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Statutes & Rules
Telephone Fraud
The telephone is an important marketing tool for legitimate businesses.  Telemarketing is an important, growing industry in Utah.  But the telephone in the wrong hands is also a very effective tool to defraud innocent consumers.

Fraudulent schemes range from peddling water purifiers, vitamins, and make-up kits to stock investments and abusive "900" numbers.  According to the Alliance Against Fraud in Telemarketing (AAFT), Americans lose an estimated $40 billion each year to telemarketing fraud.  Con artists and swindlers use the telephone more and more as their "weapon" to hold up victims.

If a sales pitch sounds too good to be true, just hang up.  If you don’t, you may become the next victim of telephone fraud.

What can be done?
The Utah Telephone Fraud Protection Act protects consumers from unscrupulous telemarketers and telemarketing scams and, at the same time, protects legitimate telemarketing businesses.  The law requires telemarketers doing business in Utah to obtain a minimum of $25,000 bond, certificate of deposit, or letter of credit to help pay restitution for victims if telephone fraud occurs.  The statute also provides enforcement powers to the division.

Top Telephone Scams

  • Free Prize Offers.  If you receive a phone call informing you that you have won a free prize, be cautious!  Usually there are conditions such as handling fees, shipping charges, membership fees or the purchase of other merchandise.
  • Charitable Solicitations.  Charitable organizations use telephone solicitations to raise funds.  Unfortunately, scammers may call you, too.  Utah law requires charities to inform you if they are registered with the state, what their permit number is and what percentage of your donation will actually go to the charitable purpose.  For a list of charitable organizations that are currently registered with the state, visit [WEB PAGE].
  • Travel Offers.  It can be tempting to purchase a bargain-priced travel package over the telephone, but be careful.  Many of these scams operate by enticing people to join “vacation clubs” or to take “free trips.”  Often the vacation or free trip has many hidden costs or conditions attached.  Your bargain could end up costing you a lot of money.
  • Investment Fraud.  Many unsound investment opportunities are peddled over the telephone.  Con artists usually make such statements as: “You must act now.”  “There is not risk.”  or “This must be kept a secret.”  Promoters will often make you feel guilty or silly for asking questions or exhibiting doubt.  Stop and think before you quickly turn your money over to the promoter.  Ask for written information.  If you receive undue or uncomfortable pressure, or if there are other “warning flags” that arise during your conversation, hang up.
  • "900" Numbers.  When you call a "900" number, you are charged either a fee for the minutes that you are on the phone or a flat fee for the entire call.  These fees can add up rather quickly after you have spent more than a few minutes on the telephone.  Some services will keep you on the line for an extended length of time before you get all of the information you called for, making it a very expensive phone call.  Find out the cost of the call before you make it and never call any "900" numbers that don’t disclose the costs up front.
  • Advance-Fee Loan Scams.  These scams often target people who are out of work or have poor credit ratings.  Con artists promise “guaranteed” loans, no matter what your credit rating is, in exchange for an upfront processing or application fee.  You may wait weeks or months only to find out that your credit has been denied and the processing fee is not refunded as promised.  Or, you may never hear from the company again, and may even find that the company is withdrawing more amounts from your credit card using your personal information that you disclosed over the telephone.
  • Credit Repair Schemes.  If you are having problems getting credit, you may be tempted to listen to promoters who advertise quick and easy solutions to credit problems.  Unfortunately, in many cases these companies take your money and do little or nothing to improve your credit history.  Credit repair companies cannot remove bad credit information from your files.  If there are genuine mistakes on your credit file, you can remove them yourself-for free.  Credit repair companies must be registered with the division.  A list of credit repair companies that are currently registered with the division can be found at the top of this page.

Tips to Avoid Telephone Fraud

  • Be wary of investing with a stranger over the telephone.
  • Don’t give in to high-pressure sales tactics.
  • Ask the solicitor if you have the right to cancel your purchase after you order.
  • Ask the solicitor for the name, address and telephone number of the company for whom they work.  (The solicitor is required to provide this information prior to giving the sales pitch.)
  • Check with the division to confirm that the telemarketer is registered.  A list of telemarketers that are currently registered with the division can be found at the top of this page.
  • Verify exactly what the solicitor is trying to sell you.
  • Get the solicitor to repeat anything that isn’t clear.
  • Be extremely cautious of giving your credit card number over the telephone.

Federal Trade Commission
          For additional information on telemarketers, visit the Federal Trade Commission’s web site at  http://www.ftc.gov/bcp/menus/consumer/phone.shtm


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