According to a newly released survey by the Federal Trade Commission, more then 25 million adults were victims of fraud in 2011. Most bought fraudulent items through the Internet using email, social media and auctions sites. But telephone scams came in a close second. Of course, there are ringtone scams that hit your credit card with recurring fees, the bogus-lottery scams, the fake-check scams and the Nigerian 419 scam. But, there's also Rachel.
Rachel usually says something along these lines: "Hello. This is Rachel at cardholder services calling in reference to your current credit card account. There are no problems currently with your account. It is urgent that you contact us concerning your eligibility for lowering your interest rate. Your eligibility expires shortly so please consider this your final notice. Please press No. 1 on your phone now to speak with a live operator and lower your interest rate. Or press No. 2 to discontinue further notices. Thank you."
So who's Rachel? And what does she want?
"These are robocalls. In other words, you pick up the phone and you don't hear a human, you hear a prerecorded message. Usually they're claiming that they can reduce your credit card interest rate substantially and because of that you'll be saving thousands of dollars. Advances in technology have also made it easy for them to do what's called 'spoof' the caller I.D. information that the consumer sees on their telephone. So it might say the name of your bank or it might say cardholder services and trick consumers into thinking that they are talking about their own accounts when really that is not the case," says Kati Daffan, a staff attorney in the Federal Trade Commission's Division of Marketing Practices.
If you manage to click No. 1 and speak with a live human, he or she will try and see if you are eligible for the scam. If you meet certain criteria, you will forwarded to the next person in the chain, which is someone who will make charges to your credit card and claim that they will reduce your interest rates. But that doesn't happen and consumers may lose their money, get locked into a new credit card, or face recurring charges.
So why hasn't the FTC been able to stop Rachel?
"When you hear these calls you think they are coming from one particular entity or scam artist, but in fact this is a readily available recording and people have found that it's easily compressible, in other words it's very easy and cheap to send out this message to millions of people at the same time. So a lot of different fraudsters all over the world are using the exact same message and pitch," says Daffan. "The FTC has been able to stop a lot of them."
But there are still many of these types of robocallers out there.
"The vast majority of sales robocalls that people are receiving are completely illegal under the FTC telemarketing sales rule. Basically if you haven't given your expressed, written consent to receive that call from that entity, then it's an illegal call. But what we're finding is the changes in technology have made it so cheap and easy to do, that the calls are proliferating anyway. So we're taking a multi-pronged approach to that problem, which involves aggressive law enforcement," says Daffan. "And then we're also improving our targeting, making it more strategic."
Daffan says the FTC is also working with industry experts and others to try to identify technological solutions to the problem. In the meantime, what can consumers do if they receive a robocall?
"When you hear a prerecorded message and it's a sales pitch, just hang up the phone. Do not press 1, do not press 2 to get yourself removed from the list. These calls are illegal in the first place, so it's unlikely that somebody will actually be creating a list and not calling you back the second time. In fact we suspect that a lot of times they're just trying to identify which numbers are working telephone numbers and you might be added to lists and get more robocalls," says Daffan. "The one thing that consumers can do and that we really encourage is report these calls to the Federal Trade Commission at DoNotCall.gov. Those reports are really crucial to us in our targeting and law enforcement efforts."