Older consumers are increasingly targets of phone, mail, and e-mail solicitations. In many cases, these solicitations are unwanted or even fraudulent.
Telemarketing: Telemarketing refers to selling products or services by phone. It causes frustration to landline holders and cell phone owners alike. Although some telemarketing calls are for legitimate business purposes, scammers have latched on to robocall technology to bilk consumers. Telemarketing fraud includes:
selling inferior merchandise,
failing to deliver goods, and
billing for fraudulent charges.
Several federal laws and regulatory rulings deal with telemarketing fraud. Federal law provides tools for law enforcement to reduce telemarketing abuses and for consumers to obtain redress for fraud. The Telephone Consumer Protection Act (TCPA) of 1991 restricts telemarketing. The Federal Communications Commission strengthened the core protections of this law in the following ways:
- Text messages are now considered “calls” subject to the TCPA.
- Callers are now liable for making robocalls to reassigned wireless numbers if the new phone users have not consented to receive them.
- Callers must now obtain consent for robocalls even if they are not “presently” dialing random or sequential phone numbers. This means that consent must come from the party any robocaller contacts, not just the intended party.
States can enforce federal law. Yet the law does not address all types of telemarketing fraud. Therefore, states can play an invaluable role in preventing, deterring, and prosecuting telemarketing fraud. Reducing telemarketing fraud requires strong enforcement at all levels of government.
Do-not-call registries (DNCRs): The federal government and some states operate DNCRs. Consumers register their phone numbers to reduce unwanted telemarketing calls. Those who register may still receive calls from political organizations, charities, and companies conducting surveys. States may include additional consumer protections, such as exempting other organizations and including stronger enforcement provisions. Compliance remains a challenge. In 2021, the Federal Trade Commission received over five million complaints about violations of the federal do-not-call registry. More enforcement tools are needed.
Mail solicitations: With the wide use of computerized mailing lists, unscrupulous marketers can target specific market segments for scams or questionable products. Older adults are often the target of scams involving misleading information. A request may appear to be from a government agency. Another may deceptively offer a free good or service when it is actually part of a profit-making scheme.
In some cases, services that the government provides at no cost may be offered for a fee. Some charitable solicitations are also disguised efforts by telemarketers to gouge consumers, with little of the collected money distributed to the charity.
Spam: A sharp increase in internet fraud and a tidal wave of unsolicited commercial e-mails, commonly known as spam, have followed. The Federal Bureau of Investigation received a record 847,376 complaints about internet fraud in 2021, causing more than $6.9 billion in reported losses. This is likely a low estimate, as so many instances of fraud, including internet fraud, go unreported.
Policymakers and the private sector should enact meaningful rules and standards to provide government oversight and consumer protection against nuisance telemarketing calls and telemarketing fraud.
Consumer protections against telemarketing
Policymakers should ensure that telemarketing practices incorporate consumer protections. Telemarketers should:
- immediately identify themselves and the true purpose of the communication;
- explain key terms, conditions, and costs (including refund and cancellation policies);
- communicate in plain language; and
- provide the name and location of the company being represented.
Prize promoters must state that no purchase is necessary to win and explain how to enter a contest without making a purchase.
All courier pickups associated with telemarketing sales should be banned unless the goods are delivered with the opportunity to inspect them before any payment is collected.
Consumer protections relating to telemarketing practices should reflect all major forms of person-to-person communication. This includes telephone calls, voicemails, text messages, and direct messaging platforms.
Telemarketers should not be allowed to use a consumer’s financial account information without prior written authorization.
Telemarketers should be prohibited from blocking caller ID.
Payment processors should be held liable for unauthorized transactions.
Federal and state regulators should vigorously enforce do-not-call registries.
Consumers who place their name on a federal or state DNCR should be protected from wireless phone charges triggered by telemarketing calls.
Telemarketer registration and bonding
All telemarketing businesses and their agents that operate in a state should be required to be registered there. If a state allows exemptions to the registration requirement, the entity should still be subject to the state’s telemarketing and consumer fraud laws.
All telemarketers should be required to be bonded so that they can compensate consumers in the event they engage in fraud.
Telemarketing anti-fraud enforcement
The Federal Trade Commission should strengthen the Telemarketing Sales Rule. Agency rulemaking and enforcement efforts should address problems that remain in the telemarketing industry.
Regulators should strengthen enforcement of anti-fraud measures. They should address issues such as online fraud, unauthorized access to consumer bank accounts, disclosures regarding premiums and prize promotions, repeat calling of telemarketing fraud victims, and the contacting of consumers who have placed themselves on a DNCR. Appropriate investigation and enforcement tools should be available to regulators, including one-party consent for electronic monitoring, to combat telemarketing fraud.
Civil and criminal penalties should be imposed for violations of telemarketing laws. This includes prison terms for those who knowingly and willfully deceive consumers. These penalties should be assessed based on the degree of fraud committed, regardless of the actual dollar amount lost.
Protections against misleading mailings
Policymakers should enact consumer protections and should eliminate deceptive practices. Mail solicitations should not appear to come from the government. Deceptive and misleading games-of-chance mailings, including sweepstakes, should be eliminated.
Charities should be required to disclose what portion of public contributions is spent on activities related to the group’s charitable purpose. This helps deter the fraudulent use of charity look-alike names for solicitation. It also better informs consumers.
The Federal Trade Commission, the Postal Inspection Service, state attorneys general, and other regulatory officials should vigorously enforce applicable laws and regulations as well as intensify efforts to increase consumer awareness of fraudulent tactics.
Protections against spam
Consumers should be protected against spam e-mail. Policymakers should prohibit misrepresentation of the sender, subject, or content of an e-mail. Regulators should create and enforce a do-not-spam list. Violators should face criminal penalties.
Emails should provide accurate contact information and a reliable opt-out system. It should be unlawful to violate a prior opt-out request.
Federal legislation should not preempt states’ right to strengthen anti-spam protections.