificate. One such case involved a $31 Hawaiian vacation, which, needless to say, would cost far more once all the extra charges were included.

According to a conference sponsored by the American Society of Travel Agents, of all vacation vouchers sold, only 10% provide consumers with actual vacations. Most such vacation certificate vendors sell thousands of certificates at ridiculously low prices, such as the $31 trip to Hawaii, making it virtually impossible to actually furnish so many vacation packages.

Better Business Bureau suggests that if you are contacted and told you have won a prize of a vacation certificate, you should investigate carefully what payments you will be responsible for and/or what you have to buy to get the trip. For example, will you need to pay for airfare, lodging, additional fees for the peak tourist season, etc.? Before traveling, you should confirm all arrangements directly yourself. Ask the vacation certificate promoters what happens if the hotel accommodations are completely booked and under what circumstances your deposit can be returned. In general, Better Business Bureau also advises that you consider attending a sales presentation for a timeshare or other resort only if you are interested in what is for sale, not for the prize alone.

Consumers who feel they may have been victimized by vacation certificate promoters should immediately contact their local Better Business Bureau and law enforcement officials. Delays only serve to allow the promoter to change names and locales, making it even more difficult to get recourse.


Another common telemarketing gambit used by scam promoters with great success is one where, often under the guise of participating in “market research” to test the product, consumers are offered motor boats or motorcycles “free” or at substantial discounts. Consumers, however, are first asked to send the company redemption fees or shipping and handling charges, which have often turned out to be much higher than the worth of the product. Such motorboats and cycles have generally been worth far less than represented by these promoters. For example, a motorboat turns out to be a rubber raft with a small battery powered motor that can barely be propelled around a swimming pool.

Many state attorneys general as well as the Federal Trade Commission and the U.S. Postal Inspection Service have taken actions against promoters of “free” prizes and motor boat and motorcycle offers. In some cases, the companies have been accused of illegally conducting lotteries since consumers must purchase merchandise in order to be eligible for any prize. In other cases, prizes were never received, or investigations revealed that companies charged shipping fees of $89 for boats valued at $40 and which really cost $9 to ship. Consumers should be aware that companies cannot afford to give genuinely valuable prizes to thousands of people nationwide and they should always view such offers, whether received by mail or over the telephone, with skepticism. In addition, companies which engage in genuine market research do not initially ask consumers to participate in a survey and then attempt to sell a product or service.

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