Telemarketing Fraud and Endorsement

¶ … telemarketing fraud so rampant?

The phone is increasingly being used "as a marketing tool and a vehicle for initial customer contact" (Michela, 1994, p. 556). Businesses make use of telemarketing applications in conducting political polling and market research, prospecting for new customers, making follow-ups on existing customers, advertising, raising charity funds, to mention but a few. Fraudsters take advantage of the increasing use of the phone and are aided by the belief that with almost every business conducting its activities through telemarketing; consumers would be in no position to differentiate legal from illegitimate causes. Moreover, telemarketing fraud is difficult to prevent and prosecute (NW3C, 2008).

Why is telemarketing fraud so difficult to prevent or prosecute?

The rip and tear operations of telemarketing fraudsters make their prosecution difficult (NW3C, 2008). Fraudulent telemarketers do not usually have definite offices, and mainly carry out their operations from mobile 'offices,' including hotel rooms (NW3C, 2008). Furthermore, the use of "rented mailboxes, disposable cell phones, and prepaid calling cards" in contacting their prospects makes their arrest and prosecution even more difficult (NW3C, 2008, p. 1).

What characteristics of the elderly make them attractive targets for perpetrators of phone fraud?

The elderly are thought to have significant assets in the form of savings and credit. Moreover, most of them own their own homes, and in most circumstances, live alone. Fraudsters capitalize on the fact that there may be no one around to recognize their illegitimate acts. Additionally, senior citizens are rather reluctant to report incidences of fraud, perhaps due to unawareness, intimidation by the fraudster, humiliation, or shame (Callaway & Becker, 2011). At the same time, since a senior's wealth is usually protected by a trusted family member or caregiver, they may be "reluctant to come forward for fear of being abandoned or creating family strife" (Callaway & Becker, 2011, p. 13). A third factor that makes the elderly an attractive target for phone fraud is the predictability of their schedules (Callaway & Becker, 2011). They often have rather predictable patterns; going to the store at the same time every other day, making their ATM withdrawals in a rather predictive fashion, and even storing their personal information, ATM cards, and wallets at the same place (Callaway & Becker, 2011).

What characteristics of large religious organizations make investigation difficult?

A number of factors make the investigation of religious organizations with questionable dealings difficult. To begin with, most of them are identified with legitimate, established religious organizations (NW3C, 2008). The Opus Dei Organization operating under the Catholic Church offers a perfect example. At the same time, most of these questionable organizations are led or driven by powerful forces that derail the process of investigation (NW3C, 2008). Thirdly, most of these organizations cover their tracks by fixing their credit histories (NW3C, 2008).

How can law enforcement work around these issues?

Law enforcement can strengthen their grounds for investigation by implementing a number of good practices including; i) maintaining a registry of questionable activities with the aim of analyzing trends; ii) developing cross-functional teams and automated cross-check processes; iii) continually exchanging good practices and information with tax authorities, and iv) inputting an 'abuse of charity' indicator on organizations with questionable dealings (NW3C, 2008).

Part Two

How much responsibility should a celebrity endorser bear if the product they promote turns out to be fraudulent, unsafe, or harmful in some way?

A celebrity endorser should bear a certain level of legal liability if they promote a product that turns out to be harmful, unsafe, or fraudulent. However, the actual level of responsibility is dependent on whether or not the celebrity was aware of the nature of the product. The responsibility borne should obviously be lower in cases where the celebrity is, for instance, tricked by the manufacturer. It would be difficult for parties other than a product's manufacture (in this case the media, the advertising company, and the celebrity) to fully understand the nature of the products they advertise.