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

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Complete Version (Department of Justice Canada web site)

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 offenders 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 means 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 the 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, and 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.

Key Recommendations

The Working Group recommends:

• that the governments and agencies of both countries clearly identify telemarketing fraud as a serious crime; (p. 7)
• that both countries explore the use of remote testimony in criminal proceedings, by video-teleconferencing or similar means, to reduce costs; (p. 15)
• hat the legal and technical potential and limits of electronic surveillance as a tool against telemarketing fraud be explored further; (p. 18)
• that both governments examine the regulation of telephone services and options for denying telephone services to telemarketing offenders; (p. 19)
• hat the scope of the existing mutual legal assistance arrangements be considered to determine whether they might be expanded to deal more effectively with telemarketing-fraud cases; (p. 20)
• that both governments clarify the circumstances under which mutual legal assistance requests are needed, by providing information and advice to the agencies involved; (p. 20)
• that extradition arrangements be examined, and if possible modified, to facilitate and accelerate extradition in telemarketing fraud cases; (p. 21)
• that federal deportation laws which might apply to foreign nationals engaging in telemarketing fraud be reviewed, and that enforcement agencies be given information about when deportation may be an option; (p. 21)
• that research be conducted into offenders, victims and other aspects of telemarketing fraud to create effective educational materials and strategies to prevent it; (p. 21)
• that governments and agencies cooperate as closely as possible in developing, maintaining and disseminating educational materials, and in coordinating education and prevention efforts; (p. 21)
• that strategies to control telemarketing fraud be coordinated between Canada and the United States at the agency, regional and national levels; (p. 25)
• that an ongoing binational working group serve as an overall coordinator and deal with national and binational telemarketing fraud issues as they arise; (p. 28)
• that regional task-forces be encouraged to cooperate across the international border to the maximum extent possible; and (p. 28)
• that, to further coordination, governments and agencies examine privacy and other laws relevant to cross-border shared access information systems with a view to expanding access to such systems to the maximum extent possible. (p. 29)