Fifty trade associations, advocacy groups, businesses and government agencies have formed a group to combat telephone marketing fraud.
"Don't believe offers that sound too good to be true," said Linda Golodner, executive director of the National Consumers League, one of the organizers of the Alliance Against Fraud in Telemarketing.John Baldwin, director of the Utah Division of Securities and president of the North American Securities Administrators Association, told a news conference announcing the formation of the alliance that "Americans lose $1 million an hour to investment fraud promoted over the telephone."
Such an amount is equivalent to $8.8 billion a year. This would be about a fifth of Baldwin's estimate of all fraud losses by small investors.
Many members of the new organization are involved with selling by telephone, and one of them said con artists are giving legitimate businesses a bad name.
Richard Barton, senior vice president of the Direct Marketing Association, said that "fraudulent telemarketers reach consumers not only on the telephone, but also through the mail and advertisement."
Golodner said the new group believes the most common scams by telephone salespeople are prize offers to lure buyers of water purifiers and vitamins, so-called "penny" stocks, office supplies, magazine subscriptions, credit repair, precious metals, travel arrangements, art, business ventures and cellular telephone lottery applications.