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Belch: Advertising and
Promotion, Sixth Edition
V. Developing the
Integrated Marketing
Communications Program
ETHICAL PERSPECTIVE 14-2
Scam Artists Know No Boundaries
As direct-marketing scam artists get more sophisticated,
they have expanded their efforts beyond the
United States and into foreign countries. Apparently—
like legitimate marketers—they have discovered market
potential in these new markets.
One such market is Canada. Driven by the strength
of the dollar (one U.S. dollar is worth about one-and-ahalf
Canadian dollars), Canada’s lenient stance on
white-collar crime, and the problems with getting lawbreakers
back into the United States to face trial,
Canada has become a virtual haven for telemarketing
scam artists preying on Canadian and U.S. citizens as
well as the elderly in England and Australia. With all
due respect to both Canadian and U.S. officials, it is
not as though the scammers operate at will. Both countries
have increased their efforts against scammers,
but the sophistication of the telemarketing rings
make it hard to catch them.
The rings use a maze of business names, bank
accounts, and mail drops. They are highly mobile, moving
monthly or even weekly, and know how to throw
authorities off track. Their primary target audiences
are the elderly, the financially desperate, persons seeking
a lucrative investment, and/or those just hoping to
get rich quick.
One such scheme is the sweepstakes-winner scam.
Working from lists, the telemarketers phone and tell
the unwary receivers that they may already have won a
lottery or sweepstakes but they must pay a fee ranging
from a few hundred dollars to thousands of dollars
to cover taxes or currency exchanges to collect. Once
they pay, they are told they may have won an even
larger prize, and more fees are collected. Some scammers
pose as FBI or IRS agents. Others prey on the
emotions of victims—particularly those with children
in poor physical or financial health. All are good at
what they do.
Another scam artist very good at what she does—or
shall we say, did—is Miss Cleo. The flamboyant
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14. Direct Marketing © The McGraw−Hill
Companies, 2003
Caribbean clairvoyant scammed consumers out of millions
of dollars with false promises of free psychic
readings. Miss Cleo was actually a fictitious name
established by two Florida firms, Psychic Readers Network,
Inc., and Access Resources Services, Inc., that
used TV ads, infomercials, and direct mailings to
lure in customers. The ads featured the Caribbeanaccented
voice of a woman saying “Call me now” and
promised free psychic readings if people called an 800
number. Once they did, they were referred to a 900
number for a “free” three-minute reading. After the
three minutes the customer would be billed at $4.99 a
minute, and operators did everything they could to get
them past the free time—including putting them on
hold! Over 6 million people called the hot line, averaging
$60 per call, for a total of $360 million before the
scam was busted. A settlement was awarded in December
2002.
A London-based company was forced by the FTC to
suspend operations for selling false domain names
ending in “.USA”—the names were useless. Shortly after
the September 11, 2001, terrorist attacks, the promotion
used e-mails to encourage consumers to be patriotic
and register for USA domain names. The FTC believes
the company made over $1 million from the scams.
While these are just some of the many scams being
run, no one knows how many more are operating on a
daily basis or how many people are being cheated. The
only things that are known is that the scammers are a
very tiny minority of the direct marketers out there
and that legitimate telemarketers are as unhappy
about the scams as are consumers and the authorities.
After all, they are getting scammed too.
Sources: Myron Levin, “Canada Scam Artists Have a Global Reach,”
Los Angeles Times, July 7, 2002, p. C4; Myron Levin, “Psychic Hotline
Accused of Caller Scam,” Los Angeles Times, Feb. 1, 2002, p. C1;
Christopher Saunders, “Courts Silence ‘.USA’ Marketer,” Advertising
Report, Mar. 12, 2002, pp. 1–2.