Law Taking Effect Jan. 1 Aimed at Disconnecting Telephone Swindlers

Swindlers use the telephone to take Americans for millions of dollars each year, and most of them operate out of California.

But California law enforcement officers next year will have a new weapon that they believe will be a big help in putting them out of business.

The weapon--provided by newly enacted legislation sponsored by Atty. Gen. John Van de Kamp--is a program requiring telephone salespersons located or doing business in California to register with the attorney general’s office starting Jan. 1.

“This law is designed to help law enforcement locate, identify and eliminate the flimflam artists without unduly inconveniencing legitimate telemarketers,” Van de Kamp said.

“Phony telemarketing schemes--known as boiler rooms--bilk consumers throughout the country out of hundreds of millions of dollars each year,” he said, adding that a boiler room consists of a large number of telephones set up in a single room.

“The U.S. Postal Service estimates that at least 80% of these boiler rooms operate out of Los Angeles and Orange counties,” he said.

Lower Operating Costs

Assistant Atty. Gen. Herschel Elkins, head of the attorney general’s consumer law section, said the main reasons most boiler rooms are in California are that it is easier and cheaper to make more telephone calls to the populous Eastern United States from the Western time zone.

“People are able to call early--between 6 a.m. and 8 a.m.--from here and get the East Coast during business hours,” he said.

Elkins said the callers are known as “yackers” and they “make high-pressure sales pitches--pushing anything from precious metals, gems and minerals to office equipment, consumer goods and investments in oil, gas or mineral fields, wells or sites.

“Many of these ‘opportunities’ are sweetened by offering gifts, prizes or other inducements to entice the would-be customer into making a commitment,” he said, adding that many of the gifts are worth considerably less than described on the phone.

He said that many such illegal operators “collect funds from consumers for goods or services that are never delivered or, when they are delivered, are worth much less than they were represented to be. It is also common for consumers to receive items they never even ordered.”

Common Technique

One favorite technique of yackers, he said, is to obtain the customer’s credit card number and then bill the credit card account for more money than was authorized by the customer or for goods or services never delivered.

Elkins said current laws are “almost totally inadequate” to deal with fraudulent phone sales operations--which he described as “growing by leaps and bounds in recent years.”

He said it is difficult to prosecute such cases because the victim can’t identify who called him and sales promises were made verbally. He said the people making the calls often do not own the business and can plead innocence about its fraudulent operations.

“When calls come from out of state, you can’t get witnesses,” he said.

The new legislation, carried by Assemblyman Robert C. Frazee (R-Carlsbad), requires telemarketers located in California or who do business in the state to register each year and to post a copy of the registration prominently in every phone room.

The law also requires telephone solicitors to inform every person called of the street address from which the calls are being made and the address of the seller’s principal business location.

Other Requirements

Additional disclosures must be made if the caller is offering prizes or attempting to sell precious metals or gems, interests in oil or mineral fields or bargain-price office equipment or supplies.

Operators who fail to register or make required disclosures would be subject to fines or imprisonment under the legislation.

Exempt from the law’s provisions are people already licensed by government agencies, such as real estate and insurance agents.

With the new law, Elkins said, “we will stop many of these (fraudulent sales) companies.”

Many will not register and will be subject to criminal penalties, he said. Others who lie on the registration form can be prosecuted for perjury, he said.

What’s the best way for a consumer to avoid being fleeced by telephone swindlers?

“If somebody calls wanting to sell something, just hang up,” Elkins advised, adding that it is the “only way to protect yourself when you don’t know who you are talking to.”