[Congressional Record Volume 143, Number 40 (Tuesday, April 8, 1997)]
[Senate]
[Page S2862]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   TELEMARKETING FRAUD PREVENTION ACT

 Mr. KYL. Mr. President, I rise to comment on the Telemarketing 
Fraud Prevention Act of 1997. I am pleased to sponsor this bill, which 
directs the U.S. Sentencing Commission to increase penalties for those 
who purposefully defraud vulnerable members of our society and those 
who cross international borders to evade prosecution. I thank Senator 
Reid for his sponsorship of this bill, and his leadership in combating 
telemarketing fraud.
  Current penalties for this crime are not tough enough to deter the 
problem and they leave the victims without restitution. Penalties for 
bank, wire, radio, and television fraud are at least two-thirds higher 
than the penalty for telemarketing fraud. Too often, telemarketing 
fraud felons receive a sentence of fewer than 5 years in prison. The 
toughest penalty to date is 10 years. These are small penalties 
considering that many telemarketing fraud criminals have stolen the 
life savings of retired senior citizens.
  Mr. President, thousands of Americans lose billions of dollars a year 
from telemarketing fraud. According to Maryland Attorney General J. 
Joseph Curran, Jr., telemarketing fraud is probably the fastest growing 
illegal activity in this country. An Associated Press story reported 
that top prosecutors in Arizona and 9 other States filed lawsuits or 
took other legal action against more than 70 telemarketers nationwide 2 
years ago in an attempt to crack down on fraud that costs consumers 
more than $40 billion a year.
  Senior citizens appear to be the most vulnerable to chicanery of this 
kind. Fred Schulte, an investigating editor for the Fort Lauderdale 
Sun-Sentinel and an expert on telemarketing fraud, has pointed out that 
senior citizens are often too polite or too lonely not to listen to the 
voice on the other end of the line. The risk of being taken advantage 
of, I believe, increases with age. According to Attorney General Reno, 
it is not uncommon for senior citizens to receive as many as five or 
more high-pressure phone calls a day.
  As one telemarketing con man who has worked all over the country put 
it: ``people are so lonely, so tired of life, they can't wait for the 
phone to ring. It's worth the $300 to $400 to them to think that they 
got a friend. That's what you play on.'' Mr. President, malicious 
criminal activity like this must be punished appropriately.
  These criminals prey on the vulnerable of our society. In one case, 
Nevada authorities arrested a Las Vegas telemarketer on a charge of 
attempted theft. The telemarketer was accused of trying to persuade a 
92-year-old Kansas man who had been fraudulently declared the winner of 
$100,000 to send $1,900 by Western Union in advance to collect his 
prize. Another example: a Maine company showed real telemarketing 
creativity. For $250, the so-called Consumer Advocate Group offered to 
help consumers recover money lost to fraudulent telemarketers--but it 
provided no services, according to Wisconsin Attorney General James 
Doyle, who sued the Maine firm plus four other telemarketers.
  Mr. President, the Association of Attorneys General has supported 
similar consumer protection efforts in the past. As Minnesota Attorney 
General Hubert H. Humphrey III put it last year: ``In the hands of a 
con artist, a phone is an assault weapon.''

  I would, at this time, like to highlight one specific provision of 
the bill. Section 2 requires that an offender forfeit any real or 
personal property derived from proceeds obtained as a result of the 
offense. The proceeds shall be used, as determined by the Attorney 
General, for the national information hotline established under the 
Violent Crime Control and Law Enforcement Act of 1994. The proceeds of 
the fraud will be returned to help the victims. I believe that it is 
important to pay attention to victims' rights in this area.
  Last year, more than 400 individuals were arrested by law-enforcement 
officials working on Operation Senior Sentinel. Retired law-enforcement 
officers and volunteers, recruited by AARP, went undercover to record 
sales pitches from dishonest telemarketers. Volunteers from the 2-year-
long Operation Senior Sentinel discovered various telemarketing 
schemes. Some people were victimized by phony charities or investment 
schemes. Others were taken in by so-called premium promotions in which 
people were guaranteed one of four or five valuable prizes but were 
induced to buy an overpriced product in exchange for a cheap prize. One 
of the most vicious scams preyed on those who had already lost money. 
Some telemarketers charged a substantial fee to recover money for those 
who had been victimized previously--and proceeded to renege on the 
promised assistance. By the time the dust settled, it took the Justice 
Department, the FBI, the FTC, a dozen U.S. attorneys and State 
attorneys general, the Postal Service, the IRS, and the Secret Service 
to arrest over 400 telemarketers in five States, including my home 
State of Arizona.
  Clearly telemarketing fraud is on the rise. It is estimated that 8 
out of 10 households are targets for telemarketing scams that bilk us 
of up to $40 billion annually. The telemarketing industry rakes in more 
than $600 billion in annual sales. There are many seniors in my State 
and across the country who must be protected against this type of 
fraudulent activity. That is why I have sponsored this bill. The House 
of Representatives passed a bill similar to mine in the 104th Congress, 
which has been reintroduced during this Congress by Representative 
Goodlatte. It already has 47 cosponsors and the support of the 60 Plus 
Association and the National Consumers League. I urge my colleagues to 
join us and cosponsor the Telemarketing Fraud Prevention Act.

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