Fast Facts

Below you will find links to some topics we like to call fast facts.These topics are also found in our consumer handbook.


TELEMARKETING AND SWEEPSTAKES LAWS
New laws took effect July 1, 1997, that regulate telemarketers and sweepstakes companies doing business in South Dakota. The Office of the Attorney General along with the help of the AARP introduced two new consumer bills which were passed during the 1997 Legislative Session. The laws aim to protect consumers from deceptive telephone sales tactics, telemarketing fraud, and sweepstakes scams. Both laws prohibit fraudulent practices, but also require solicitors to tell the truth by giving the consumer the full terms and conditions of the deal.

Despite the new laws, consumers should still be careful when dealing with telemarketers and sweepstakes. These laws will not eliminate the fraudulent tactics that the criminal callers and sweepstakes promoters use. They continue to operate in their deceptive practices and it is up to you as a consumer to be aware of your rights so that you are not victimized by those not adhering to the law.

TELEMARKETING SDCL 37-30A
Federal and/or state of South Dakota telemarketing statutes require the following:

  • At the beginning of the call, the caller must tell you their true name, the name of the telemarketer by whom they are employed, the name and address of the business they represent and the purpose of the call.
  • Within 30 seconds of the call, the caller must ask if you are interested in hearing the sales presentation, and hang up if you aren't.
  • The caller must hang up the telephone immediately if at any time during the solicitation the consumer expresses a disinterest in the goods or services offered.
  • Upon your request, a telemarketer must place you on their "do not call list" and not call you again once you have indicated such.
  • If a prize is offered, you have to be told immediately if a purchase or payment is necessary, the odds of winning, and any restrictions or conditions of receiving the prize.
  • If you decide to make the purchase, the telemarketer must provide a written confirmation complete with the full terms of the deal. You must sign the written confirmation prior to the deal becoming valid.
  • The only way to avoid the written confirmation is if the telemarketer provides a no questions asked, full refund policy. The refund policy must be disclosed at the time of the call and the telemarketer must provide a written version when the product is delivered.
  • It is illegal for a telemarketer to withdraw money from your checking account without your express, verifiable authorization.
  • You do not have to pay for credit repair, recovery room, or advance-fee loan/credit services until these services have been delivered.
A telemarketer may not:
  • Place unsolicited consumer telephone calls to any residence which will be received before 9 a.m. or after 9 p.m. consumer's local time, or place any unsolicited consumer telephone calls on Sunday.
  • Engage in unfair or deceptive solicitation.
  • Engage in any conduct which harasses, intimidates, or torments any person in connection with the telephone call.

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The following are tips to combat the criminal caller:
  1. BEWARE of anyone who asks you to send money or buy anything sight unseen, unless you are certain you are dealing with a reputable firm. Remember, you are not initiating this transaction and should be allowed the opportunity to check the company out. You can do this by calling the Division of Consumer Protection or other consumer protection agencies, and by talking with family members, friends, attorneys, or financial advisors. Only those businesses with something to hide will discourage you from doing this.
  2. RESIST high pressure sales tactics. Legitimate businesses respect the fact that you are not interested or that you want to research their company before buying. The more a caller tries to hurry you into buying or sending money, the more likely he or she is a criminal.
  3. TAKE your time. You can ask for written information about the product, service, investment opportunity or charity that's the subject of the call so that you can take the time to study their offer. If the company won't willingly comply - BEWARE. Asking the caller to put the offer in writing does not necessarily protect you. It often leads to credible-looking letters, which in the consumer's mind seems to legitimize what in fact is a bad deal. Even if they do send you something in writing, check them out before responding.
  4. KEEP information regarding your bank accounts or credit card information to yourself. Give this information only to those businesses whom you are familiar with, never to those who solicit you first.
  5. DON'T pay for a free prize. Free is free. If a caller tells you that there is a fee of any type, such as taxes, or shipping and handling costs, they are breaking the law.
  6. NEVER send cash, check, or money orders by courier, overnight delivery, or wire to anyone who insists on immediate payment. This type of request is a clear sign of fraudulent activity.
  7. IF you do not want the telemarketer to call you again, say so! By law they have to place your name on a "DO NOT CALL LIST" and honor your request. Before advising them of your request to be placed on their list to not call again, it is best to jot down the caller's name, company name and address so you know who your request has gone to. If they call again, hang up. They're breaking the law and should be reported to the Division of Consumer Protection or the Federal Trade Commission.
  8. DO NOT let appeals designed to tug at your emotions influence your decisions. Many telemarketers will request that you send money to charitable causes such as law enforcement agencies, firefighters, children's "Say No to Drugs" campaigns, children's educational projects or community causes which may not exist. They may use prizes to tempt victims to contribute, but all too often the prizes never arrive and the contributions are pocketed by the caller.

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SWEEPSTAKES SDCL 37-32
New sweepstakes laws require solicitors to tell the truth and give the consumer the full terms and conditions of the deal before accepting any payment.

