WASHINGTON -- To avoid being ripped off by dishonest telemarketers, here's advice from an expert: inmate Thomas Newberry, now serving time in prison for wire and mail fraud.
First, Newberry said, don't give your credit card number (or worse still, your debit-card number, which allows withdrawals from a checking account) to a telephone salesperson making unsolicited calls.
And second, if you do -- and if you're unhappy with the results -- it's essential that you complain. Complain to the company. To the police. To the state attorney general's office. Curiously, almost nobody does, Newberry said.
"Out of every 100 people we sold, maybe one would ask for their money back. I don't know why," said Newberry, serving a 10-month sentence in Oregon. "Some, I even sent their money back, if they said they were going to call the attorney general or the postal inspector's office."
Newberry gave his lesson at a House of Representatives small-business subcommittee, detailing how various scams worked so that Congress can better try to control them.
Banks, credit card companies and law enforcement officials all testified that phone fraud is a large problem that is getting more sophisticated and tougher to control. The newest trend is the use of checking account debit cards, which dishonest phone marketers can use to empty personal and business accounts.
At the moment, the crooks have almost -- but not quite -- figured out how to tap into personal checking accounts virtually undetected, said Carole Byrum, an investigator for U.S. Bancorp.
Representative Ron Wyden, D-Ore., detailed another state-of-the-art scam. It relies on unsuspecting consumers giving out their checking account number, which the crook then puts on a magnetically encoded bank deposit draft. The draft is then routed between banks and accounts. Bank and credit card officials said the most common phone frauds involve low-cost vacation packages, water purifiers, health and beauty aids, vitamins and promotional pens. In some cases, consumers are lured into buying products at hugely inflated prices by promises of various "prizes" that may not exist.