November 25, 2013

Phone Thumbs down

The following report contains information on telemarketing:

Some telemarketing businesses sell their products by promising their customers wonderful prizes like cash, appliances, vacations, and cars. In order to receive your prize, of which you are a "guaranteed winner", the customer is usually required to forward a shipping and handling fee or "redemption charge" along with an order for the advertising specialty products such as pens or fridge magnets.

The prizes won in these promotions are usually "throw away" items. For instance, a personal computer may turn out to be a hand-held calculator, a billiard table will be a pocket-sized version, and the fabulous spa will be a battery-operated bubble-making machine.

The advertising specialty products ordered are generally of inferior quality and overpriced compared to merchandise which could be purchased from a local vendor. Experience has shown that these products may cost as much as five times more than what they are worth.

Consumer calls about telemarketing companies continue to be a major source of complaints to Better Business Bureau. The majority of these companies operate out of Quebec with a few in the United States.

While legitimate telemarketing companies do operate in Canada, there are many companies using unethical practices to market their products. Consumers should be cautious about providing money upfront for a guaranteed prize. Legitimate contests will not require you to send money to receive your award.

Although the offer you have received appears to be legitimate, remember these telemarketers are reading from a script. The very same offer you have received has been made to thousands of other Canadians.

The following information was published in the Ottawa Citizen, Saturday January 9, 1993. 
How one telemarketing scam works:

  1. Person receives a phone call from a fast-talking salesperson that tells him he has won one of five grand prizes, from exotic trips and boats to new cars. To qualify for the grand prize, the person must purchase several hundred or even thousands of dollars worth of the company's products, from pens to vitamins. To pay for products, the person is asked for and gives his or her credit card number.
  2. The goods arrive at the person's home or business.
  3. The grand prize never materializes. In some cases, the new car turns out to be a model, and the boat is a rubber dingy.
  4. When the person's monthly credit card statement arrives, he may discover billing for purchases he never made. The person's name, and sometimes his credit card number are placed on a sucker list which is sold from one outlaw company to another. Calls to the company to complain go nowhere. In some cases the firm has vanished.
  5. The cycle starts again when the person receives a phone call from another disreputable telemarketing company, which got his name from the sucker list.

Detective Sergeant Barry Elliott of the Ontario Provincial Police states that "even intelligent people are sitting ducks for the almost hypnotic sales techniques and verbal arm twisting." He says, "These are not dumb people who are getting hit. We have lawyers, dentists, farmers, everybody. It's because these sales people are extremely good."

The company will promise the moon and the stars and all you'll end up with is a hole in your wallet. For related information, please refer to our reports on Prize Schemes, Direct Marketing Schemes or Ponzi Schemes.