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Protecting Yourself From Some of
The More Common Scams

Following some common sense rules will keep your hard earned money in your bank account. The following articles courtesy of the Social Security Administration will help you protect yourself from some of the more common telephone and charity scams.

Are You a Target of Telephone Scams?

If you're age 60 or older, you may be a special target for people who sell bogus products and services by phone.

It's easy enough to fall prey to their sales pitch. Telemarketing fraud is a multi-billion dollar business in the United States. Every year, thousands of consumers lose from a few dollars to their life savings to telephone con artists.

That's why the Federal Trade Commission (FTC) encourages you to be skeptical when you hear a phone solicitation and to be aware of the Telemarketing Sales Rule, a new law that can help you protect yourself from abusive and deceptive telemarketers.

How Older People Become Victims of Telemarketing Fraud
Fraudulent telemarketers try to take advantage of older people on the theory that they may be more trusting and polite toward strangers. Older women living alone are special targets of these scam artists.

Here are some reasons older people become victims of telemarketing fraud:

Often it's hard to know whether a sales call is legitimate. Telephone con artists are skilled at sounding believable--even when they're really telling lies.
Sometimes telephone con artists reach you when you're feeling lonely. They may call day after day--until you think a friend, not a stranger, is trying to sell you something.
Some telephone salespeople have an answer for everything. You may find it hard to get them off the phone -- even if they're selling something you're not interested in. You don't want to be rude
You may be promised free gifts, prizes, or vacations--or the "investment of a lifetime"-- but only if you act "right away." It may sound like a really good deal. In fact, telephone con artists are only after your money. Don't give it to them.

Common Telephone Scams
Con artists never run out of scams. Have you heard any of these?

Prize offers: You usually have to do something to get your "free" prize--attend a sales presentation, buy something, or give out a credit card number. The prizes generally are worthless or overpriced.
Travel packages: "Free" or "low-cost" vacations can end up costing a bundle in hidden costs. Or, they may never happen. You may pay a high price for some part of the package -- like hotel or airfare. The total cost may run two to three times more than what you'd expect to pay or what you were led to believe.
Vitamins and other health products: The sales pitch also may include a prize offer. This is to entice you to pay hundreds of dollars for products that are worth very little.
Investments: People lose millions of dollars to "get rich quick" schemes that promise high returns with little or no risk. These can include gemstones, rare coins, oil and gas leases, precious metals, art, and other "investment opportunities." As a rule, these are worthless.
Charities: Con artists often label phony charities with names that sound like better-known, reputable organizations. They won't send you written information or wait for you to check them out with watchdog groups*.
Recovery scams: If you buy into any of the above scams, you're likely to be called again by someone promising to get your money back. Be careful not to lose more money in this common practice. Even law enforcement officials can't guarantee they'll recover your money.

Tip-Offs to Phone Fraud
Telephone con artists spend a lot of time polishing their "lines" to get you to buy. You may hear this:

You must act "now"--or the offer won't be good.
You've won a "free" gift, vacation, or prize--but you pay for "postage and handling" or other charges.
You must send money, give a credit card or bank account number, or have a check picked up by courier--before you've had a chance to consider the offer carefully.
You don't need to check out the company with anyone--including your family, lawyer, accountant, local Better Business Bureau, or consumer protection agency.
You don't need any written information about their company or their references.
You can't afford to miss this "high-profit, no-risk" offer.

If you hear these--or similar--"lines" from a telephone salesperson, just say "no thank you," and hang up the phone.

The Telemarketing Sales Rule
The FTC's Telemarketing Sales Rule requires telemarketers to make certain disclosures and prohibits certain misrepresentations. It gives you the power to stop unwanted telemarketing calls and gives state law enforcement officers the authority to prosecute fraudulent telemarketers who operate across state lines.

The Rule covers most types of telemarketing calls to consumers, including calls to pitch goods, services, "sweepstakes," and prize promotion and investment opportunities. It also applies to calls consumers make in response to postcards or other materials received in the mail.

Keep this information near your telephone. It can help you determine if you're talking with a scam artist or a legitimate telemarketer.

