Real Possibilities

January 11-17, 2016

New FTC rule helps consumers avoid scams

By Nan Selz
State President AARP Arkansas

The Federal Trade Commission has amended the Telemarketing Sales Rule in order to help consumers avoid scams.  The rule, which AARP and other consumer advocates have long supported, makes it illegal for telemarketers to request or demand the following three payment methods which are favored by con artists because they are hard to trace.

CASH-TO-CASH MONEY TRANSFERS provide instant and unrecoverable cash.  Such transfers, provided by Moneygram, Western Union and Ria, can be redeemed anywhere in the world once the recipient knows the confirmation number.  The consumer may be instructed to send the transfer to an address in the United States, but the recipient may actually be located and collect the transfer in another country or even on another continent.

PREPAID, RELOADABLE PAYMENT CARDS (prepaid debit cards) are issued by Green Dot’s, MoneyPak, Vanilla Reload and Reloadit.  Scammers can transfer funds from the consumer’s card to their own card quickly without detection and collect the cash anywhere in the world.

DIRECT BANK ACCOUNT WITHDRAWALS allow unscrupulous telemarketers to debit the consumer’s bank account once or continually without permission.  They create “checks” or “payment orders” by using the consumer’s bank account number.  Such withdrawals are difficult to reverse, so consumers should never provide their bank account numbers over the phone.

Legitimate telemarketers seldom use these payment methods, but they are frequently used by con artists peddling bogus merchandise and services. Consumers should be aware of and avoid these common scams:

– Callers claiming to be IRS agents who threaten arrest, seizure of property or deportation to exhort supposedly unpaid taxes,

– Callers posing as grandchildren or police claiming a loved one has been arrested or hospitalized and needs money immediately,

– Utility workers threatening to cut off the utilities due to unpaid bills, a scam that is particularly common in cold weather.

Consumers should be suspicious of anyone on the telephone who requests immediate payment, especially if they demand a specific form of payment.  They should also be wary of telemarketers who claim they can help recover money previously lost to fraud for an upfront fee.  This is also illegal under the FTC’s Telemarketing Sales Rule.

For information about other scams, sign up for AARP’s Fraud Watch Network where consumers receive tips and resources to help them spot and avoid fraud and identity theft. The Fraud Watch Network is also on Facebook and on Twitter at #fraudwatch. http://www.aarg.org/money/scams-fraud/fraud-watch-network/