They must provide a written prize notice which includes the following:

  • The true name, address, and telephone number of the solicitor and sponsor.
  • The odds of winning, the true retail value of the prizes offered, and disclose any restrictions or costs associated with receiving the prize.
  • Telling the consumer if they must listen to or attend a sales presentation prior to obtaining a prize and describe the property or service that is the subject of the presentation.
  • A statement disclosing the average length of a call, and any toll charges beyond normal long distance charges if the individual is invited or required to telephone the solicitor or sponsor to enter or claim a prize.
The law also prohibits a sweepstakes operator from:
  • Providing a written prize notice that contains language, or is designed to lead a reasonable person to believe that it originates from a government entity, public utility, insurance company, consumer reporting agency, debt collector, or law firm unless they actually are.
  • Placing on the envelope, which contains a written prize notice, any representation that the person to whom the envelope is addressed has won or will receive a prize.
  • Representing directly or by implication that the number of individuals eligible for the prize is limited, or that an individual has won or will receive a particular prize unless it is true.

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BE ALERT TO SWEEPSTAKES APPEALS
Legitimate sweepstakes mailings should clearly disclose that there is NO PURCHASE NECESSARY TO PARTICIPATE. To require a payment to enter would make the sweepstakes a lottery and it is illegal to operate a lottery through the mail.

  • Read sweepstakes promotions and direct mail contents carefully. Your entry may be discarded if the rules are not followed to the letter.
  • Identify the eligibility requirements for entry. For example, do you have to be a certain age to participate?

If the sweepstakes promotion states you are a "pre-selected winner," you will usually receive a prize only if you respond to the sweepstakes. Although a sweepstakes may claim "you're a winner," you probably have not won the GRAND PRIZE. In some instances, the majority of "pre-selected winners" receive only pennies per person. Remember to read all the contest rules to avoid being disappointed by the outcome.

Whether or not you are purchasing a product or service, sweepstakes participants must have an equal chance of winning a prize. Remember that the probability of winning the BIG prize may be quite low. Most sweepstakes campaigns involve mailings of a half-million to ten million or more letters.

Sometimes charitable organizations also use sweepstakes appeals to entice people to donate. In that situation, you do not have to give a donation in order to enter the sweepstakes. If you do donate to the charity through the sweepstakes campaign, check out the charity as you would any other charitable donation. Again, you are not required to give to enter the sweepstakes. Do not give to the charity unless it clearly specifies the programs your gift would be supporting. Don't hesitate to seek out information about the charity's finances and activities before donating.

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NEW AND USED CAR SHOPPING

HOW TO GET THE BEST DEAL ON A CAR

Automobile dealerships are under pressure from the manufacturer to sell in large volume. What that means to a buyer is this: Be prepared for pressure from the salesperson.

Before you even set foot in a car dealership, make sure you know exactly what you want. Decide on the type and size of car or truck, or better yet, the model. You should also study the history of the car you are considering.

Does it have a good rating? Is it safe? Is it reliable? Is there a dealer nearby who can service your car if something goes wrong? Also decide the approximate price you want to pay. Check with your bank, savings and loan or credit union to ensure that you qualify for a loan. A new car is one of the largest financial investments most people ever make. Take your time deciding and don't let a car salesperson sell you a vehicle you don't need. And, as always, deal through a reputable company. Ask several friends who are satisfied with their cars where they purchased them and from whom.

Below are tips to use when shopping for a car:
  • Plan your purchase ahead of time. Decide what kind of car you want and how much you can afford to spend, not only in monthly payments, but in total costs such as the sticker price, interest, taxes, insurance and repairs.
  • Try to arrange for financing with a bank, the car dealership, credit union or savings and loan BEFORE you buy.
  • Never go alone to buy a car. Always take somebody along for moral support, preferably somebody who is knowledgeable about cars and car maintenance.
  • Compare the prices of several dealers before you buy.
  • Never let a dealer talk you into borrowing extra money for the down payment. You're the one who's buying the car and you know how much you can afford to spend.
  • Avoid buying anything unless you have road tested it and are satisfied with it. If the dealer won't let you drive the car first, don't buy it.
  • Avoid buying anything in a hurry. Think it over for a day or two and don't sign anything before you're sure of your obligations.
  • Have a mechanic check the car and make a list of the things which need to be repaired or adjusted.
  • Buy from a dealer with a good reputation. You will usually get better service since he can't afford to alienate future buyers by not treating you right.
  • Never sign a contract with blank spaces. Make sure that all spaces are filled with words, numbers or with a line through the space.
  • If the salesperson says repairs have been made to the car for resale purposes, ask for proof or have the salesperson state the repairs in writing. This will protect you in case you have trouble later and discover the repairs were not made at all.
  • Make sure that all promises the car dealer makes to you are in the contract in writing. If the dealer won't put them in writing, don't buy from him.
  • Most car dealers will give you the name of the previous owner and most previous owners will be glad to tell you about their car.
  • Be sure you read and understand all parts of your contract. If you don't understand parts of the contract, have the dealer explain them to you. When reading the contract, be sure to pay close attention to the section headed "disclaimer of warranty." Once signed, this essentially means that any repairs are your responsibility after you've bought the car.
  • When buying a used car, ask for the title to reveal any damage disclosure information.

USED CAR DEALER REQUIREMENTS
The dealer must list in the contract the price of the vehicle, all finance charges and any other charges you incur. ALL charges must be explained to you.

By federal law, the dealer must disclose to you the true mileage of the vehicle. The dealer also is required to tell you if the true mileage is unknown. An odometer statement should be given to you to comply with the law before any serious bargaining starts. If the seller refuses to let you have an odometer statement, notify the Division of Consumer Protection.

If you have reason to suspect that your car's odometer has been tampered with, contact the Department of Revenue, Dealer Licensing. Within 30 days after the purchase, you should receive a title to the used vehicle. If you don't, contact the Office of Dealer Licensing.

