How to Avoid Telemarketing Rip-Offs

Most telemarketers are a legitimate part of the sales community. However, there is a, multi-billion dollar industry of telemarketers engaged in fraudulent activity who, in all likelihood, someday will be calling you. The best way to avoid being taken by these swindlers is by understanding how they operate.

Common Telemarketing Scams 

Prize Awards:
One popular telemarketing scam is to tell consumers they have won a prize, or that they have been selected to receive merchandise as part of a marketing research program. To receive the prize or goods the consumers need to buy a product, pay shipping and handling fees or incur significant charges on a 900 number. What usually happens is that they receive nothing at all, or if the prize is delivered, receive an item that is of much lesser value than they anticipated. For example, a luxurious sounding motorboat turns out to be propelled in a rubber raft with a powered motor that can barely be propelled in a swimming pool. The Bureau suggests that consumers should not pay anything to receive a gift or prize.

Vacation Certificate: Another commonly used telemarketing swindle involves “free” vacation offers. These vacations can end up costing the consumer hundreds or even thousands of dollars for substandard accommodations and services. Many times these offers are part of a timeshare promotion where consumers are told they will be able to receive free or discounted airfare if they sit through a sales presentation. These consumers complain that the promised one hour sales presentation turns out to be a multi-day harassment. Some consumers end up buying what is offered so they will be left alone. The Bureau recommends attending a timeshare presentation only if you are interested in the product, not for the promised vacation alone. Also, do not allow yourself to be pressured into buying something you have not thought over. Never make on the spot decisions under pressure.

Paper Pirates: These swindlers attempt to use poor internal communication in business to sell overpriced and often substandard items and supplies. For example, the bogus supplier will ask an employee what type of copiers the firm uses and then will ship unordered, overpriced and often inferior merchandise to the firm along with a request for payment. Firms often pay the invoice, assuming that someone in the company placed the order.

Business Opportunities: Here consumers are lured by the promise of high profits and no risk for those willing to invest in a product or business. But the promises are not put in writing and the consumer almost always fails to achieve the promised results. Consumers should think about the marketability of any product they are planning to invest in or sell, check to see if the company actually makes the product or is selling on behalf of someone else, and check with local agencies for more information on the licenses needed to open such a business.

Charity Solicitations: some telemarketers claim that they are soliciting donations for some type of charity. Before you pledge or send any money be sure to ask for information on the charity, and verify that the solicitor is a legitimate representative of the charity. Also, ask for information on how much of the money actually goes to the charity, how the charity uses the money, and if contributions are tax deductible.

Advance Fee Loans: Be ware that you do not have to pay for credit repair or loan services until these services have been delivered. If a telemarketer offers these services to you for an advance fee, hang up. Only brokers cannot guarantee loans, and it is illegal for them to ask you to pay an advance fee or deposit until you have received your loan. For more information on this scam, refer to our report, Tips on Loans and Credit Card Scams.

Protecting Yourself
Your own awareness of potential scams is your best defense against telephone swindlers. Ask yourself these questions when a telemarketer calls:

  • Do I have adequate time to think this over, or am I being pressured for a decision right now?
  • Will they send me additional information through the mail, putting their statements and promises in writing, or do they refuse?
  • Are they insisting on my credit card or checking account number right now?
  • Do they want to send over a private courier tonight for my check?
  • Is my “free gift” or “prize” really FREE, or do I have to pay a registration fee, shipping and handling charge or some other required expense before receiving anything?

If the answer to any one of these questions is yes… BE VERY CAUTIOUS ABOUT DOING BUSINESS WITH THE COMPANY.

To avoid becoming a victim of a telemarketing scam:

  • Take your time. If it is a good deal now, it will still be a good deal after you take a couple of days to think about it and check out the company.
  • Be particularly careful about supplying your credit card number or information about your checking account over the telephone when you did not place the call and when you are not familiar with the party on the other end of the line.
  • Do not buy anything just to receive a free gift.
  • Check out a charity before you give. Find out how much of your donation actually goes to the charity.
  • Be extremely cautious about investing with an unknown caller who insists on an immediate decision or promises large returns.
  • Do not buy from suppliers until you have verified their existence and reliability.
  • Businesses should establish effective internal controls. Channel all bills through one department and verify a;; billing authorizations.
  • Know who you are dealing with. Investigate a company’s reputation before you do business with it.
  • If the caller will not take “no” for an answer, and will not allow you to get off the phone, hang up.

Be aware that when a person or business falls for a telemarketing scam, often their name is added to a “sucker” list. “Sucker” lists are mailing lists of people who have fallen for various scams. In other words, if you fall for one scam artist, others will soon be calling you.

Telemarketing Sales Rule
In December 1995, the Federal Trade Commission instituted the Telemarketing Sales Rule to help protect consumers from unethical telemarketers. According to the Rule, telemarketers must:

  • Call only between 8 a.m. and 9 p.m.
  • Promptly say they are selling something.
  • Disclose total costs and refund policies before asking for money.
  • Get written or taped authorization to take money from consumers’ bank accounts.
  • Specify the odds of winning for prize contests and inform you that no purchase is necessary.
  • Not call anyone who has asked not to be called.

The Consumer Protection Board has recently established a “Do Not Call” Telemarketing Sales Calls Registry which includes that names of all those who no longer wish to receive unsolicited telemarketing calls. Most telemarketing calls will be prohibited thirty days after your number appears in the registry. However, since the registry is published quarterly, it might take several months until you stop receiving telemarketing calls. To place yourself on the “Do Not Call” Registry, you may fill-out a form on the “Do Not Call” web site by visiting, You may also call 1-86-NO CALL NY or write to the following address:

"Do Not Call" Registry
NYS Consumer Protection Board
P.O. Box 2078
Albany, New York 12220-0078

To Report a Scam
Consumers can file a complaint with Better Business Bureau here, report a suspected scam here and read more about avoiding scams here.  

Consumers should also report telephone scam artists to your local Attorney General. The Telemarketing Sales Rule gives these local law enforcement officers the power to prosecute fraudulent telemarketers who operate across state lines.

Bureau of Consumer Frauds & Protection
New York State Attorney General’s Office
120 Broadway New York, NY 10271

For more information on the Federal Trade Commission’s Telemarketing Sales Rule, you can contact the FTC at 212-264-1207 or 202-326-3758. You can write to the FTC at
600 Pennsylvania Avenue, NW, Washington, DC 20580. You can also get information form their web site at