Eliminating fraud, the greatest threat to telemarketing's reputation

Tehrani, Nadji

People in the telemarketing industry usually do not perceive fraud as being a big problem. They point out (and rightly so) that the volume of legitimate business conducted via telemarketing is so enormous that the "work" perpetrated by frauds who masquerade as telemarketers fades into insignificance. This position is eminently correct, at least from a dollars-and-cents point of view. But fraud has another measure: public opinion. Unfortunately, the public at large is not conversant with industry statistics. Instead, it relies on general impressions, formed in the alarmist atmosphere created by a journalism that seeks to excite passion rather than foster reason.

Even worse, so long as the public has a distorted picture of telemarketing, individuals are liable to confuse legitimate telemarketers and frauds who pretend to be telemarketers. (Please notice that I have deliberately avoided the phrase "fraudulent telemarketers." I would no more use that phrase than describe a scalpel-wielding killer as a "fraudulent surgeon.") Citizens who remain uninformed are vulnerable to scams and swindles -- a state of affairs that puts pressure on our legislators and regulators to "do something."

So, whereas industry professionals know that fraud shouldn't be a problem, regulatory bodies, which must respond to public opinion, sometimes see things differently. Fortunately, recent events indicate that our regulatory authorities are well aware of the importance of telemarketing to the economy, and are more than willing to consider antifraud measures that do not involve the creation of more rules and regulations, which could have the effect of making it more difficult to conduct legitimate business. Such measures include programs to educate consumers. It is imperative that consumers learn how to 1) recognize fraud and 2) report it to the appropriate authorities.

Existing regulations will prove ineffective if consumers remain uninformed. As industry professionals, we should make every effort to cooperate with bodies such as the Federal Trade Commission (FTC) to educate the public and make further regulation unnecessary.

The FTC: Doing What's Right For The Consumer And Our Industry

The more I work with the FTC's Division of Marketing Practices, the more I become convinced of the wisdom and forbearance of our government's senior authorities. Division officials Eileen Harrington (associate director) and Judith Nixon (senior attorney and co-author of the FTC's Telemarketing Sales Rule) are among our government's elite. They recognize that the great majority of telemarketers are decent and law-abiding members of the business community, and they are genuinely respectful and supportive of our industry's role in the nation's economy. They are also aware that a few frauds can do a great deal of damage to our industry's reputation.

We should count ourselves fortunate that the FTC has taken an interest in eliminating fraud. In a sense, they have delivered our industry a wake-up call: our reputation is at risk. We do not have to accept this risk. Instead, let's work with the FTC to make it more difficult for criminals to use the phone to defraud citizens. and leave the (false) impression that such acts are somehow characteristic of the telemarketing industry.

How To Detect Frauds

Most of us are familiar with the usual scams. We may find it hard to believe that others would fall prey to them. But many do, particularly the elderly. Furthermore, many younger people are fooled as well, taken in by phony investment schemes and real estate "opportunities."

To make life more difficult for frauds, I suggest we develop and promulgate fraud detection guidelines. In future issues, we will contribute to this process by offering our own guidelines for fraud control. In the meantime, I would like to point out that any list of guidelines should make this point up front: If someone makes you an offer that sounds too good to be true, you can safely assume that it is. Every consumer should consider this point before even thinking of giving his or her credit card number over the phone. Consumers should know that if they have any doubts about divulging credit card information over the phone, they should hang up immediately.

How To Treat Suspected Frauds

If you suspect fraud, or are aware of unlawful practices being perpetrated over the phone, alert the authorities immediately. The sidebar accompanying this editorial lists the appropriate contacts in the offices of the Attorneys General. Contacting the authorities is the least we can do to ensure that existing antifraud statutes are enforced.

Eternal Vigilance: Every Telemarketer's Duty

We all know, from sobering experience, that legal measures sometimes make a blunt instrument in combating fraud. Consequently, telemarketing's leaders are concerned that regulations intended to curtail fraud can end up frustrating legitimate business. To make further regulation unnecessary, we should concentrate on doing what we can to make sure existing regulations are effective. Again, this is an issue of education and public awareness.

I urge all readers of Telemarketing(R) & Call Center Solutions(TM) magazine, all attendees of TCCS(TM) (Telemarketing & Call Center Solutions(TM) Conference and Expo, formerly TBT(R), Telemarketing and Business Telecommunications Conference and Expo), and all vendors serving the field to unite behind the FTC in a crusade to inform the public about acceptable telemarketing practices. The onus is on us, as telemarketing's leaders, to protect the good name of our industry.

Eileen Harrington To Address General Assembly At TCCS(TM) SPRING '96

I am pleased to announce that Eileen Harrington of the FTC will speak at TCCS(TM) SPRING '96. After I became aware of the far-reaching expertise that Eileen holds as the associate director of the Division of Marketing Practices, I personally invited her to share with us some of her ideas on the problem at hand, and what solutions the industry might apply to control and prevent fraud. She will speak immediately before the keynote presentation on Tuesday, May 21, 1996. All readers of Telemarketing(R) & Call Center Solutions(TM) are invited to join us at TCCS(TM) SPRING 96, which will be held May 20-23, 1996 at the Long Beach Convention Center, Long Beach, California.

Other Dynamic And Prestigious Speakers At TCCS(TM) SPRING '96

The upcoming event in Long Beach will include two vitally important keynote addresses:

1. Thomas O. Jones, president of Elm Street Technologies and former senior lecturer at Harvard University Graduate School of Business Administration, will speak on Creating Customer Loyalty: Your Most Critical Challenge.

2. Scott B. Ross, president of Business Operations and chief financial officer at MCI Telecommunications, will speak on Unlocking the Power of the Virtual Call Center and the Internet: The New Forum for Business.

Both of these addresses cover material that is crucial to the future success of large and small call centers. The importance of these topics, which will tell you what it takes to be on the cutting edge in advanced marketing, cannot be underestimated. For more information on the TCCS(TM) SPRING '96 program, see the insert between pages 64 and 65 in this issue or call 800-243-6002 or 203-852-6800.

I look forward to welcoming you to Long Beach on May 20, for what promises to be the finest conference and exposition our industry has ever seen. P.S.: Don't buy anything until you have visited the TCCS(TM) Exhibit Hall. Admission to the Exhibit Hall is FREE if you register by May 10, 1996.

Sincerely,

Nadji Tehrani

Publisher & Editor-in-Chief

For information and subscriptions: Call TELEMARKETING(R) 203-852-6800 or Fax to: 203-853-2845 or 203-838-4070

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