It's illegal for a telemarketer to call you if you've asked not to be called. If they call back, hang up and report them to your state Attorney General.
Calling times are restricted to the hours between 8 a.m. and 9 p.m.
Telemarketers must tell you its a sales call and who's doing the selling before they make their pitch. If it's a prize promotion, they must tell you that no purchase or payment is necessary to enter or win. If you're asked to pay for a prize, hang up. Free is free.
It's illegal for telemarketers to misrepresent any information, including facts about their goods or services, earnings potential, profitability, risk or liquidity of an investment, or the nature of a prize in a prize-promotion scheme.
Telemarketers must tell you the total cost of the products or services they're offering and any restrictions on getting or using them, or that a sale is final or non-refundable, before you pay. In a prize promotion, they must tell you the odds of winning, that no purchase or payment is necessary to win, and any restrictions or conditions of receiving the prize.
It's illegal for a telemarketer to withdraw money from your checking account without your expressed, verifiable authorization.
Telemarketers cannot lie to get you to pay, no matter what method of payment you use.
You do not have to pay for credit repair, recovery room, or advance-fee loan/credit services until these services have been delivered. (Credit repair companies claim that, for a fee, they can change or erase accurate negative information from your credit report. Only time can erase such information. Recovery room operators contact people who have lost money to a previous telemarketing scam and promise that, for a fee or donation to a specified charity, they will recover your lost money, or the product or prize never received from a telemarketer. Advance-fee loans are offered by companies who claim they can guarantee you a loan for a fee, paid in advance. The fee may range from $100 to several hundred dollars.)

Exceptions to the Rule
While most types of telemarketing calls are covered by the Rule, there are exceptions. The Rule does not cover:

Calls placed by consumers in response to general media advertising, except calls responding to ads for investment opportunities, credit repair services, recovery room services, or advance-fee loans.
Calls placed by consumers in response to direct mail advertising that discloses all the material information required by the Rule, except calls responding to ads for investment opportunities, prize promotions, credit repair services, recovery room services, or advance-fee loans.
Catalog sales.
Calls initiated by the consumer that are not made in response to any solicitation.
Sales that are not completed, and payment or authorization for payment is not required, until there is a face-to-face sales presentation.
Calls from one business to another unless nondurable office or cleaning supplies are being offered.
Sales of pay-per-call services and sales of franchises. These are covered by other FTC rules.

What You Can Do To Protect Yourself
It's very difficult to get your money back if you've been cheated over the phone. Before you buy anything by telephone, remember:

Don't buy from an unfamiliar company. Legitimate businesses understand that you want more information about their company and are happy to comply.
Always ask for and wait until you receive written material about any offer or charity. If you get brochures about costly investments, ask someone whose financial advice you trust to review them.
Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, state Attorney General, the National Fraud Information Center, or other watchdog groups*. Unfortunately, not all bad businesses can be identified through these organizations.
Always take your time making a decision.
Legitimate companies won't pressure you to make a snap decision.
It's never rude to wait and think about an offer. Be sure to talk over big investments offered by telephone salespeople with a trusted friend, family member, or financial advisor.
Never respond to an offer you don't understand thoroughly.
Never send money or give out your credit card or bank account number to unfamiliar companies.
Be aware that any personal or financial information you provide may be sold to other companies.

For More Help
Before you buy from an unfamiliar organization, check it out with some of these groups. Your local phone directory has phone numbers and addresses.

Call for Action
5272 River Road, Suite 300
Bethesda, MD
1-800-647-1756

State Attorney General

Better Business Bureau*

Local consumer protection organization

National Charities Information Bureau
19 Union Square West
New York, NY 10003-3395
212-929-6300

To stop unwanted telephone sales calls from many national marketers, send your name, address, and telephone number to:

Direct Marketing Association
Telephone Preference Service
P.O. Box 9014
Farmingdale, NY 11735-9014

Under the Telephone Consumer Protection Act of 1991, you can ask that companies put you on their "do not call" lists. If the company calls you again, you can bring action in Small Claims Court.

For More Information

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics*, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the online complaint form*. The FTC enters Internet, telemarketing, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide

Charitable Donations: Give or Take

Reproduced Courtesy of the Social Security Administration ©2001

You may have contributed a portion of the $143 billion raised for charities in 1995. Unfortunately, an estimated $1.43 billion of that amount may have been misused or ended up in the pockets of fraudulent solicitors. With more than half a million federally recognized charities soliciting for charitable contributions, it pays to be cautious when making a donation. Asking questions about the nature and activities of the organization is the only way you can be sure the money you contribute will support worthwhile causes.

Paid Fund-Raisers
Some charities find it more efficient to pay professional fund-raisers to handle large scale mailings, telephone drives, and other solicitations rather than their own paid staff or volunteers. Professional fund-raisers are in business to make money and can legally keep a portion of the money they collect. If you're solicited for a donation, ask if the caller is a paid fund-raiser and what percentage of your donation the fund-raiser will keep. If you're not comfortable with the amount, you may want to consider other options for donating.

