Scam Artists Know No Boundaries
As direct-marketing scam artists get more sophisticated, they have expanded their efforts beyond the United States and into foreign countries. Apparently-like legitimate marketers—they have discovered market potential in these new markets.
One such market is Canada. Driven by the strength of the dollar (one U.S. dollar is worth about one-and-a-half Canadian dollars), Canada's lenient stance on white-collar crime, and the problems with getting lawbreakers back into the United States to face trial, Canada has become a virtual haven for telemarketing scam artists preying on Canadian and U.S. citizens as well as the elderly in England and Australia. With all due respect to both Canadian and U.S. officials, it is not as though the scammers operate at will. Both countries have increased their efforts against scammers, but the sophistication of the telemarketing rings make it hard to catch them.
The rings use a maze of business names, bank accounts, and mail drops. They are highly mobile, moving monthly or even weekly, and know how to throw authorities off track. Their primary target audiences are the elderly, the financially desperate, persons seeking a lucrative investment, and/or those just hoping to get rich quick.
One such scheme is the sweepstakes-winner scam. Working from lists, the telemarketers phone and tell the unwary receivers that they may already have won a lottery or sweepstakes but they must pay a fee ranging from a few hundred dollars to thousands of dollars to cover taxes or currency exchanges to collect. Once they pay, they are told they may have won an even larger prize, and more fees are collected. Some scammers pose as FBI or IRS agents. Others prey on the emotions of victims—particularly those with children in poor physical or financial health. All are good at what they do.
Another scam artist very good at what she does—or shall we say, did —is Miss Cleo. The flamboyant
Caribbean clairvoyant scammed consumers out of millions of dollars with false promises of free psychic readings. Miss Cleo was actually a fictitious name established by two Florida firms, Psychic Readers Network, Inc., and Access Resources Services, Inc., that used TV ads, infomercials, and direct mailings to lure in customers. The ads featured the Caribbean-accented voice of a woman saying "Call me now" and promised free psychic readings if people called an 800 number. Once they did, they were referred to a 900 number for a "free" three-minute reading. After the three minutes the customer would be billed at $4.99 a minute, and operators did everything they could to get them past the free time—including putting them on hold! Over 6 million people called the hot line, averaging $60 per call, for a total of $360 million before the scam was busted. A settlement was awarded in December 2002.
A London-based company was forced by the FTC to suspend operations for selling false domain names ending in ".USA"—the names were useless. Shortly after the September 11,2001,terrorist attacks,the promotion used e-mails to encourage consumers to be patriotic and register for USA domain names. The FTC believes the company made over $1 million from the scams.
While these are just some of the many scams being run, no one knows how many more are operating on a daily basis or how many people are being cheated. The only things that are known is that the scammers are a very tiny minority of the direct marketers out there and that legitimate telemarketers are as unhappy about the scams as are consumers and the authorities. After all, they are getting scammed too.
Sources: Myron Levin,"Canada Scam Artists Have a Global Reach," Los Angeles Times, July 7, 2002, p. C4; Myron Levin, "Psychic Hotline Accused of Caller Scam," Los Angeles Times, Feb. 1,2002, p. Cl; Christopher Saunders,"Courts Silence '.USA' Marketer," Advertising Report, Mar. 12,2002, pp. 1-2.
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