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B. COMMON SCAMS

Telemarketing sweepstakes and promotions often use official- sounding names such as "Prize Redemption Center" or "National Claims Office." Many include an 800 or 900 telephone number that you must call immediately in order to claim the prize. The catch is that you must buy the product in order to claim the prize. Or else the cost of the phone call far exceeds the value of the prize.

Legitimate sweepstakes and prize awards never require you to purchase products in order to win. If you have doubts about any offer, contact your local Better Business Bureau or state, county, or city department of consumer affairs. Find out if the FTC has any pending orders or cases against the company.

Through the National Association of Attorneys General (NAAG), state agencies operate a clearinghouse on telemarketing fraud to deal with interstate enforcement. You might want to contact them as well.

Ads that claim you can get rich while working from your home are common, but most mail-order promoters do not have successful businesses. They are merely suppliers who seek to sell you advice and cheap products.

To avoid questionable mail-order promotions, the Better Business Bureau (BBB) recommends the following:

• Study the business and learn about its pitfalls as well as its opportunities.

• Evaluate the risks of establishing any business without experience.

• Investigate with the local BBB or chamber of commerce the reliability of anyone offering a sales proposition.

• Check the performance claims made for the products, and be sure they are supported by evidence.

• Demand proof of earnings, and verify the information with the people whose earnings are reported.

• Understand any contract or agreement before signing.

More than $10 billion is invested each year with swindlers and scam artists working the telephone. Pitches commonly include phony investment schemes, partnerships and tax shelters, bogus prizes, and commodities such as gold bullion. These scams typically promise unusually high rates of return.

Two big telemarketing frauds involve vacation certificates and motorboat or motorcycle promotions. If you receive a vacation certificate, investigate whether airfare, hotel, and so on are included (usually they are not). Check to see what precautions the company has taken to protect you in the event of overbooking. Above all, do not attend any time-share presentation unless you are interested in what is for sale. If you are offered a motorcycle or motorboat at a reduced price, do not buy it. These products are inferior, and the premium and handling charges usually amount to more than they are worth.

Another common scheme involves people pretending they are IRS agents. Individuals are called and told they are entitled to a contest prize, insurance settlement, or money bequeathed by a distant relative-but first they must send the taxes on the prize to a post office box. Or people are informed that they are eligible for a low-interest loan provided they call an 800 or 900 number immediately. When you call, you discover you are charged an exorbitant fee for the call and that an expensive (say, $200) processing fee for the loan must be paid in advance. Operators pocket the loan-processing fees and disappear.

To avoid telephone scams, remember the following:

• If the deal or proposal seems too good to be true, it probably is.

• Always get the name of the person, his or her address, and the name of the company. You may be able to find out if the investment is listed for sale by calling your state's consumer protection agency or attorney general's office.

• Never reveal your credit card number or accept unexpected telephone calls from strangers.

• Always ask for and review a written prospectus before investing. If a large amount of money is involved, retain the services of an attorney or accountant to review the written material and interview the telephone solicitor.

• If you must invest immediately or lose the opportunity, pass on the offer.

• Never invest money at anytime or anywhere with someone you have not met.

• If you receive a call from a charity, don't automatically send money. Also be wary of offers made by sales companies that claim that a certain percentage of their sales go to charities. Investigate these companies and charities before making a donation.

• If you suspect you have been the victim of telemarketing fraud, contact your Better Business Bureau, Federal Trade Commission, state attorney general's office, U.S. postal inspector, or other appropriate agency.

   

The offices of some state attorneys general maintain a hot line for telefraud, and they network with the FTC to catch fraud across the country.

In 1965, Congress established the Guaranteed Student Loan Program. The goal, said President Lyndon Johnson, was "to provide access to every student who wants to better himself through higher education."

The program encouraged lending institutions to offer students low-interest loans regardless of their economic status. The government told lenders it would subsidize the low-interest rates and pay off the loans if students defaulted. As a result, student loans, once unappealing to lenders, suddenly became a risk-free, money-making proposition.

Since 1965, the government has backed more than 50 million of these loans, worth more than $100 billion. The program has helped students pay their way through all types of educational institutions, from four-year colleges to trade schools.

However, the loan program also spawned an array of fraudulent schools that prey on unwary youths.

A California man told the Los Angeles Times that he borrowed $5,500 to enroll in an auto-repair course he had seen advertised. The first day of class he discovered that the school had no garage, no tools, and no cars. In a classroom across town, recent immigrants were spending their loan dollars learning the fine points of English grammar by watching-over and over again--rented videos of Hollywood hits. Featured film: La Bamba.

At last count, the United States had some 6,000 trade schools, offering training in 130 occupations, from auto mechanic to X-ray technician. How to tell good from bad?

First, rule out schools that don't have both a state license and accreditation from an independent agency approved by the U.S. Department of Education-imperfect screening, but screening nonetheless.

Tour the facilities. An up-and-up school should let prospective applicants talk freely with students and faculty members. Look for low student/teacher ratios and qualified instructors who have been there awhile.

Ask for documentation. How many students complete the training? How many get jobs in that field? In some states, licensing agencies require schools to submit that information annually. If so, the school should be willing to give prospective students a copy. Other important information to obtain in writing: the school's refund policy and a clear explanation of any student-loan obligations the student may incur. The U.S. Department of Education has a toll-free hot line (800-4333243) through which students can learn a school's student-loan default rate. In general, the higher the rate, the riskier the school.

Contact the personnel offices of potential employers. Ask what training they require and what schools, if any, they recommend. Ask the school for a list of companies that have hired recent graduates.

Call the local Better Business Bureau. It may know whether the school has a problem past.

Finally (or first), check out other educational options. Community colleges may offer better training at more reasonable prices. Most require a high-school diploma or General Equivalency Diploma (GED) to enroll in professional courses; they often offer GED-preparation classes for a minimal fee. Education departments in some states can also supply lists of schools that offer free or low-cost training.