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USED CAR WARRANTIES
Almost all used cars sold by dealerships are sold "as is." Most of the complaints we receive about used automobiles are from consumers who do not understand the legal consequences of the "as is" designation. "As is" means that the dealer won't make any repairs after the car leaves the lot.

The confusion is even greater when salespeople tell you that the car comes with warranty protection when the written contract contains the "as is" language. Consumers believe what the salesperson says. Remember, if your contract says "as is," your recollection of what the salesperson promised about a guarantee won't help you at all in court.

Any guarantees or promises made by the dealer must be given to you in writing to make them legally binding. Always check to see whether the contract contains that "as is" clause which cancels any oral guarantees or implied warranties the dealer makes to you. If the dealer made those guarantees on the warranty, ask him to strike the "as is" language and write in the warranties. If the salesperson made promises to you about warranties but your contract contains the "as is" statement, ask the salesperson to put his initials by it, and give you a clear warranty statement. You will then have a written warranty to show the judge if you received a defective vehicle.

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LEMON LAW
A motor vehicle "lemon law" enacted in 1993 enables consumers, under certain conditions, to obtain either a replacement or a refund for their new SUV, car, light pickup or motorcycle.

A condition that does not conform with the vehicle's warranty and is identified by the consumer within the first year after delivery or the first 12,000 miles (whichever occurs first) is covered. If the condition has not been repaired after four or more attempts and significantly impairs the use, value or safety of the vehicle and arises out of normal and ordinary use, the consumer is probably entitled to a replacement or refund. For a refund, there would be a reasonable allowance for the consumer's use of the vehicle. This charge would be determined by the amount of time used and the total mileage on the vehicle at the time of the first report of the condition to the manufacturer or authorized dealer.

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AUTOMOBILE REPAIR SHOPS
Always deal with a shop that has a good reputation. Explain the problem as simply and fully as possible and say what condition you expect the vehicle to be in when it is returned to you.

Before repair work begins, have the shop prepare an estimate of parts, labor and additional charges. You should also note on the estimate, with both your signature and the mechanic's, that you will not pay any costs above the estimate unless you give approval.

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VEHICLE RETAIL INSTALLMENT SALES
There are specific provisions under South Dakota law covering purchase of motor vehicles from a seller where more than one payment is to be made. There must be a written contract where the consumer agrees to pay, over a period of time, the actual sales price of the vehicle, plus insurance, official fees and finance charges. These motor vehicle retail installment contracts are also covered by the federal truth-in-lending regulations. Credit extended under these provisions may be executed only by lenders licensed and regulated by the state Division of Banking. These lenders can include bankers and even car manufacturers themselves.

The motor vehicle installment contract must include the following: cash price of the vehicle, amount of the buyer's down payment, amount included for insurance and other benefits, official fees, finance charge, balance owed by the buyer, number of installment payments, and the amount and date of each payment. The finance charge is computed and payable on the unpaid balances and may be set at any rate agreed to by both parties.

A buyer who pays or refinances the full amount of the installment contract is entitled to a refund of the unearned finance charge.

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NETWORK MARKETING: INVESTMENT OPPORTUNITY OR ILLEGAL PYRAMID SCHEME?
 

MULTILEVEL MARKETING COMPANIES
Multilevel marketing plans, also known as "network" or "matrix" marketing, are a way of selling goods or services through distributors. These plans typically promise that if you sign up as a distributor, you will receive commissions for both your sales of the plan's goods or services and those of any other people you recruit to join the distributors. Multilevel marketing plans usually promise to pay commissions through two or more levels of recruits, known as the distributors "downline." Legitimate network or multilevel marketing companies differ from pyramid schemes because they do not depend on re-circulating the money of new participants. Rather, they generate new wealth through the sales of goods and services to non-participants. While they use the same marketing structure as do pyramid schemes, network marketing companies are designed to sell products, rather than participation.

PYRAMID SCHEMES
If the emphasis in a network marketing company is to build a sales force rather than to sell the company's products to customers outside the company, watch out! It may be an illegal pyramid scheme which is an illegal money-making venture that simply circulates money among participants; it does not create new wealth. While a few people might get rich, many more will lose money when a pyramid scheme collapses. As the pyramid expands, it requires recruiting new members at a geometrically expanding rate. A pyramid's success requires the participation of a rapidly expanding number of people. As a result, pyramids are doomed to ultimate failure from the beginning. When a plan for new recruits breaks down or collapses within the pyramid, most people, except perhaps those at the very top of the pyramid, lose their money. Don't gamble that you will make your money before the scheme fails.

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THE DIFFERENCE BETWEEN PYRAMID SCHEMES AND NETWORK MARKETING
Because they know pyramid schemes are illegal, many pyramid promoters try to disguise their schemes as legitimate network or multilevel marketing companies by offering a line of products and claiming to be in the business of selling them. As a result, it can be difficult at times to distinguish between an illegal pyramid scheme and a legitimate network or multi-level marketing opportunity.

To tell the difference, it is often necessary to carefully analyze the way the company is marketed and the way it does business. In some cases, the product may be worthless or over priced. Sometimes the only reason a person purchases the product is to participate in the scheme. This price premium is actually a thinly disguised pyramid participation fee. In other cases, the product may have some value but the new participants are encouraged to buy larger amounts than they can sell in order to meet high sales quotas. In still other cases, the participation fee may be disguised as expensive "training."