Charity Checklist
Whether charitable organizations use their employees, volunteers, or professional fund- raisers to solicit donations by phone, mail, or in person, consider the following precautions to ensure that your donation dollars benefit the people and organizations you want to help.

Ask for written information, including the charity's name, address, and telephone number. A legitimate charity or fund- raiser will give you materials outlining the charity's mission, how your donation will be used, and proof that your contribution is tax deductible.

Ask for identification. Many states require paid fund-raisers to identify themselves as such and to name the charity for which they're soliciting. If the solicitor refuses, hang up and report it to local law enforcement officials.
Call the charity. Find out if the organization is aware of the solicitation and has authorized the use of its name. If not, you may be dealing with a fraudulent solicitor.
Watch out for similar sounding names. Some phony charities use names that closely resemble those of respected, legitimate organizations.
Know the difference between "tax exempt" and "tax deductible." Tax exempt means the organization doesn't have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return. Even though an organization is tax exempt, your contribution may not be tax deductible. If deductibility is important to you, ask for a receipt showing the amount of your contribution and stating that it is tax deductible.
Beware of organizations that use meaningless terms to suggest they are tax exempt charities. For example, the fact that an organization has a "tax I.D. number" doesn't mean it is a charity: all nonprofit and for profit organizations must have tax I.D. numbers. And an invoice that tells you to "keep this receipt for your records" doesn't mean your donation is tax deductible or the organization is tax exempt.
Be skeptical if someone thanks you for a pledge you don't remember making. If you have any doubt whether you've made a pledge or previously contributed, check your records. Be on the alert for invoices claiming you've made a pledge when you know you haven't. Some unscrupulous solicitors use this approach to get your money.
Ask how your donation will be distributed. How much will go to the program you want to support, and how much will cover the charity's administrative costs? If a professional fund-raiser is used, ask how much it will keep.
Refuse high pressure appeals. Legitimate fund-raisers won't push you to give on the spot.
Be wary of charities offering to send a courier to collect your donation immediately.
Consider the costs. When buying merchandise or tickets for special events, or when receiving free goods in exchange for giving, remember that these items cost money and generally are paid for out of your contribution. Although this can be an effective fund-raising tool, less money may be available for the charity.
Be wary of guaranteed sweepstakes winnings in exchange for a contribution. You never have to donate anything to be eligible to win.
Avoid cash gifts that can be lost or stolen. For security and tax record purposes, it's best to pay by check. Use the official full name of the charity &emdash; not initials &emdash; on your check. Avoid solicitors who want to send a courier or use an overnight delivery service to pick up your donation.

Charity Check-Up
Many charities use your donations wisely. Others may spend much of your contribution on administrative expenses or more fund-raising efforts. Some may misrepresent their fund-raising intentions or solicit for phony causes.

Before you open your checkbook, check out the charity you're considering with these organizations:

Philanthropic Advisory Service*
Council of Better Business Bureaus
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203-1838
(703) 276-0100

National Charities Information Bureau*
19 Union Square West, 6th Floor
New York, NY 10003-3395
(212) 929-6300

American Institute of Philanthropy
4905 Del Ray Avenue, Suite 300
Bethesda, MD 20814
(301) 913-5200

Your Local Charity Registration Office

Most states require charities to be registered or licensed by the state. Check with your state Attorney General's office or Secretary of State.

Many smaller, newer, or local charities may not be rated by the organizations listed here. Some fraternal organizations, such as police and fire groups may not be rated at all. If the charity seeking your donation is not listed or rated, follow the precautions listed under Charity Checklist to help you determine whether an organization deserves your donation dollars.

For Complaints and More Information
If you believe an organization may not be operating for charitable purposes or is making misleading solicitations, contact your state Attorney General or your local consumer protection office.

* The information being provided is strictly as a courtesy. When you link to any of the web sites provided herewith, you are leaving this site. Taylor & Associates and Royal Alliance, Inc. make no representation as to the completeness or accuracy of the information provided at this site. Nor are the companies liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third party technologies, sites, information and programs made available through this site. You are now leaving the website of Taylor & Associates and you assume total responsibility and risk for your use of the site you are linking to.

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Nigel B. Taylor, CFP� is a Registered Representative of and offers securities products & services through Royal Alliance Associates, Inc. Member FINRA/SIPC, a registered Broker-Dealer. In this regard, this communication is strictly intended for individuals residing in the states of California and Nevada. No offers may be made or accepted from any resident outside the specific state(s) referenced. Separately, Taylor & Associates is a CA Registered Investment Adviser