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Marketing Insights for Entrepreneurs

Fat Finger Dialing & Other Phone Scams

For as long as there have been telephones, there have been telephone scams. Not all of them are alike, of course. Some operate by manipulating the person on the other line, while others exploit holes or weaknesses in the phone system itself. In both cases, the results can be frustrating – ranging from mild annoyances to outright catastrophes (in the form of sky-high phone bills.) Today, we’ll take a closer look at “fat finger dialing” and some other phone scams to look out for.

Fat Finger Dialing

As far as phone scams go, fat finger dialing falls under the “mild annoyance” category. It’s also rather simple: you (the scammer) deliberately purchase a 1-800 number that is one digit different than a popular number customers in your market already know about. Then , if all goes according to plan, you benefit from the people who mis-dial your number instead of the company they wanted to reach. Naturally, that company is a competitor of yours – so you are directly siphoning people away from them.

Think of it as a phone-based version of online URL squatting, where people buy domains confusingly similar to existing ones. According to WordSpy, fat finger dialing isn’t just a clever trick used by small-time scammers. Back in 2003, AT&T sued Sprint and other competitors for allegedly stealing their customers through fat finger schemes and tricks.

Auto-Dialers

Fat finger dialing is certainly a questionable practice, but it’s more annoying than damaging. Auto-dialers are another story. Rather than merely misleading people (who are free to hang up upon realizing their mistake) an auto-dialer can literally inflict hundreds or thousands of dollars worth of unwanted phone charges onto a person without their knowledge. Unfortunately, this scam can take many different forms and is hard to guard against in just one way.

For example, an auto-dialer can call your cell phone and display a return number which is actually a “premium rate” line that racks up huge charges. Or, it could lead to advertising messages. Auto-dialers have even been used to facilitate telemarketing fraud. The best defense? Regard any strange-looking calls with skepticism, and Google around before instinctively calling it back. Chances are, if it’s a scam, others have fallen victim before you and written about their experiences.

Telemarketer Fraud

Telemarketing fraud has been a problem since telemarketing itself was invented. According to the Federal Trade Commission, consumers lose “billions of dollars a year” to phone-based marketing scams:

“The heart of a fraudulent telemarketing operation is usually a “boiler room,” where seasoned operators try to scam hundreds of thousands of people across the country every day. Telephone fraud knows no race, ethnic, gender, age, education or income barriers. Anyone with a phone can be victimized by telemarketing scam artists.”

Travel packages, “free” bonuses and “special offers” are all tell-tale signs of a possible telemarketing scam in the making, the FTC says. The most egregious con artists will actually swindle elderly people into turning over their bank or credit card information and simply drain their cash.

Pre-Paid Phone Cards

We’ve all seen pre-paid phone cards like these at gas stations or convenience stores in our town. Unfortunately, you aren’t always buying exactly what these cards promise. In October 2008, The Consumerist discussed FTC research showing that pre-paid phone cards deliver “about half of the minutes promised” on their packaging.

Two major calling card distributors were formally charged by the FTC for cheating their customers. Among the allegations were “hidden fees” and “false statements” about the number of minutes being sold. When you remember that “customers are charged connection fees, special fees for using a payphone, minutes are deducted for calls that did not connect and minutes are rounded up by three or four”, the fact that half your promised minutes actually don’t exist just adds insult to injury.

“809″ Scams

The 809 scam is a way of manipulating you into an astronomical long-distance charge. Here’s how to tell if you’re being targeted by one. Typically, you will receive a voicemail or text message instructing you to call back a stated phone number in connection with some important-sounding event, such as a “legal matter” or contest winnings. Invariably, that number will contain the area code “809″ – which is from the Caribbean and costs a small fortune to dial.

According to ScamBusters, the rates for these scandalous calls can be as high as $25 per minute. Also keep in mind that this scam is carried out with area codes other than 809. It can technically be used with the area code of any far away, expensive-to-dial country.

Your Phone Statement: The First Line Of Defense

It’s easy to ignore the phone bill statements we receive each month. “What’s the point – I made the calls, I obviously know what’s in there” is the common attitude. Yet when it comes to phone scams, the billing statement is actually a strong line of defense. If any suspicious dialing has occurred (incoming or outgoing), this is where it will be listed.

By nonchalantly tossing your statement into the trash, you risk being unaware of a scam until it’s too late – until after it inflicts hundreds or thousands of dollars worth of damage.  Resolve to devote five minutes per month to reviewing this important document. You’ll be glad you did!