In pyramid schemes, the emphasis in the sales pitch is on recruiting - building up the organization and the number of participants - not on selling the products to customers. Pyramid schemes depend on making money from the participants rather than sales to those outside the company.

The key questions to ask are: Would I pay this price for the product or service offered without the potential for commission? Would other reasonable people pay this price for the product or service? If not, it is very likely a pyramid scheme.

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PYRAMID REALITY
Pyramids are illegal. There is a real risk that a pyramid operation will be closed down by law enforcement authorities and the participants subject to penalties, fines and possible arrest.

Pyramids are deceptive. Participants in a pyramid, whether they mean to or not, are deceiving those they recruit. Few would pay to join if the odds stacked against them were fully explained.

Pyramiding is based on simple mathematics: many losers pay a few winners.

REMEMBER: Pyramid schemes deceive and cheat consumers and are illegal. But promoters continue to hype pyramid schemes and recruit new people. Con artists running the scams are looking for people who are vulnerable to get-rich-quick promises. Success comes only with hard work. There is no shortcut to wealth. For more information, contact the Division of Consumer Protection.

PROTECT YOURSELF
  • Take your time. Don't be rushed into any business deal. Show your attorney any contracts you receive from the company. A legitimate business opportunity won't disappear overnight.
  • Ask questions about the competency and experience of the company and its officers, the products including the potential market in your area, start-up fees, buy-back provisions, and actual earnings of current distributors.
  • Get written copies of all available company literature.
  • Check with others who have experience with the company and its products. Find out if the products are actually being sold to consumers.
  • Investigate and verify all information. Contact the Division of Consumer Protection if you suspect a company might be engaged in an illegal pyramid scheme.
  • If a pyramid promoter or recruiter tells you that the program has been examined and approved by the Division of Consumer Protection, know that the claim is not true! Our office does not approve any marketing programs. If such representations are made to you, please notify the Division of Consumer Protection at 1-800-300-1986.

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SMART SHOPPING
 

ADVANCE FEE LOANS Quick loans may seem like an easy solution to a money or credit problem, but in the long run could cost you even more. Some companies claim to guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on advance fee loan guarantees. They may be illegal. Many legitimate creditors offer extensions of credit through telemarketers and require an application or appraisal fee in advance. Legitimate creditors never guarantee that the consumer will get the loan or even represent that it is likely.

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AWARD OR PRIZE NOTIFICATIONS
Sweepstakes and prize solicitations which offer assurances that you have won a prize are almost always designed to deceive consumers. In all cases, do not pay anything or buy anything for the chance to win a prize. Notices of this type are used to peak your interest so you will respond to them by phone or mail and almost always are delivered with a high pressured sales pitch. Usually the prize you will receive, if you receive anything at all, will not be worth what you paid. Examples might include a free trip to the Bahamas, which turns out to be worthless, or jewelry such as a diamond or emerald, but the stone turns out to be worth no more than $5 to $10.

Don't be fooled by impressive names or titles. These types of companies are only trying to sell you something, trying to influence you to call a 1-900 phone number, or are trying to take your money by deceptive means. Companies who are not violating the present laws will offer a prize even if you do not buy anything or pay anything. However, they usually make the prize sound so attractive you end up spending your money anyway, or they hope you do not notice your opportunity to obtain the prize without payment.

Do not trust any company or group which requires you to pay something in order to obtain a prize.

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BEAUTY PAGEANTS

Beauty contests are generally operated in one of two ways. One type involves corporate sponsorship and the entrants must meet eligibility requirements to participate. The other type of beauty pageant passes the cost onto participants, making them responsible for entry fees, food, lodging, special costumes, travel, even the cost of the award or crown. Often the contestants are required to get sponsors or sell tickets and advertising to defray the costs of the contest.

Generally there is nothing more flattering than receiving an invitation for yourself or your child to enter a beauty or baby pageant. However, it is for that same reason that people cannot be careful enough in protecting themselves from possible wrongdoing. There is no law that prescribes how a pageant must be managed or how much a pageant can charge prospective contestants. The rules are set by each contest promoter.

Before getting involved in a beauty contest, get some answers.
  • Who is the promoter or sponsor of the pageant? Are they reputable?
  • What individual is the main coordinator of the event? How can you contact them?
  • Do you need sponsors or will you have to sell advertising to participate?
  • Who pays for the cost of travel, meals and lodging?
  • If you win and advance to another level, who pays?
  • Is there a new entry fee at every level of the competition?
  • Will photos or specific clothing be required?
  • Is there a refund policy?

Other things you should find out are: is there a possibility of more than one actual winner of the pageant, and how did the promoter get your child's name. Some pageants claim the names were submitted, while others simply pull names out from newspapers or magazine subscription lists. Others let you participate by making applications available.

A legitimate contest promoter will be able to respond to questions with ease. Others may have difficulty in answering, or may vary their answers. Often "shady" businesses will make the inquirer feel dumb for having asked questions. Do not be intimidated. Once you receive answers to all of your questions, then use your own judgment to decide whether you want to enter yourself, or your son or daughter in a pageant.

Before getting involved in a beauty contest, get some answers. Costs of the contests are often passed on to the participant.

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BUSINESS FRAUD
Every year millions of dollars worth of high-quality, fairly priced office supplies are sold over the telephone by honest reputable suppliers. Unfortunately, for many businesses and organizations, millions of dollars are also stolen from businesses each year by office supply schemers. The large majority of these rip-offs go either undetected or unreported because the supplies are used or the victims are too embarrassed to acknowledge they have been "taken."

