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Don't Let Phone Fraud Get Your Number

We're all quick to protect ourselves from street crime but rarely think about telephone crime. "Being curious" about what a telephone pitchman might say is the functional equivalent of walking down a dark alley in a bad neighborhood, in the opinion of Princeton Survey Research Associates, which studied the issue for the American Association of Retired Persons.

Tough new federal regulations aimed at telemarketing fraud took effect on the last day of 1995. The regulations from the Federal Trade Commission won't stop crooks. But they'll slow them a bit and help law enforcement officials put more of them away. They should also help consumers distinguish between a fraud and an honest sales call.

Here's how salespeople are now supposed to behave on the phone. If they don't, assume that you're talking to a crook and get off the line as fast as you can:

In the very first part of the call, you have to be told the company's name, the fact that this is a sales call and what's being sold. The caller can't pretend to be doing a poll or conducting market research. If a prize is offered, you have to be told immediately that no purchase or payment is needed to win it.

If you've supposedly won a prize, you cannot be asked to pay anything for it. It's illegal to make you buy something or say that a purchase will improve your chance to win. You can't even be required to pay "shipping charges." The caller must tell you how to enter without making a purchase. Prize promotions ("you have been specially selected to win a boat, a car, $25,000") are hugely popular among crooks. So watch out.

You cannot be asked to pay in advance for certain dubious services. These include cleansing your credit report of damaging credit information, finding you a loan or a credit line, recovering money scammed from you by someone else or acquiring a prize that some telemarketer falsely said you'd won. Under the new rules, you pay for these services only if they're actually delivered.

You shouldn't be called before 8 in the morning or after 9 at night, local time. Telemarketers are breaking the law if they call you repeatedly or intimidate you or use profane or threatening language.

Telemarketers have to take you off their list if you say you don't want to be called any more. If they do call again, they've broken the law.

Be especially wary of telemarketers who want your bank account number. That lets them execute "demand drafts," which take money from your bank account to buy the product or service they sell. They generally get to keep that money, even when they diddle you. By contrast, if you pay by credit card, you can tell the card-issuer to reverse the purchase and give you your money back.

The FTC has put new limits on paying by demand draft. The telemarketer has to get "verifiable authorization" for the draft -- defined as your written permission, your consent recorded on tape or a letter sent to you, disclosing the terms (including the refund terms), before the money is taken out of your account. If you get that letter and the terms are wrong, you can call the bank and stop payment, says Eileen Harrington, associate director of the FTC's Bureau of Consumer Protection. But if the crook has your money already, you might as well kiss it goodbye. Best advice: Never pay by demand draft.

If you're guaranteed a refund, the caller has to reel off all the limitations and particulars. If no refund is mentioned, however, the caller needn't tell you a thing, so be sure you ask. If no refunds are allowed, however, all telemarketers must disclose that fact.

There's one big hole in the telemarketing law. It applies only to for-profit organizations, not to charities. There are plenty of deceptive tele-fundraisers, but the FTC has no jurisdiction over the nonprofits.

How do you tell the difference between an honest and a dishonest sale? "Usually, by the high-pressure sales tactics," said Linda Golodner, president of the National Consumers League in Washington. "They want the money sent upfront. They want your credit card or bank account number. They want that money today."