TERMS OF THE TRADE
AD SPECS - An abbreviation of advertising specialties.
These consist of promotional items, including pens, key chains,
magnetic business cards, baseball caps, etc. They are mainly sold
to small business customers. A telemarketer will often print the
customer's business name, address and telephone number, or special
message such as an anti-drug slogan, on the promotional ad spec
item.
ADVANCE FEE FRAUD - The object is generally to
trick prospective victims into parting with funds by persuading
them that they will receive a substantial benefit in return for
providing some modest payment in advance.
The characteristics of this type of fraudulent scheme often entail
enlisting the services of the prospective victim to assist in an
activity of questionable legality, thus providing some assurance
that the victim would be unlikely to report the matter to the police,
once defrauded.
The victim would, rightly, be apprehensive that he or she had
aided and abetted some criminal activity and would also be reluctant
to make public the fact of his or her gullibility, particularly
if adverse media coverage was a possibility.
Thus, the offender is able to carry out the scheme repeatedly,
sometimes in respect of the same victim, leaving the police faced
with difficulties in finding witnesses and securing evidence.
BINARY COMPENSATION PROGRAM - A promotional term
used to describe a pyramid scheme.
BOILER ROOM - A term commonly used to describe
an office setting involving high-pressure sales tactics, the use
of multiple phone lines, and a sparcely appointed office (making
fast, fly-by-night moves to a new location easy and efficient).
The origin of the term refers to a time when telemarketers would
acquire cheap office space, often in the basements of buildings,
which was typically hot, uncomfortable, and noisy.
BUSINESS OPPORTUNITY FRANCHISE SCAMS - Attempts
to sell businesses or franchises to entrepreneurs. Income figures
are usually grossly exaggerated.
CATALOG REBUTTAL - A term referring to a sales
technique that many telemarketers use. Telemarketers will instruct
customers to mail in a photograph of themselves, sometimes with
their award or bonus. Customers are told that this photograph will
appear in a future promotional catalog that the company will publish.
This rebuttal tends to lend legitimacy to the promotion even though
the catalog is never actually published.
CHARGEBACKS - A customer's cancellation of a
credit card charge that he or she had made for an original purchase.
The customer subsequently receives a refund on his/her VISA or
MasterCard and the telemarketer's merchant account is charged with
an offsetting chargeback for the amount of the sale.
CHARITY ROOM - Telefunding where a very small
portion of the funds raised, usually less than 10%, if any, goes
to legitimate charities.
CHECK DEBIT (SIGHT DRAFT)- A method of payment
in which the telemarketer is able to receive funds directly from
the customer's checking account via electronic transfer. This eliminates
the actual drafting of a check as well as the float period for
the instrument to clear.
CLOSER - A telemarketing sales representative
(rep) who specializes in finalizing or closing the sale to a customer.
Closers are usually experienced telemarketers who take over the
sale from the "fronter" and generally command a higher
commission per sale.
CLOSING RATE - The actual percentage of customers
who purchase the product out of all those who are contacted. Typical
closing rates fall between 3 and 10 percent, depending on the experience
of the sales reps and the sales tactics used.
COLD CALLING - Unsolicited outgoing telephone
calls to potential customers. Potential customers' names and telephone
numbers are usually purchased by boiler room owners in the form
of "lead lists" (also called "mooch lists" or "sucker
lists" by criminal telemarketers).
CONTROL NUMBER - Also called a claim number or
activator number, this is the number listed on a mailer or promotional
card sent out to a prospective customer. Sales reps use this number
to verify that the customer has been pre-selected to receive an
award or bonus. Most telemarketers represent that this is a unique
customer number which has been registered in their computer system,
when, in fact, the number acts merely as a state or mail batch
identifier.
CUSTOMER SERVICE - A separate division in most
telemarketing companies whose sole responsibility is to handle
customer complaints.
DEMAND DRAFTS - Telemarketing frauds are often
based on the creation of "demand drafts," rather than
checks. A demand draft resembles a personal check but carries no
signature. In place of a signature, it has a notice that the account
holder has given permission to have money withdrawn from his or
her checking account to pay bills for goods and services.
DROPPING MAIL - The process of mailing large
volumes of promotional materials (award notification letters or
cards), usually several times per week, to entice potential customers
to call in to the boiler room. This practice is used as part of
an "inbound" telemarketing system.