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CHARITABLE SOLICITATIONS - HOW TO GIVE WISELY
Consumers and businesses are frequently approached by individuals for donations to charitable organizations. Many times individuals have not heard of the charity and are concerned whether the organization is legitimate.

Currently, paid solicitors contracted by a charity to perform telephone solicitations are required by state law to be registered with the Division of Consumer Protection. If you are contacted through a telephone call to donate money to a charitable organization that is unfamiliar to you, contact the Division of Consumer Protection to check their registration. If the company is not registered, they are soliciting illegally.

The best way to insure that your donation goes to a worthwhile cause is to give to those charities with whom you are familiar. Below are some tips that can help you give wisely.

  • Don't judge a charity solely on its name. Some solicitors deliberately use names similar to that of some better known organization. For example, there are many groups soliciting funds for law enforcement organizations and may not be affiliated with local or state officers. In fact, some of these groups are "for- profit" and are not actually charitable. If the name of the group sounds questionable, check them out more thoroughly.
  • Evaluate the appeal for your donation. A good speaker's dramatic urgency can be hard to resist. Pay close attention to the CONTENT of the appeal-not HOW it is said. It is this CONTENT that should provide the basis for any decision to give.
  • Many solicitors are volunteers or employees of the charity. Some charities hire a fund-raising firm. Ask about the financial arrangements between them and the charity. In many cases, the charity receives only a small percentage of your contribution.
  • Ask specific questions when you are asked to contribute money to an event. Who are the participating organizations and are they aware of this undertaking? Ask for a list of these organizations so you can call and check.
  • Don't be pressured into a snap decision. If you are not immediately convinced to contribute, ask the solicitor to send written information.
  • Always make your contribution by check or credit card. Cash donations are impossible to track and hard for the charity to protect.

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CONTRACTS
A contract is an agreement between two or more people that creates obligations between the parties, such as purchasing a vehicle or hiring someone to repair your roof. Our office cannot assist you with contractual disputes that do not involve consumer fraud. However, please be aware of the following when you are considering entering into a contractual agreement.

  • Any contract may be reviewed by a private attorney or second party prior to entering into an agreement. Don't be pressured into a quick decision to sign any contract. Some contracts may be written to give the company an advantage in all legal questions. Contracts need to be reviewed carefully before you sign.
  • If both parties agree orally, it may or may not be an enforceable contract depending on the facts and type of sale. Be aware that unscrupulous salespeople may try to convince you a contract exists when it does not. Seek legal advice.
  • Insist on a written agreement containing everything you were told verbally. The written agreement in a court of law may mean the difference between winning or losing.
  • Get the total cost of whatever you are buying in writing. Know how long you will have to make payments and be sure you can meet them.
  • Insist that the salesperson give you a copy of the contract to review before you sign it.
  • Never sign a contract with blank spaces to be filled in later by the salesperson.
  • Thoroughly read and understand the contract and seek the advice of a trusted friend, relative or professional if you need another opinion. Only an attorney can give you a true legal opinion.

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CREDIT REPAIR SCAMS
You should avoid any credit repair solicitations that you receive. Companies coast to coast appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. After you pay them hundreds or even thousands of dollars in up-front fees, they can do nothing to improve your credit. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report. No one can legally remove accurate and timely negative information from a credit report. Everything a credit repair company can do for you legally, you can do for yourself at little or no cost.

Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.

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EMPLOYMENT SCAMS
Newspaper and magazine ads praising employment opportunities in such fields as government, postal and airline industries, or overseas positions are becoming very common. The amount of money consumers spend for further information varies from $29.95 to $500 or more. In most instances, there is no guarantee of job placement. This information is usually very generic and can be obtained for free at a job service location or the specific company.

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FAKE INVOICES
Schemers know that businesses sometimes get very busy and can make mistakes in accounting. Fraudulent people prey on these weaknesses by lifting names from mailing lists, business registers, the Yellow Pages, or published advertisements and send "fake" invoices for directory listings or advertising. To the company's accounting department, the invoice may seem genuine and may even include the name of a company executive as the "authorizing agent." However, the invoice may be a solicitation in disguise and in very fine print contain the following disclaimer: "This is a solicitation. You are under no obligation to pay unless you accept this offer."

  • Check the paperwork closely.
  • Confirm that an order was placed by your firm.
  • Don't pay until you verify the goods or services are received.

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FARM SCHEMES
Consumer Protection routinely receives complaints from farmers who have been contacted by out-of-state firms selling fuel additives, pesticides or tools. In many cases, after the consumer agrees to make a small purchase on a trial basis, they are sent larger quantities of unordered merchandise with large bills attached. Even though the consumer says he didn't order the larger shipment, the company says they will turn it over to a collection agency if the bill is not paid. See the Unordered Merchandise section of this handbook for more information.

Telemarketers typically try to place their sales calls early in the morning and catch the farmer before he goes to the field or out to do chores. If you receive a call of this kind, take the time to make an informed decision by checking out the solicitor and by comparing prices with local businesses.

