1. See, Committee on Government Operations, The Scourge of Telemarketing Fraud: What Can Be Done Against It?, Fifteenth Report by the Committee on Government Operations (U.S. G.P.O.: 1991), at p. 7 ("Various estimates place losses to consumers each year from telemarketing fraud at $3 billion to $15 billion to $40 billion and probably hundreds of millions of dollars to financial institutions.").
2. United States v. Benjamin Alex Smith and Elizabeth Marjorie Robertson, Criminal Action No. 95-CR-448 (D. Colo., 1996) (sentencing two Operation Senior Sentinel defendants for telemarketing fraud).
3. See 18 U.S.C. § 2236 for enhanced penalties for any telemarketer convicted of victimizing ten or more persons over the age of 55 or targeting persons over the age of 65. The United States Sentencing Guidelines also increase sentences for any convicted criminal that targets victims according to age. See, USSG § 3A1.1.
4. Tele-Scams Exposed: How Telemarketers Target the Elderly: Hearing Before the Senate Special Committee on Aging, 104th Cong., 2nd Sess. (March 31, 1996) (statement of Kathryn Landreth, U.S. Attorney for the District of Nevada).
5. Tele-Scams Exposed: How Telemarketers Target the Elderly: Hearing Before the Senate Special Committee on Aging, 104th Cong., 2nd Sess. (March 31, 1996) (statement of Edward Bruce Gould, Jr., convicted telemarketer).
6. FTC v. United Recovery, 1:94-CV-3164-CAM (N.D. Ga. 1994); FTC v. PFR, Inc., et al., CV-S-95-74-PMP (LRL) (D. Nev. 1995); FTC v. Richard Canicatti, individually and dba Refund Information Services, et al., CV-S-94-859-HDM (RLH) (D. Nev. 1995); FTC v. Thadow, Inc., et al., CV-S-95-75-HDM (LRL) (D. Nev. 1995); FTC v. Telecommunications Protection Agency, CIV 96-344 (E.D. Okl. 1996); FTC v. USM Corp., CV-S-95-668 LDG (LRL) (D. Nev. 1995); FTC v. Meridian Capital Management, Inc., et al., CV-S-96-63 PMP (LRL) (D. Nev. 1996).
7. The FTC sued USM Corporation, doing business as "Senior Citizens Against Telemarketing," in July 1995. Of the consumers interviewed by Commission Staff, 81 percent were at least 65 years of age; 47 percent were at least 75; and 23 percent were at least 80. According to the Director of the Bureau of Consumer Protection, "this preponderance of older consumers is not unusual in recovery room cases." Tele-Scams Exposed: How Telemarketers Target the Elderly: Hearing Before the Senate Special Committee on Aging, 104th Cong., 2nd Sess. (March 31, 1996) (statement of Jodie Bernstein, Director, Bureau of Consumer Protection, FTC).
8. For example, in FTC v. 9013-0980 Quebec Inc. dba Incentive(s) Int'l or Pegasus Industries, 1:96 CV 1567 (N.D. Ohio 1996), the FTC filed a complaint against defendants, all located in Canada, alleging that they conducted deceptive telemarketing prize promotions from Montreal that promised consumers enticing prizes such as cars, boats, Bahama vacations, and large sums of cash in exchange for $500 to $5000 in processing fees, taxes, or products such as radios and air filters. Consumers actually received only certificates or cheap items worth a scant fraction of what they had paid to the Canadian telemarketers.
9. Letter of Kathryn E. Landreth, U.S. Attorney for the District of Nevada, to Federal Trade Commission, December 5, 1996.
10. United State Securities and Exchange Commission, "Summary of Comments and Discussion Regarding Protections for Senior Citizens and Qualified Retirements Plans," July 8, 1996, p. 6.
11. In its 1995 survey of state securities enforcement activity, the North American Securities Administrators Association (NASAA) reports that state law enforcement agencies nationwide secured more than 140 criminal convictions of sellers of unregistered securities and securities fraud and obtained more than $5 million in fines, $35 million in restitution judgments, and more than 1500 cease and desist orders, injunctions, and consent orders against sellers of such securities in a single year. 1994-95 NASAA Survey of State Securities Activities, April 29, 1996. NASAA reports that the data "understates total state securities activity as the survey does not include data from California and Florida, among other states."
12. Securities and Exchange Commission, Telecommunications Technology Securities Fraud, January 25, 1996, p. 2.
13. For SMR cases, see, e.g., FTC v. Digital Communications, Inc., No. 93-6648-JGD (JRX) (C.D. Cal. 1995) (stipulated permanent injunction; summary judgment against one defendant); FTC v. Metropolitan Communications, Corp., No. 94-Civ-0142 (JFK) (S.D. N.Y. 1994) (stipulated preliminary injunction entered; case pending); for IVDS cases, see, e.g., FTC v. Chase McNulty Group, Inc., No. 95-524-CIV-T-25E (M.D. Fla. 1994), FTC v. Digital Interactive Associates, Inc., No. 95-Z-754 (D. Colo. 1995).
