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10 States Press Crackdown On Telemarketers

October 26, 1993

WASHINGTON (AP) _ The top prosecutors in 10 states filed lawsuits or took other legal action against more than 70 telemarketers nationwide Tuesday in an attempt to crack down on fraud that costs consumers more than $100 billion a year.

″In the hands of a con artist, a phone is an assault weapon,″ said Minnesota Attorney General Hubert H. Humphrey III, president of the National Association of Attorneys General, in announcing the actions at a news conference marking National Consumers Week.

Senior citizens are often targeted because they are home when fraudulent telemarketers call, Humphrey said.

In one case, a Nevada authorities arrested registered Las Vegas telemarketer Manuel Maurice Swift on a charge of attempted theft. Swift was accused of trying to persuade a 92-year-old Kansas man who had been declared the winner of $100,000 to send $1,900 by Western Union in advance to collect his prize.

Swift, who was arrested Friday and released on his own recognizance Monday, was not listed in the phone book and could not be reached for comment.

″Nobody is giving anything away these days,″ Humphrey said, cautioning that if it’s really a free ″prize,″ it shouldn’t cost a dime. ″If it sounds like a steal, it probably is, right out of your own pocket.″

An example of telemarketing creativity came from Maine.

A company there called Consumer Advocate Group offered, for $250, to help consumers recover money lost to fraudulent telemarketers but provided no services, according to Wisconsin Attorney General James Doyle, who sued the Maine firm plus four other telemarketers.

Officials of the Maine company did not immediately respond to a phone call seeking comment.

Patricia Faley, acting director of the U.S. Office of Consumer Affairs, said the estimate of at least $100 billion per year in all kinds of fraud, including telemarketing, is low. But it means that ″the average American consumer is losing $400 a year to fraud, and maybe a lot more.″

The states whose attorneys general announced actions Tuesday were Arizona, Florida, Iowa, Minnesota, Nevada, Ohio, Oklahoma, Oregon, Washington and Wisconsin. However, the targeted companies and individuals were from all over, including California, Colorado, Connecticut, Maine, New Jersey, New York, Pennsylvania and Texas.

Telemarketing has also gone global, said Justice Department official Laurence Urgenson. He estimated that Canadian-based schemes take about $60 million annually from U.S. consumers.

Legal agreements with Canada allow for mutual assistance in investigations, but improvments are needed to help people recover their losses, where possible.

In other action:

-Humphrey accused two Nevada telemarketers in lawsuits of making bogus prize offers including Cadillacs if consumers bought $800 worth of vitamins or $1,500 worth of skin care products.

The most common prize, when delivered, was a cheap Norman Rockwell lithograph, he said. Two similar telemarketers in Arizona were sued by that state’s attorney general, Grant Woods.

-Florida Attorney General Robert A. Butterworth filed a civil suit against a Florida man for running two telemarketing companies that promised jobs overseas in exchange for a fee paid in advance. The companies had no contacts with employers and never placed anyone in a job, the suit contends.

-The Ohio, Oregon and Washington attorneys general filed lawsuits against 13 telemarketers who, like the arrested Las Vegas telemarketer, allegedly required a fee from people informed that they had won or were eligible to receive valuable prizes. In most cases where prizes were sent, the fee was worth more.

-The Iowa and Oklahoma attorneys general issued 45 civil investigative demands to prize, gift, sweepstakes, award and telemarketing companies. Such demands let authorities get documents and testimony on fraud allegations.

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