By Dennis Sean O’Brien
WASHINGTON – Maryland and 19 other states have joined with the Federal Trade Commission to pull the plug on high-tech telemarketing scams that have been ripping off unwary investors, the director of the FTC’s consumer protection branch announced Tuesday.
Launched late last summer, the ongoing “Project Roadblock” targets infomercial and telemarketing investment swindles that prey on people hoping to make money on new technology, said Jodie Bernstein, the FTC consumer director.
The operation has resulted in 85 civil and criminal cases so far.
Investment losses in those cases ranged from $1,000 to $400,000, said Dee Harris, president of the North American Securities Administrators Association, which took part in the investigation.
Maryland Assistant Attorney General Webster Brenner said the state has filed civil misrepresentation charges against one firm on behalf of six investors.
Brenner said he hopes the campaign will emphasize to consumers, “just don’t fall for it in the first place.”
Berstein said the scams are just the newest in a long line of high-tech frauds, involving everything from cellular phone system licenses to interactive video licenses.
“These are the same artists that were selling aluminum siding,” she said.
The new generation of frauds lure people into investing in pager licenses from the Federal Communications Commission and in “information provider” partnerships that are supposed to make a bundle by processing calls to 900 numbers.
But investors aren’t told the complete costs of setting up the 900-number operations, Harris said. So their initial investment yields nothing.
Often callers will tell prospects they can buy FCC paging licenses and then sell them to large firms like AT&T and triple their investments. But the payoff rarely happens, Harris said.
Another paging licensing scam plays off of a legal way to use the license, called “shared frequencies.”
Shared frequencies allow two or more people to use the same pager frequency. Scam artists sell the same frequency over and over and over, Harris said.
Brenner said often swindlers will sell or exchange phone number lists to other schemers in what investigators call “recovery-room” scams.
In that scam, Brenner said, previous victims get unsolicited calls from telemarketers who say they can help get the lost money back – for a fee, of course.
One invalid elderly woman in Alexandria, Va., lost nearly $100,000 – the life savings she earned from babysitting over four decades, Harris said.
Sometimes, once deals are cinched, the con artists will even send a courier to the investor’s house to pick up the cash. That’s a sure sign the money’s gone for good, Harris said.
Reaping profits from high-tech investments is possible, Bernstein said. But, she said, investing is risky.
“The truth is that these investments, if properly presented, are suitable only for sophisticated high-rollers who can afford to lose every penny that they put into them,” Bernstein said.
“If a company calls you touting the profits and minimizing the risks of investing in telecommunications systems and licenses, hang up the phone,” she said.
The best way for consumers to protect themselves, Harris said, is to call the state securities division and ask questions before investing. In Maryland, call 410-576-6360.
The nationwide hotline number for Project Roadblock is 1- 800-876-7060.
The total number of victims is inestimable, Harris said. But, he said, such high-tech scams accounted for more than a quarter of all investment losses reported to a federal-state database from March to October 1995. “The sad thing is, the people who can least afford it are losing everything. And there are myriads of them,” Harris said. -30-