14. See, The Federal Communications Commission, In the Matter of Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems; WT Docket No. 96-18 Implementation of Section 309(j) of the Communications Act --- Competitive Bidding, First Report and Order, PP Docket No. 93-253, April 23, 1996 , ¶ 19, p. 12. The FCC notes, "If the freeze were to be lifted, it could inadvertently encourage a resumption of fraudulent activity by application mills seeking to induce unsophisticated investors into filing applications." Id.
15. United States of America and Olin Keith Beck v. Ansbacher (Bahamas) Limited, et al., Equity Action No. 170 of 1996, Supreme Court of the Commonwealth of Bahamas (February 8, 1996).
16. For example, the Investment Advisers Supervision Coordination Act, Pub. L. No. 104-290 §§ 301-308 (codified as amended at 15 U.S.C. § 80b-1, et. seq.), exempts from SEC registration all investment advisers that are subject to state securities regulation, unless they manage at least $25 million in assets and serve as advisors to certain federally registered investment companies. This legislation takes effect April 9, 1997.
17. In one 1996 case, FTC v. Freecom Communications Corp., 2:96 CV 0492 (D. Utah 1996), a telemarketer charged approximately one million consumers $495 each for seminars and business opportunity instruction, yielding the defendants hundreds of millions of dollars in revenue over a four-year period.
18. The Franchise Rule requires, among other things, that each franchisor set out the names, addresses, and telephone numbers of current operators of the business, an audited financial report, and the litigation and bankruptcy history for the company and its principals.
19. In FTC v. Career Information Services, Inc., et al., 1:96 CV 1464 ODE (N.D. Ga. 1996), the Court froze $2.5 million in assets fraudulently obtained by an Atlanta-based employment scam. Through an agreement with the defendants, the Commission has obtained over $1 million in refunds for over 20,000 consumers. In FTC v. Careers, Inc., et al., 96-72710 (E.D. Mich. 1996), the FTC obtained injunctive relief halting a Detroit telemarketer from deceptively marketing its employment services for airline jobs nationwide and the FTC also secured a consent judgment requiring the defendants to pay $350,000 in consumer redress. In two other cases FTC v. Direct Link, Inc., 96-11239 WGY (D. Mass. 1996), and FTC v. Stratified Advertising and Marketing, Inc., et al., CV 96-4142 TJH (VAP) (C.D. Cal. 1996), the FTC obtained default judgments against a Massachusetts telemarketing firm and emergency redress against a California "government job placement firm," respectively. Final redress orders in those cases are still pending.
20. The CROA, 15 U.S.C. § 1679, et. seq., prohibits a variety of false and misleading statements, as well as fraud by credit repair organizations (CROs). CROs may not receive payment before any promised service is "fully performed." Services must be under written contract, which must include a detailed description of the services and contract performance time. CROs must provide the consumer with a separate written disclosure statement describing the consumer's rights before entering into the contract. Consumers can sue to recover the greater of the amount paid or actual damages, punitive damages, costs, and attorney's fees for violations of the CROA. The states and the FTC may also enforce the CROA.
21. The agreement was entered into on behalf of the U.S. by the FTC and Department of Justice and on behalf of Canada by Industry Canada. The agreement calls upon the FTC and Industry Canada to: cooperate in detecting deceptive marketing practices; inform each other of investigations and proceedings involving cross-border deceptive marketing practices; share information relating to the enforcement of their deceptive marketing practices laws; coordinate their enforcement against cross-border deceptive marketing practices; and study further measures to enhance the scope and effectiveness of cooperation in the enforcement of deceptive marketing practices laws.
22. In one sample of fraud reported to the Telemarketing Complaint System in 1996, consumers reported fraud an average 9.8 months after they lost their money to fraud.
23. Data from the 1996 Project Roadblock cases revealed that less than five percent of the consumers affected by the practices charged by the FTC in its cases had personally reported their losses to the FTC and NFIC as of December 31, 1996. Other sources estimate that less than one-tenth of one percent of all consumer victims of telemarketing fraud ever report their victimization. See, Committee on Government Operations, The Scourge of Telemarketing Fraud: What Can Be Done Against It?, Fifteenth Report by the Committee on Government Operations (U.S. G.P.O.: 1991), p. 2.
24. For the business practices covered by the Fraud Report, consumers typically file complaints with the following federal agencies: the Commodities Futures Trading Association, the Federal Bureau of Investigation, the Securities Exchange Commission, the United States Department of Justice, and the United States Postal Service, in addition to filing complaints with the Federal Trade Commission.