Magazine fraud scheme busted by FBI, Department of Justice
The scheme involved dozens of fraudulent magazine sales companies located across the United States and Canada. The 60 people indicted are located in 14 states and two Canadian provinces.
The U.S. Department of Justice, FBI, and Postal Inspection Service collaborated to bring down the largest elder fraud scheme in the nation. That’s the good news. The bad news is that during the 20 years it operated, over 150,000 mostly elderly, vulnerable victims lost $300 million paying for fraudulent magazine subscriptions.
The scheme involved dozens of fraudulent magazine sales companies located across the United States and Canada. The 60 people indicted are located in 14 states and two Canadian provinces. Six operated from Oxford and Abbeville in Mississippi.
The Department of Justice cites two tactics defendants used to defraud people. Some employed a “renewal script” in which telemarketers falsely claimed to be calling from the consumer’s current magazine subscription company.
They also made a bogus offer to reduce the cost of a current subscription, but in reality signed victims up for new, expensive subscriptions. One consumer went from having one subscription to 12.
Other defendants used a “cancellation” script to target people who had previously fallen victim to a magazine scam and were desperate to stop the subscriptions. Telemarketers claimed to be calling from a magazine’s “cancellation department” and offered to cancel the subscriptions and pay off outstanding balances for a large lump-sum payment. They weren’t actually affiliated with any magazine and consumers didn’t really owe the money they paid.
The indictments describe the different roles of defendants:
Company Owners operated the call centers and provided lists and scripts to the Telemarketers, who were trained by Call Center Managers.
Scheme Leaders provided a variety of services, including software programs that tracked orders and other customer information. They also sent invoices and collection letters to victims.
Lead brokers furnished the call lists. They charged premium prices of as much as $15 per name because many people on the lists were elderly and susceptible to fraudulent sales tactics.
In bringing the indictments, the U.S. Attorney said, “Unfortunately, we live in a world where fraudsters are willing to take advantage of seniors, who are often trusting and polite.”
The FBI special agent in charge said the scam artists left many victims financially devastated in their retirement years.
It appears all of these defendants conducted their schemes via telemarketing, but other magazine scammers go door-to-door. Over the years, we’ve issued consumer alerts about six local companies that victimized consumers here and in other states.
A common tactic is for young people to falsely claim they’re selling subscriptions to fund a school trip or earn a scholarship. People who fall for their bogus story often never receive their magazines.
The BBB offers these tips to avoid becoming the victim of a magazine sales scam:
h Check out the company with the BBB.
• Be wary of high-pressure sales tactics that rely on emotion.
• Ask to see, or have sent to you, the terms and conditions of your subscription. Legitimate magazine companies will have and give them to you; crooks likely won’t. h It’s okay to hang up. h Pay with a credit card so you’ll have some recourse if something goes wrong.
Be wary if you can only pay by cash or check.
• Remember that the FTC’S CoolingOff Rule gives you three days to cancel a sale over $25 made in your home. But also recognize that getting a refund from a scammer will likely be impossible.
Randy Hutchinson is the president of the Better Business Bureau of the MidSouth. Reach the BBB at 800-222-8754.