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FOREIGN LOTTERIES
If someone writes or calls you indicating that they want you to participate in a foreign lottery, do not be fooled. Not only is it a scam, it is illegal for you to participate. Do not send money under any circumstances for a foreign lottery. US citizens cannot participate in foreign lotteries, and foreign lotteries cannot solicit within the United States. There are several different catches to this type of scam. First, they try to get you to send money to participate in a foreign lottery, and then they call you advising you that you've won, but you need to send additional money for taxes, currency exchanges, or to get the money through customs. Again, this operation is run by crooks. Don't be taken.

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HEALTH CLUBS
Keep in mind that joining a health club, tanning facility or health spa generally involves signing a membership contract and paying dues and fees. In some cases, the facility then goes out of business after collecting thousands of dollars in prepaid membership dues. When becoming a member, and before signing a contract, consumers should consider the following:

  • Upon illness or physical inability to use the facility, can the contract be canceled or transferred to someone else?
  • Is there an annual renewal process?
  • Are the terms of the contract for a lifetime, yearly or monthly membership? Remember "life-time" means the club's life-time, not yours.
  • Are the payments monthly or do you have to pay up front? Although monthly payments might be a little higher than yearly payments, you might save money in the long run if the facility goes out of business.

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HOME IMPROVEMENT
The secret to avoiding home improvement schemes is to get estimates, comparing both price and quality of work. Beware of roving roofers and people who offer to pave your driveway or spray your trees and bushes for disease. They prey especially on the elderly, who are often trusting and can ill afford to pay more for services or materials that are not always good quality.

If you truly need a new roof, get more than one estimate. Don't allow somebody you don't know to come in and re-roof, or claim to re-roof your house or barn without asking for another estimate and comparing the price with local businesses.

It is also very important to fully understand any contract you sign. It should clearly state the type and extent of repairs or improvements and the materials to be used. Do not accept verbal agreements; get it in writing. A deposit should be sufficient to hire the contractor. NEVER PAY IN FULL UNTIL THE WORK IS COMPLETED and you have received signed lien releases from all subcontractors (i.e. plumbers, electricians, etc.) as well as from all material men (i.e. lumber yards, concrete suppliers, window suppliers, etc.).

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INTERNET SHOPPING
The Internet provides another medium for scam artists. The same scam artists who use the newspapers, magazines and mail are taking their deception to cyberspace.

The most common signs of fraud are abundant promises of profits, guarantees of credit regardless of bad credit history, incredibly low prices, or prizes that require upfront payments.

One of the main problems with Internet purchases is that you are dealing with somebody at a distance. In some cases, it is virtually impossible to track the website to an actual person or address. Use the same common sense you would use when buying items off line. Before you order from a new company, ask for printed information such as a brochure or catalog. It is also important that you understand the company's refund and exchange policies.

If you do purchase items or services by way of the Internet, it might be wise to use a credit card because these charges can be disputed if problems arise. However, be sure and file a dispute within the time period specified by your credit card company.

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LIEN WAIVER
Consumer Protection investigators have seen an increase in calls from consumers who have found liens filed against their newly-purchased or remodeled home. Here's how it can happen to you.

In most cases, consumers hire and pay one general contractor who then buys materials from local businesses and hires subcontractors. Even if you have paid the general contractor, he may not have paid his suppliers or subcontractors. You are then liable for the unpaid bills for materials or work. The subcontractors can file liens against your home until they are paid. Any individual who furnishes skills, labor, services or materials for the improvement or development of property has authority to file a lien on that property for the value of what was provided. In most cases, a consumer cannot legally transfer property until all liens have been paid.

You can avoid having a lien filed against your property by obtaining a lien waiver. When you hire someone to build a home, an addition, or even a deck, don't pay the contractor or anyone else until you receive a waiver from all business subcontractors who have provided a service in the completion of the project.

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MAGAZINE SUBSCRIPTION SALES
If you are offered a free magazine subscription for which you must pay only postage and handling, compute the total cost. The postage and handling may be very high when compared to the usual rates. Phone solicitors may try to convince you to buy a subscription for a small monthly payment. Because you pay only a little at a time, you may not realize that you have actually paid more than the regular subscription price.

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MAIL SHOPPING
Shopping by mail can be a convenient way to save time, energy and money. It can also be difficult because of lost orders, computer mix-ups or long distance calls. Below are some precautions you can take to protect yourself when ordering by mail:

  • Never send cash through the mail; only send a check or money order, or use your credit card.
  • Carefully read the description of the product to make sure that the product offered is what you want.
  • Note the stated delivery time and ask for an order or delivery number.
  • Find out about the merchant's return policy. If it isn't stated, ask before you order.
  • Keep a copy of your order form.
  • Keep your canceled checks and charge account records as they will be helpful if you have a problem.
  • If merchandise is damaged, contact the mail order company immediately. If you are asked to return it, get a receipt or return mail number from the shipper. If you don't receive your order or your package is lost in transit, the mail order company will probably take responsibility for tracing it.

Shopping by mail can be convenient, but precautions should be taken.  

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FEDERAL MAIL ORDER RULES
According to the rules adopted by the Federal Trade Commission in 1975:

  • You must receive the merchandise when the seller says you will. If you are not promised delivery within a certain time period, the seller must ship your merchandise within 30 days upon receipt of your order.
  • You have the right to cancel your order if the seller can't ship your order in the stated time or within 30 days. The seller must tell you if the promised delivery date can't be met, and what the new shipping date will be. The seller must give you the option to either cancel the order for full refund or agree to the new shipping date. The seller also must provide a free way to reply, such as a stamped envelope or a postage-paid postcard. If you don't answer, it means you agree to the delay. If you do not agree to the delay, the seller must mail your refund to you within seven business days after your cancellation. If it's a credit sale, the seller has one billing cycle to adjust your account.

