California Telemarketing Fraud Laws: How to Recognize it

In 2017, BankMyCell released a survey confirming what millions of people already knew: Millennials hate phone calls. According to the smartphone retailer, 75 percent of the 1,200 respondents said they avoided time-consuming calls, while 81 percent reported feeling anxious at the thought of talking on the phone.

With telemarketing fraud becoming more rampant, that phone call aversion very likely will keep on growing. No matter the generation, the upward trend of malicious rings makes it extra important for Californians to learn how to recognize fraudulent telemarketing and be aware of the rights and protections they enjoy that help defend them against this uber-annoying and financially damaging practice.

Telemarketing fraud is a pretty broad criminal category. This offense occurs when a criminal communicates with their potential victim over the telephone in an attempt to execute any sort of fraudulent scheme, plain and simple. Commonly, these rip-offs manifest as credit card scams, lottery cons, requests for small fee advances, or so-called “once-in-a-lifetime investment opportunities.”

The California Business and Professions Code lists three requirements that a defendant must meet to be determined guilty of telemarketing fraud. They must be a salesperson, a seller's representative or agent, or an independent contractor, and they must have deployed a scheme over the phone in connection with a sales offer or willfully engaged in fraud or deceit in connection with a sales offer over the phone. So, while false advertising, annoying phone calls and unsolicited spam are similar to fraudulent calls, these are actually defined as their own separate crimes in California under different sections of the state's Penal Code.

Residents of the El Dorado State are covered by a combination of anti-fraud telemarketing laws on both the state and federal levels.

First and foremost, telemarketing fraud in California falls under the umbrella of the state’s general larceny statutes, detailed in California Penal Code Sections 484 through 490. These theft-related laws state that it’s a criminal offense to knowingly use false pretenses or dishonest representation to willfully defraud another person of their money, labor, or real or personal property.

In the state, petty theft is a misdemeanor that can result in up to six months in county jail, while the fraudulent diversion of funds is punishable by the same jail time plus fines of up to $10,000. Grand theft is a felony that entails up to one year of jail time.

On a more specific level, California’s Business Code 17511.9 BPC makes it a crime to commit telemarketing fraud. This particular crime is called a wobbler, which means it can be charged as either a misdemeanor or a felony, with jail time reaching up to three years and fines up to $10,000.

Part of recognizing fraudulent phone calls is knowing how to tell when a call is actually on the up and up. In California, legitimate telemarketers are beholden to numerous legal regulations.

Right off the bat, telemarketers must disclose that the call is a sales call before the so-called “pitch” begins. Robocalls are only legal if the recipient has formerly consented to them or has previously had a business relationship with the company doing the robocalling – public safety alerts are OK, too. In California, telemarketing times for all robocalls must be made between the hours of 9 a.m. and 9 p.m., local time.

Telemarketers must hold a license to make sales calls in the state, and California enforces the National Do Not Call Registry, a list maintained by the Federal Trade Commission to which citizens can voluntarily add their phone number to reduce the amount of telemarketing calls they receive. Californian telemarketers are subject to penalties of up to $500 for willfully contacting phone numbers on the Do Not Call Registry.

Though California has passed its own state legislation in regards to telemarketing fraud, the tell-tale signs of fraudulent calls know no state borders.

The first line of defense is often the spam call protection automatically offered on both Android and iOS smartphones from numerous providers. Usually, unidentified or “fishy” numbers are marked in red as potential spam on the caller ID screen. So, whether the phone is in Connecticut or California, green phone calls are the way to go.

If the scam caller makes it past the caller ID, the FBI notes some helpful giveaways or “tells” for fraudulent telemarketing calls. These include phrases or requests along the lines of:

• “You must act now.”
• “You’ve won a free gift/vacation/prize.”
• “You don’t need to check out the company with anyone.”
• “You don’t need any information/references about the company.”
• “You can’t afford to miss this high-profit, no-risk offer.”

The FBI also warns against ever sending money, even nominal fees, or disclosing credit card or bank account info to sources that the call recipient is not explicitly familiar with. Likewise, if a caller refuses to send written information about offers or financial requests or their company does not show up on the Better Business Bureau (or does show up at the National Fraud Information Center), it may be a fraudulent pitch. The FBI advises against paying for anything in advance over the phone as well and notes that anyone telling a caller to pay for taxes over the phone is violating federal law.

In addition to common tells, many fraudulent telemarketing schemes fall into the same old time-tested categories. These often include scams such as:

• Claims of free government grants or notifications of loan approvals asking for a small fee to advance a greater payment
• Stories about foreign lottery tickets, typically involving a lottery the recipient does not recall entering and requesting the payment of “provincial taxes,” transfer costs or “administrative fees”
• Payment processor scams, in which the caller asks the recipient to make a payment on the caller’s behalf, promising to reward the recipient a fee for each payment processed
• Pitches of identity theft insurance, especially those that inform call recipients that they’re already the victim of identity theft

Of course, adding a phone number to the Do Not Call Registry is free and helps reduce the number of telemarketing calls in general, potentially negating the need to even have to spot common scams in the first place.

For Californians who suspect they’ve had a run in with a fraudulent telemarketer or those who have received telemarketing calls despite being on the Do Not Call List, the California Department of Justice asks residents to report their complaints to the Federal Trade Commission. The FTC accepts complaints online or at 888-382-1222. Anyone reporting a complaint will need the name of the company who called, the telephone number of the caller, and the date of the call.

Telemarketing fraud cases typically find their way to federal court, but the Golden State also lets its residents sue malicious telemarketers in small claims courts, resulting in civil penalties of up to $1,000. Take that, spammers.