Nov. 18, 2009 Show
The telephone rings as you’re sitting down to dinner or putting the kids to bed. A stranger is selling something. It’s known as “cold calling.” For many businesses, including securities firms, cold calling serves as a legitimate way to reach potential customers. But sometimes serious trouble and financial losses await you at the other end of the line. You may be pressured to buy a bad investment. Or the investment might be a scam. Whether the calls are annoying, abusive, or downright crooked, you can stop cold callers. This Alert tells you how to stop cold calls, what your legal rights are, which red flags to avoid, and how to evaluate any investment opportunity that comes your way over the telephone. Use the “National Do Not Call Registry” to Reduce Unwanted Cold CallsThe National Do Not Call Registry was jointly established by the Federal Trade Commission and the Federal Communications Commission to give Americans a way to avoid getting telemarketing calls at home. Adding your home or cell phone number to the Registry is easy — and absolutely free. You may register two ways:
For more information on the Do Not Call Registry, see the FTC’s website. Be aware that putting your home phone or cell phone numbers on the National Do Not Call Registry will not stop all telemarketing calls. You still may receive calls from:
Understand Your RightsWhen telemarketers, including people from the securities industry, call to sell you something, they must follow these important rules: Cold Callers Must Check the “National Do Not Call Registry” — With very few exceptions, federal law requires all telemarketers, including securities firms, to search the National Do Not Call Registry every 31 days to avoid calling any numbers that are on the Registry.
Cold Callers May Call You at Home Only Between 8:00 a.m. and 9:00 p.m. — These time restrictions for calls at home apply unless you have an established business relationship with the firm or you gave the firm express written permission to call you at other times. Cold callers may call you at work at any time. Cold Callers Must Say Who’s Calling and Why — Cold callers must promptly tell you:
Additional Responsibilities of Cold Callers — Cold callers must also:
What Are Signs of Trouble?Cold calling is used legitimately to find clients for the long term. These callers ask questions to understand your financial situation and investment goals before recommending that you buy anything. Unfortunately, not everyone has your best financial interest at heart. Watch for these signs of trouble:
What Else Can You Do?When cold callers use harassing, abusive sales tactics and lie to you about investment opportunities, they violate the cold calling rules and break federal and state securities laws. Don’t let them off the hook! U.S. Securities and Exchange Commission
What If I Want to Invest?Never buy an investment based simply on a telephone sales pitch. A wise investor will always slow down, ask questions, get written information about the investment, and investigate the background of the firm and broker. Take notes so you have a record of what the broker told you, in case you have a dispute later. Before making a final decision and handing over your hard-earned money, take the time to investigate. Follow these steps:
Remember, there are rules governing cold calling. It pays to know them — and don’t hesitate to take action in the event the caller does not abide by them. Additional Resources
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