These rules do not apply to C.O.D. orders or services associated with merchandise such as mail order photo finishing, magazine subscriptions, seeds and growing plants, or book and record clubs where you agree to buy on a regular basis.

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MIRACLE MEDICAL CURES
Advertising for miracle medical cures is abundant in today's society. These type of promotions promise quick cures and easy remedies to those with assorted health problems, usually targeting the elderly and anyone else susceptible to their promises. Alternative cancer cures, arthritis treatments, and "fountain of youth" drugs are examples of what these offers target.

Wasting money on worthless treatments is only part of the problem. There are many unproven medications, healing devices, and various types of therapies that can be harmful to you. Using drugs, chemicals, or even medical devices not tested and approved by the Food and Drug Administration (FDA) can result in any number of problems-organ damage, trouble breathing or changes in blood pressure, for example. Even some herbal remedies, which are marketed as "all natural" can produce severe allergic reaction or have an adverse effect on the balance of other medication.

If you feel you have a health problem, do not waste money or time that may be critical to your health. By experimenting with unproven "miracle cures," the consumer's health often suffers because of abandoning their doctor's prescribed medical treatment. Visit with your doctor before beginning any new treatment. Alternative approaches are best taken as a participant in an FDA-sanctioned clinical study, where your health and effects of treatment can be monitored.

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900 NUMBER SCAMS Consumers need to know the difference between 900 numbers and 800 numbers. Unlike 800 numbers, which are free, you pay a fee when you call a 900 number. The company or organization you're calling sets the price and receives the money. Charges can vary from less than a dollar to more than $50, and are usually determined by a set rate per minute. Your phone company will provide a free service to BLOCK access to 1-900 calls from your home phone. There is no charge for this one-time switch.

Federal law requires that the cost of calling must be disclosed as a flat rate, by the minute with any minimum or maximum charge that can be determined, or by range of the rates for calls with different options. All other fees charged for services and the cost of any other service to which a caller might be transferred, must be disclosed. For example, if a 900 call is going to cost you $4.00 per minute to call and there is a minimum billing of 6 minutes, you will automatically be charged a minimum of $24.00 on your telephone bill. Any time over that would be added on from there. In most cases, the charge of a 900 call is collected by the local telephone company on behalf of the business.

Any 900 calls offering sweepstakes, prizes or awards must disclose the odds of winning or the factors for determining the odds.

If you question 1-900 charges which appear on your phone bill, you should follow the instructions on your phone bill immediately to dispute the charges. Pay the undisputed portion of your bill. Even if the telephone company removes the charges, the debt might be turned over to a collection agency by the company or service provider. In this case, send the collection agency a letter explaining why you dispute the debt and follow the procedures outlined in the Fair Debt Collection Practices Act. Your local and long distance telephone service cannot be disconnected for contested pay-per-call charges. Your phone company will provide a free service to BLOCK access to 1-900 calls from your home phone. There is no charge for this one-time switch.

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PAST DUE ACCOUNTS
Q: How much interest can a business charge on past due accounts?
A: If a business does not have a written contract with a customer specifying the rate of interest on past due accounts, the maximum rate allowable under state law is 15% per year. If the business has a written contract with the customer which specifies the rate, the business may set the interest rate at any level it chooses.

The South Dakota Attorney General's office says a statement or bill is not considered a contract, so if monthly statements are the only place in which the interest rate is stipulated in writing, the business could not charge more than 15% per year. (SDCL 54-3-5 and 54-3-16)

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RAIN CHECKS
Stores are required to offer rain checks, unless the advertisement clearly states that "quantities are limited," or unless the store can establish that advertised items were ordered in time for delivery and were in sufficient quantities to meet the public's reasonably anticipated demand. A rain check will allow you to purchase the desired item at a later time at the bargain price. Instead of a rain check, stores are permitted to offer a substitute item of comparable value to the sale item at the sale price. The store may also offer some form of compensation that is at least equal in value to the advertised item.

If you cannot find an advertised product on the merchant's shelf, ask for it. If the store has run out, you should ask for a rain check, a substitute or other equivalent compensation. In most cases, retailers will provide you with one of these options.

If you know that a particular store routinely runs out of advertised specials without stating that quantities are limited, and does not provide you with a rain check, a substitute item or some other equivalent compensation, write to the Correspondence Branch, Federal Trade Commission, Washington, DC 20580.

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RENT-TO-OWN
Rent-to-own businesses have become popular in South Dakota. A rent-to-own business offers personal property, such as TV's, stereos, furniture and appliances for rent with the option to buy. State law requires that rent-to-own businesses disclose the terms of the arrangement before you buy. The required disclosures include:

  • the total number, amount, and timing of all payments necessary to own the property;
  • a brief description of the property sufficient to identify it and any damages to the property at the time of agreement;
  • the initial payments required before delivery of the property;
  • statements that the consumer will not own the property until all necessary payments have been made and that the consumer is responsible for the fair market value of the property if it is lost, stolen, damaged or destroyed;
  • statements regarding late payments, default, pick-up and reinstatement fees;
  • a statement clearly summarizing the terms of the consumer's option to purchase including a statement that the consumer has the right to an early purchase option;
  • a statement identifying the party responsible for maintaining the property while it is leased and statements regarding warranty coverage;
  • a statement that the consumer may terminate the agreement without penalty by voluntarily surrendering or returning the property in good repair, ordinary wear and tear excepted, upon termination of any rental agreement; plus a notice of the right to reinstate a rental agreement with the terms and conditions of reinstatement.

