Report of the Canada - United States Working Group on Telemarketing Fraud

Department of Justice

EXECUTIVE SUMMARY

During meetings on April 8-9, 1997 in Washington, D.C., President Clinton and Prime Minister Chrétien directed officials to prepare a joint study examining ways to counter the serious and growing problem of cross-border telemarketing fraud. This Report results from meetings and research conducted by law-enforcement and policy officials from various federal and state/provincial agencies of Canada and the United States.

Telemarketing fraud has become one of the most pervasive forms of white-collar crime in Canada and the United States, with annual losses in both countries in the billions of dollars. In recent years, authorities have observed concentrations of offender s in metropolitan areas including Las Vegas, Los Angeles-Orange County, Miami-Fort Lauderdale, Montreal, Toronto and Vancouver.

Telemarketing criminals frequently prey upon senior citizens, although all age groups have been victims. Many elderly victims have lost life savings to these criminals, with a loss of quality of life which is often physically and psychologically devastating, not only to the victims, but also members of their families.

"Telemarketing fraud" describes the use of telephones to deprive victims dishonestly of money or property or to misrepresent the values of goods or services. Low-cost telecommunications have made legitimate telemarketing popular, but also provide a mea ns of conducting massive frauds, sometimes involving thousands of victims and tens of millions of dollars in losses.

The large numbers of victims and distances involved make telemarketing frauds costly and complicated to investigate and prosecute, especially when they are committed across national borders. Differences in legislation and procedural delays created by mutual legal assistance and extradition proceedings create further difficulties. The long distances and multiple jurisdictions involved in many cases highlight the need for effective cooperation among the governments and agencies involved as well as th e private sector.

The Report examines the ways in which telemarketing fraud is committed; legal issues and options; consumer-education and prevention; and cross-border cooperation and strategy. It concludes that telemarketing fraud is a serious and expanding problem, a nd that cross-border cases are a challenge for both governments. With a sound strategy and the right combination of tools and tactics, Canada and the United States can cooperate even more closely to meet the increasingly international challenge of this most pernicious of white collar crimes.

The key recommendations of the Working Group follow this Executive Summary.

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