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Blowing the whistle when telemarketers defraud consumers or the government

On Behalf of | Apr 27, 2021 | Whistleblowing |

Telemarketing is a legitimate, productive sector of the American economy. At its best, it serves as effective means of connecting businesses with customers who might not otherwise have access to the goods and services those businesses offer.

At its worst, however, telemarketing can also serve as a platform for fraud. Employees and others who have information about businesses engaging in telemarketing fraud can help put an end to those wrongful, illegal practices by becoming whistleblowers. If the government counts as a victim of that fraud, whistleblowers may even have the right to receive compensation for their brave efforts.

Telemarketing fraud takes many forms

Telemarketing, broadly defined as marketing products via telephone calls, can connect a business one-on-one with potential customers nationwide. A telemarketer can exert a powerful influence on a potential customer’s buying decisions.

Fraud occurs when telemarketers leverage that influence to trick, scam, or cheat the person on the other end of the phone, or someone else with whom the telemarketer does business. Telemarketing fraudsters commonly try to obtain payments, credit card information, or financial account information from their victims. Common telemarketing frauds include:

  • Advance payment scams in which a telemarketer convinces the customer to pay in advance for a non-existent good, service, or reward;
  • Telemarketers who pose as callers from government agencies like the IRS or Social Security Administration demanding payments or financial account information;
  • Callers who seek donations to fictitious charities;
  • Telemarketers selling worthless car or home warranties; and
  • Ponzi and pyramid schemes in which callers promote too-good-to-be-true investments.

Telemarketing scams can defraud the government

You might think that the only victims of telemarketing fraud consist of the people duped by a telemarketer’s lies. However, these scams can also defraud the government.

In a recent scheme prosecuted by the Department of Justice, for example, two former owners of a telemarketing company pleaded guilty to engaging in schemes involving phony prescriptions for compounded drugs. The fraudsters used telemarketing to solicit prospective patients willing to accept compounded drugs they did not necessarily need, obtained prescriptions for those patients (oftentimes from telemedicine doctors who prescribed without seeing or meaningfully treating the patients), and then sent those prescriptions to compounding pharmacies that had agreed to pay illegal kickbacks.

The scheme amounted to fraud on the U.S. Government because the pharmacies billed many of the prescriptions to TRICARE, the U.S. Government health care program for current and former military members and their dependents.

Whistleblowers on telemarketing fraud have legal protections and may obtain compensation

Telemarketing fraud is illegal and wrong. People who know it is happening can help to put an end to it by blowing the whistle on wrongdoers.

In a scheme like the one above, for example, people contacted by the telemarketers, as well as employees of the telemarketers, doctors or pharmacies involved, could potentially become whistleblowers.

The law protects whistleblowers against retaliation by their employers or others. A federal statute called the False Claims Act also entitles whistleblowers to compensation – amounting to between 15% and 30% of the money recovered – if they blow the whistle on a scheme that defrauds the federal government.  Many states have similar statutes that compensate people who blow the whistle on scams that defraud state governments.

Whistleblowers can take full advantage of their legal protections and options by working with an experienced whistleblower attorney.