Preventing Mass Marketing Fraud

Mass marketing frauds target individuals of all ages and walks of life. Victims are lured with false promises of significant cash prizes, goods, services, or good works in exchange for up-front fees, taxes, or donations. Mass marketing frauds victimize millions of Americans each year and generate losses in the hundreds of millions of dollars.

We’ve highlighted the various fraud schemes, provided information on how to avoid becoming a victim, and included contact information on reporting agencies so you can protect yourself, your employees and your business from mass marketing fraud.

What Are Common Mass Marketing Scams

The top mass marketing schemes include:

Foreign lotteries & sweepstakes. Foreign lottery fraud is currently one of the most prevalent consumer frauds. Victims are told that they have won a lottery or sweepstakes in a foreign drawing. To collect the winnings, victims are told they must first pay various taxes and fees.

Nigerian letter scams. Victims are asked to help illegally transfer funds out of Nigeria in return for a share of the money. Perpetrators ask victims for their bank account information under the pretext that it is needed to complete the transaction. Victims may also be asked to pay money up-front to help defray the cost of taxes, legal fees, or bribes.

Credit & loan scams. Victims with poor or non-existent credit are offered credit cards/loans—for an advance fee. “Credit repair services” may offer to help those with poor credit improve their credit ratings—for an advance fee.

Overpayment scams. The victim is advertising an item for sale. A “buyer” sends the seller a counterfeit check or money order for more than the cost of the item. The victim is asked to return the difference between the payment and the cost of the item. When the payment turns out to be counterfeit, the victim is held responsible by his or her financial institution.

Charity scams. Con artists solicit donations in the name of non-existent or fraudulent charities. Most charity scams occur during the holidays or in the aftermath of disasters when philanthropy is most common.

How to Avoid Becoming a Victim

The main characteristics of mass marketing fraud include the following:

• Offers appear “too good to be true.”
• Payments for goods or services are required in advance.
• Personal information is requested over the telephone.
• Offers are unsolicited.
• Representatives use high-pressure sales techniques, claiming that immediate action is required.

What Consumers Can Do

• Do not believe everything you are told. If something sounds too good to be true, it probably is.
• Avoid being taken by high-pressure sales. Take the time to research offers before deciding whether or not to participate.
• Do not do business with anyone who solicits money in advance of awarding a prize.
• Inspect all representatives’ credentials carefully.
• Get all offers in writing and keep a copy for your records.
• Do not deposit checks sent by companies that claim the check is being sent to pay fees or taxes on lottery winnings.

Report Scams When They Occur

• Do not be embarrassed. These frauds are perpetrated by sophisticated con artists.
• File a claim with the appropriate reporting agency listed below.
• Report the crime promptly – you will have a better chance of getting your money back and bringing the perpetrators to justice when you file a complaint as soon as possible after the crime.

Where to Report Mass Marketing Fraud

The following is a list of information sources and reporting agencies for mass marketing frauds:

Federal Trade Commission (FTC): Victims are strongly encouraged to report frauds to the FTC (Opens in a new tab), which maintains a comprehensive scam database, called Consumer Sentinel.

Internet Crime Complaint Center (IC3): For internet-based scams, individuals are encouraged to report incidents directly to IC3 (Opens in a new tab).

Internal Revenue Service (IRS):To avoid charity frauds, individuals should research organizations on the IRS website (Opens in a new tab).

Better Business Bureau, Wise Giving Alliance: The Wise Giving Alliance (Opens in a new tab) provides information on charities that have been the subject of donor inquiries and also offers tips about charitable giving.

Federal Bureau of Investigation (FBI): Businesses are encouraged to report Mass Marketing Frauds to their local FBI offices (Opens in a new tab).

Head to our loss control and risk management page to learn more ways to protect your business.