EMPLOYMENT SCHEME - A scheme that preys on persons'
desperation for work. They advertise that they can arrange to obtain
jobs for prospective clients for an up-front fee.
FRONTER - Generally, an inexperienced sales rep
who handles the first portion of a customer sale. The fronter will
obtain basic customer background information and provide the customer
with an outline of the promotion before turning the telephone over
to a closer to finalize the deal.
GIMMIE GIFT - The award or bonus that all customers
receive. Even though sales reps advise customers that they may
receive one of several valuable prizes, if they receive any prize
at all, each customer actually receives the same gimmie gift, usually
a prize of very low value. Typical gifts include a travel certificate
or a piece of cheap jewelry.
HARD GIFT - An extra or throw-in gift given in
addition to the gimmie gift in order to entice the customer to
make a purchase. Like the gimmie gift, it usually has a very low
cost, although it is represented to be quite valuable. Typical
hard gifts include a diamond pendant or designer watch.
INBOUND SYSTEM - Boiler rooms which receive incoming
customer calls through the use of mailers, newspaper advertising,
or automatic dialing systems.
LAYDOWN - An easy sale. A customer who is so
excited about the promotion that he or she becomes an easy target
for the sales rep.
LEAD COSTS - The costs associated with obtaining
and contacting new customers. These costs include lead lists, telephone
bills, advertising expenses, postage, and the costs associated
with distributing a mailer.
LEAD LIST - A list of potential customers which
a telemarketer purchases from a lead specialist. Also called "mooch
list" or "sucker list." This list of names and telephone
numbers represents potential customers who are most likely to be
interested in the promotion based on past buying tendencies, income
bracket, etc. Lead lists are often sold at a cost of between $3
and $5 per name.
LOTTERY SCHEMES - A type of telemarketing scheme.
Victims are told they are entered into a foolproof method to win
state or foreign lotteries. Sales of foreign lotteries are inherently
illegal. The scheme generally purchases few, if any, lottery tickets,
and overhead costs and commission costs take a large proportion
of the funds.
MAILER - The actual letter, card, or award notification
that the telemarketer mails to potential customers in order to
entice them to call in for more information. Most fraudulent telemarketers
that use an inbound system use such mailers.
MERCHANT ACCOUNT - A VISA and/or MasterCard operating
account that telemarketers establish at legitimate financial institutions
so that customers can charge purchases on their own credit cards.
A merchant account is actually a clearing account which the telemarketer
maintains at a bank. Customer charges are credited to the account
and funds are subsequently transferred to a separate corporate
bank account, usually the next day. In general, telemarketers have
an extremely difficult time obtaining merchant accounts due to
the high volume of charge-backs and the nature of the industry.
MISREPRESENTATIONS (MISREPS) - Untrue or deceptive
statements that sales reps make to entice a potential customer
to buy or send money. Misreps may include false statements concerning
award, bonus, or product values, product or award quality, facts
concerning the telemarketing company, odds of winning a specific
award, profit potential of an investment, organizations on whose
behalf monies are being solicited, etc.
MOOCH - A term that telemarketers use to describe
a victim, particularly a naive customer who is easily influenced
and manipulated by the sales rep when closing the sale.
MYSTERY PITCH - A presentation in which a salesperson
solicits money by convincing victims that they have been selected
to receive a valuable prize but are prohibited "by law" from
disclosing the prize. In fact, no federal or state law prohibits
truthful disclosures of prizes or awards.
OMISSIONS - Significant facts relating to a telemarketing
promotion which the sales rep withholds from the customer. Omissions
may include hidden costs or restrictions relating to the promotion
of which the customer is unaware.
ONE IN FOUR (FIVE OR SIX) - A common telemarketing
scheme, in which potential customers are notified that they are
guaranteed to receive one of the listed awards currently being
given away. The listed awards, which often are listed in order
of ascending or descending value, typically include items of substantial
value, such as an automobile or cashier's checks. Every one in
four, however, includes at least one "gimmie gift," such
as "limited-edition artwork" or "his-and-hers diamond
watches," that appears expensive but has a value far less
than the amount of money that the telemarketer seeks to obtain
from the victim. Variations on this theme include a "two in
six" or allowing the customer to delete one of the prizes
from those listed. In these latter schemes, telemarketers carefully
include multiple "gimmie gifts," so that even after the
victim eliminates two gifts the telemarketer can still give the
victim a "gimmie gift" rather than a truly valuable prize.
