Report of the Canada - United States Working Group on Telemarketing Fraud

Department of Justice


The essence of fraud is that victims are deceived into acting to their own disadvantage. The deception makes it both possible and necessary to prevent the frauds from succeeding by giving potential victims information to protect themselves. To succeed, educational programs must have accurate information about who commits the offence, who is likely to be victimized by it, and how this occurs. The Working Group recommends that structured and methodical research be conducted into offenders, victims and other aspects of telemarketing fraud, and that the results be used to create effective educational materials and strategies to prevent it.

Education and prevention efforts are a critical element of any overall strategy to control telemarketing fraud. They can save large numbers of prospective victims the emotional and material consequences of losing irreplaceable funds or assets. They may also deter offenders by making telemarketing fraud unprofitable. There are several ways in which the United States and Canada can usefully collaborate to make prevention efforts more effective. Authorities can share information about victims, offenders and the offence itself, and about the messages and media used and their effectiveness. They can also work together on particular education projects, coordinating timing, media and messages to reach consumers in both countries more effectively than if either country acted alone. The Working Group recommends that the governments and agencies of Canada and the United States cooperate as closely as possible in developing and maintaining educational materials and effective programs to disseminate them, and in coordinating their education and prevention efforts.

Examination of these questions in a binational context involves four key questions.

  • Whom should we seek to educate?
  • Through what communications media can they best be reached?
  • What messages should be delivered?
  • How can our governments and agencies effectively cooperate?

4.1 Educating the General Public

Government agencies and non-governmental organizations in both countries already publish brochures, manuals, pamphlets, and other materials that contain valuable information about telemarketing fraud. These include messages intended to raise general awareness of the problem and to convey specific information about particular schemes and how they work. In most cases these efforts form part of general consumer-education or crime-prevention programs. They have the advantage of reaching very large numbers of people, but because telemarketing fraud is only a small part of more general consumer- protection and crime-prevention agendas, it only forms a small part of the overall message. This means that information cannot be detailed, and may be overlooked in the competition for attention with other, higher-profile elements of the package.

The Working Group noted one particularly disturbing fact about how the offence is perceived, by both the general public and by victims themselves. Some do not view it as a criminal offence at all, but as simple bad judgment on the part of victims. This perception can lead to a tendency to blame the victims for their own losses. It affects how society sees the victims, and how the victims see themselves. This in turn can influence the way the offence is treated by law-enforcement and regulatory agencies, and when offenders are convicted, by the courts which sentence them. The Working Group has already recommended that telemarketing fraud be labelled as a serious form of economic crime. It is important that this most fundamental fact be made a key part of the message directed at the general populations of Canada and the United States.

4.2 Educating Specific Segments of the Public

Focusing education on specific target groups allows resources to be used more effectively and more detailed messages to be communicated. It is the offenders, not governments, who choose the victims, and prevention requires that authorities determine who is most likely to be targeted and reach out to them before the offenders do. This involves identifying target groups based on risk - the likelihood that offenders will contact them and the likelihood they will be victimized if contacted. Mature adults, including the elderly, who have worked for many years and have accumulated substantial funds, assets, or credit, are more attractive to offenders.

Choosing target groups.

Target groups may be defined by whatever characteristics make them seem suitable to offenders, by research into which population groups are actually being targeted, or by specific information, such as "mooch" or "sucker lists" seized by police. As noted above, senior citizens are being disproportionately victimized, and they are already one focus of education efforts in both countries. Lists compiled by offenders themselves, where available, are used in the "reverse boiler-room" education efforts described below. It may sometimes be possible to target specific cities or regions with anti- fraud advertising if they are identified as being singled out by offenders. The identification of potential victim groups is important because it allows messages to be constructed and delivered with the maximum impact at the least cost. Once target groups are identified, appropriate messages must be developed and appropriate media chosen to deliver them in ways which will be received, understood, and remembered.

Choosing the media.

The Working Group did not examine media in detail, but did note that such things as information brochures, pamphlets, newsletter pieces on telemarketing, inserts in pension cheques, and radio, television or newspaper advertising have already been used effectively. Specific groups can often be reached through their own newsletters or organizations. Internet websites may also become an important medium, particularly if, as potential victims go "on line", offenders do so as well. Speakers from public and private organizations can talk about illegitimate telemarketing to affected groups, using presentation kits developed to assist them. Possibly the best medium for contacting victims directly is the one used by the offenders themselves, the telephone, a fact demonstrated by the success of "reverse boiler-room" operations (below).

Developing the message.

The nature and content of the message will also vary depending on the nature of the target audience and other circumstances. Messages directed at specific groups must be framed in terms that those groups are likely to see and understand. Offenders have targeted victims based on factors such as age, disability, language, and culture. Each of these factors is a challenge to those who must find ways to communicate with potential victims more effectively than the telemarketers can. Messages must also be changed from time to time, to keep up to date with the latest developments in fraud, and to be interesting and relevant to the public.

4.3 Two Success Stories: Consumer "Hotlines" And "Reverse Boiler-Rooms"

"Hotlines" for Consumer Questions and Complaints

Government and non-government organizations in both countries have set up telephone lines for complaints about fraudulent telemarketing or general consumer matters. These exchange information both ways: victims can be given information about how to complain effectively and how to avoid being victimized again, and the operators gain valuable and timely information about ongoing frauds. Law-enforcement can use this for investigations or enforcement proceedings, and educators can use it to keep their materials and programs up-to-date. Since the information is voluntarily provided by members of the public, there appear to be few legal restrictions on how it can be used.

The Canadian "Phonebusters" unit, a joint project of the Ontario Provincial Police and federal agencies, and the U.S. National Fraud Information Center (NFIC) both run nation- wide, toll free hotlines, and the Federal Trade Commission (FTC) recently set up a Consumer Response Centre. The U.S. agencies download the information they compile into the Telemarketing Complaint System (TCS), a data-base run by the FTC and the National Association of Attorneys General (NAAG). The FTC recently voted to share its complaint data with Canadian law enforcement agencies; the Canadian data are now being transferred to the TCS. These steps will enhance the ability of agencies in both countries to monitor and act upon complaints quickly, no matter where they originate.

"Reverse Boiler Rooms"

The more specifically targeted a message is, the more detailed and effective it can be. This is demonstrated by the success of "reverse boiler-room" projects which contact potential victims using the same means the offenders do: the telephone. Telemarketing "boiler rooms" use salespeople to telephone prospective victims, and law enforcement and consumer organizations have all employed the same principle in reverse: groups of volunteers make large numbers of calls to those whose names appear on "mooch lists" or "sucker lists" seized from offenders. Calls may warn about the general problem, or about particular telemarketing frauds known to be in operation, and one-on-one contact allows callers to answer questions or give information needed by the individual recipient. Groups conducting reverse boiler rooms in the United States report that persons called appreciate the effort and the information they receive. The Working Group encourages its agency participants to assist in the development and conduct of future reverse boiler rooms in both countries.

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