You just sat down to eat dinner and the phone starts ringing. You suspect it is a telemarketer. Although telemarketers can often be annoying, there is usually nothing illegal about what they are doing. Once in a while, however, a caller's objective may be a little more sinister than just trying to get you to buy light bulbs. Here are some of the most common telemarketing scams.

SWEEPSTAKES

"I just wanted you to know that you've won a FREE Caribbean cruise," they say. "All you have to do is send $20 so we can confirm your prize." Any contest in which you must pay money to win a prize is a lottery. With the exception of state-run contests, lotteries are prohibited by federal law.
If the caller asks for your credit card number, be aware that you may never see the prize and may end up with bogus charges on your credit card.
To be legal, anyone promoting a contest must specify, "No purchase is necessary to win."

CHARITABLE CONTRIBUTIONS

Although there are some legitimate organizations that solicit funds over the telephone, some that ask for money may be fraudulent. Always make sure that you ask for more information. Scam artists will ask for (or demand) a donation NOW and will refuse to send written information concerning the charity. Many of these groups will try to trick you by using a name that sounds like the name of a legitimate organization.

"HOT INSIDER INFO"

"I just happen to know that the value of this company's stock is going to go up by 200% tomorrow, so I recommend that you buy TODAY." When someone in the securities industry calls you to solicit investments, it is known as "cold calling." If "cold callers" follow certain rules, their actions are perfectly legal. However, if a "cold caller" harasses you or lies to you, he or she may be in violation of both state law and Securities Exchange Commission regulations.
If a caller guarantees returns on an investment, he or she is lying to you. There is no way to know exactly what a stock or a corporation is going to do tomorrow, let alone next week or next year. If the caller refuses to send written information about himself or the brokerage, hang up.
If you invest and then want to get out later, you have no guarantee that you will ever be able to contact that broker again. In the same way, don't let them sell you stock in a company that you have never heard of or one that they refuse to tell you more about. The operation could be a scam, or the company could be a high-risk "start-up."

Beware of "no net sales" policies. This means that if you want to sell a stock, you cannot do so until the brokerage can connect you with someone who wants to buy an equal number of shares. While you are waiting, the "huge returns" that the caller promised you may turn into huge losses. Remember that "cold callers" are often making their money on commissions—the fee they charge per transaction—not the capital that you make or lose. Their livelihood rarely depends on your gains or losses.

PROTECTING YOURSELF

You can protect yourself from telemarketing scams by following a few simple rules:
• Always ask for written information.
• Never give out credit card numbers or other personal information unless you know exactly what you are doing.
• Ask yourself, "Is everything legal here?" If the caller is breaking any law, no matter how trivial it may seem (such as calling before 8:00 AM or after 9:00 PM, beware. He or she may be breaking other laws as well.
• If you are uncomfortable or are annoyed by a caller, ask to be put on the "do not call" list. Once you request this, the company CANNOT call you again.

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