OUTBOUND SYSTEM - Unsolicited customer contacts
generated exclusively through cold calling. Telemarketers purchase
lead lists and sales reps call these leads without invitation.
Opposite of an inbound system and generally a more difficult sale.
PRE-QUALIFICATION - Qualifying customers in advance
of the lead or sale, in other words, verifying that the potential
customer can afford the promotion and has ready access to funds
before spending a considerable amount of time trying to make the
sale.
PRIZE ROOM - A company whose pitch is to convince
victims that they have won a valuable prize but first must send
a fee or purchase some product to qualify for the prize.
PRODUCT ROOM - A company whose pitch offers to
sell a product such as jewelry or travel, or provide a service
such as time share resales. The product is inevitably never delivered,
has substantial added costs, or is worth far less than stated in
the telemarketing pitch.
PROMOTION - The total package being offered to
the customer which usually includes a product, bonus, or award
and any other incentives used to help close the sale. This package
is usually referred to as a promotion, a limited offering, contest,
or lottery being provided to "select" consumers.
REBUTTAL - Standard responses that sales reps
use to overcome typical customer objections. Rebuttals are often
pre-printed and readily available to the sales rep in order to
help overcome customer hesitancy to purchase.
RECOVERY ROOM - Boiler room or rip-and-tear operation
which tells victims they can obtain refunds from companies which
previously defrauded victims. Recovery rooms charge an up-front
fee, and frequently make false representations that they are affiliated
with a law enforcement agency, a court, or a law firm.
RELOAD (LOAD) - An attempt to resell a customer
who has already purchased from a telemarketing company. Customers
who have made a purchase in a previous promotion are often re-contacted
and promised the chance of winning more valuable awards in exchange
for a subsequent purchase. Customers can be reloaded five, six
or more times, each time being promised grander awards with greater
chances of winning.
RELOAD (LOAD) LIST - A lead list of customers
who have previously made purchases in one or more telemarketing
promotions. Telemarketers may keep these leads for themselves or
sell them to other boiler rooms.
RIP AND TEAR - Where the telemarketer makes calls
from a motel room, apartment or phone booth and induces a victim
to send money, generally through a wire service or to a mail drop,
by promising the victim that he or she will receive a large cash
prize. They collect as much money as possible in a short period
of time, before leaving town or changing locations. Frequently,
rip-and-tear operators use aliases and rent mail boxes, known as
mail drops, to help them avoid detection.
SALES PITCH - The presentation (typically written)
that sales reps use to help convey the nature of the promotion.
This "pitch" lists all the key selling points which management
deems necessary to complete the sale. With experience, sales reps
tend to develop their own unique pitch or selling style which works
best for them.
SEED PITCH - The pitch that an automatic dialing
system uses when generating leads. The seed pitch is replayed continuously
over the telephone in an attempt to solicit potential customers.
SIGHT DRAFT (CHECK DEBIT) - A method of payment
that enables the telemarketer to receive funds directly from the
customer's checking account via electronic transfer. This eliminates
the actual drafting of a check as well as the float period for
the instrument to clear.
TAKEOVER (TO) - Similar to a closer. One sales
rep may take over for another in order to try to close the sale.
A sales rep may ask for a TO in order to put a fresh voice on the
phone who can try a different tactic to sell the customer.
VERIFICATION - "Confirmation" of a
customer order. Either during the telemarketer's sales call or
shortly thereafter, an employee of the telemarketing operation
will contact the customer and review the information that the sales
rep provided. While the verifier purports merely to verify the
details of the transaction, he or she may also introduce new false
or misleading statements into the conversation to further the sale,
or may ask leading questions (such as "The salesman didn't
promise you anything, did he?") with the object of tape-recording
the victim's answers. This allows the scheme, in the event that
the victim or a friend or relative later contacts the operation
to complain about the transaction, to play the tape back to the
victim.
VERIFICATION RATE - The percentage of customers
who continue with the purchase upon "verification." Depending
on the product, promotion, and the experience of the verifier,
telemarketing verification rates may vary between 60 and 95 percent.
VICTIM VENUE - Cases in which prosecution takes
place where the victim resides rather than where the fraudulent
telemarketer is doing business.
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