The major category of complaints was identity theft, 42% of all complaints. Identity theft occurs when someone appropriates identifying information in order to commit fraud or theft (credit card or Social Security number). This is a growing crime; we shall focus on it in a later panel.
Many schemes to defraud the public are committed on the Internet, often using "spammed" e-mails — unsolicited e-letters purporting to offer some business or sales opportunity. The receiver is invited to visit a web site or to call a number for more information. Misbehaving Internet auctioneers triggered 10% of all complaints — for failing to deliver goods, sending goods less valuable than those advertised, or shipping late. Internet services, with 7% of total complaints, were cited for such things are charging undisclosed Web fees.
There are thought to be 14,000 telemarketing firms in the country; roughly 10% of them are thought to be fraudulent, according to the government. Congress estimates that Americans lose about $40 billion each year due to the sale of phony goods and services over the telephone (some of these plots are done through the mail as well). What are some of the schemes launched by unscrupulous people? They offer advance-fee loans, tell the caller he has won a prize in a lottery (that he must pay for first), or offer him the chance to "invest" in foreign lottery tickets. They extol the virtues of worthless credit card protection plans, promote magazine subscriptions that never arrive, and sell timeshare and vacation opportunities with hidden financial catches. They also claim to offer services to help cheated people get their money back — all, of course, for a price (these "recovery services" are part of the original con).
Anyone can fall victim to one of these schemes, but the elderly often find themselves victimized repeatedly. The American Association of Retired Persons found that 56% of the names on "mooch lists" (fraudulent telemarketers' lists of most likely victims) were age 50 or over. Seniors make up 60% of the callers to the National Consumers League's National Fraud Information Center. There are numerous tragic stories: the Ohio widow who lost her life savings of $240,000 to more than 50 fraudulent telemarketers. A 92 year old California woman lost $180,000 and then another $5,250 more in supposed recovery fees to man who said he could get some of her money back. Seniors are targeted by thieves for at least three reasons. They have significant disposable income. Consumer protection literature suggests that seniors are often lonely and will stay on the phone with a telemarketer to have someone to talk to. Some seniors may be just "too nice" and too polite and trusting just to say no and hang up the phone.
Law enforcement is helping to resolve this issue. In two major undercover operations, Operation Disconnect and Operation Senior Sentinel, the Department of Justice brought federal criminal charges against more than 1,300 fraudulent telemarketers. In a statute enacted in 1994 as part of the Senior Citizens Against Marketing Scams Act, courts can impose an additional five years imprisonment where the mail, wire, or bank fraud offense was committed in connection with the conduct of telemarketing. An additional ten years may be added if the offense targeted those 55 years or older.
Source: Chart figures from the ConsumerSentinel database come from http://www.ftc.gov; "What's the Department of Justice Doing About Telemarketing Fraud?" Retrieved from http://www.usdoj.gov/crimianl/fraud/telemarketing/doj.htm; "Facts about Fraudulent Telemarketing." Retrieved from http://www.aarp.org/fraud/1fraud.htm; "Seniors as Predominant Telemarketing Fraud Victims." Retrieved from http://www.crimes-of-persuasion.com. Data retrieved October 9, 2002.
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