 

The rent-to-own option may provide flexibility for many individuals. We suggest you shop around and compare the total cost of buying versus renting. You may find that although monthly rental payments are low, the total cost of rent-to-own may be higher than purchasing the item on credit.

Shop around and compare the total cost of buying versus renting.

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RETURNING STORE ITEMS
Consumers have only limited rights if they are returning an item to a store. As in most states, no South Dakota laws regulate store return policies.

Provided the goods weren't misrepresented, each store may set its own policy, which may include either a cash refund, an exchange, credit to your account, or no refund at all. Others may limit the amount of time in which a return may be made, such as 30 days from the date of purchase.

Be sure and ask what a store's return policy is before making your purchase.

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SELF-IMPROVEMENT SCHEMES Many promoters of correspondence courses, dance studios, hair growth products, wrinkle smoothers, weight reducers, health spas, and beauty kits appeal to the vanity of consumers. Promoters claim their products can improve your love life, health, looks, mind and even your sex appeal. Be alert and be careful. Take the time to compare product contents and prices, and don't fall for any marketing gimmicks that sound too good to be true.

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TELEPHONE SHOPPING
Shopping by telephone is often a convenient alternative to shopping by mail. In making your decision to order by phone, consider prior experience with the company or its general reputation.

However, if you prefer the ease of ordering by phone, you assume the responsibility for merchandise that is delivered late or not at all.

When placing an order by phone, make sure you keep a record of:
  1. the company's name, address and telephone number.
  2. the price of the item or items ordered.
  3. descriptions and item numbers of products ordered.
  4. the method of payment and shipment used.
  5. the date the order was placed.

It is also very useful to keep a copy of the advertisement or catalog from which you ordered.

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TONER PHONERS
Office supply schemers frequently operate from a supply warehouse thousands of miles from their prospective victims. The schemers target all kinds of businesses and organizations, including restaurants, professional offices, religious groups, schools and hospitals. They generally sell products needing constant replacement, such as office and maintenance supplies. While the schemers use many different ploys, the following are some common tactics used.

  • They rarely deal with the authorized purchasing agent.
  • They may mislead you to solicit an order.
  • They may claim to be conducting a survey of office equipment or updating their records.
  • They may try to pressure you into placing an immediate order.
  • They may offer free gifts.
  • They may misrepresent merchandise, including the quality, type, size and brand of their products.
  • They may refuse to accept returned merchandise.

There are steps you can take to keep your company from being victimized.

  • Never buy from a new supplier by telephone or mail until you have verified the company's existence and reputation.
  • Designate purchasing agents for ordering, receiving and paying for supplies.
  • Don't give out any information on makes and models of office equipment over the telephone unless you're sure you know with whom you're talking.

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VACATION SCAMS
"Gift vacation for two. Have an exciting fun-filled holiday. Deluxe room accommodations for two days and three nights."

Typical vacation spots are Las Vegas, Reno, the Caribbean and Hawaii. If it sounds too good to be true, it usually is. Firms make these offers either directly to consumers, through telephone or mail solicitations, or to businesses who use vacation certificates as part of their own sales promotions. Most consumers don't get what they expect.

These certificates usually cost from $100 to $500. If you buy one, you would typically be entitled to several days and nights at the vacation spot. According to the conditions on the certificate, you have to contact the promoter-not the hotel-to make your reservation and probably make a deposit. You might have to make another deposit when you confirm the reservation.

In some cases, vacation certificate promoters get rooms from the hotel only if the hotel is not booked up. If it is already booked, consumers who want to redeem their certificates may not get their first choice of hotel. They may find promised "first class accommodations" aren't all that classy or that their "vacation site" may be some distance from the main attractions of the resort.

In fact, some promoters sell vacation certificates without reserving any rooms. They issue counterfeit certificates that are not honored by the hotel, restaurant or casino indicated.

When in doubt, check with Consumer Protection in the Attorney General's office in the state where the promoter is located to see if there is a record of complaints against the company.

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WARRANTIES & GUARANTEES
Warranties and guarantees are a seller's or manufacturer's written promise to stand behind the merchandise and services he provides. In evaluating warranties and guarantees, consumers need to know:

  • what product, part of a product or performance is guaranteed.
  • what length of time it is guaranteed.
  • what will be done in case of failure.
  • what the buyer must do to make the guarantee good.
  • whether there is an "as is" clause in the contract which cancels any express or implied guarantees the dealer might have made orally.

Federal law requires most warranties, including those for cars and mobile homes, to be easy to understand. Warranties on products costing $15 or more must be labeled "full" or "limited."

To have a full warranty, the product must meet minimum federal standards regarding repairs, refunds and replacements. Under this law, if you incur damages of $25 or more which are the result of deceptive warranties or violations of the law, you can sue the manufacturer for those damages.

A "lemon" clause is part of full warranties. If you can't get a product or part repaired after a "reasonable" number of attempts, this provision requires the manufacturer to give you a refund, less depreciation, or replace the product or part without charge.

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WORK-AT-HOME Magazine and newspaper advertisements give consumers the impression that they can make big profits from the comfort of their homes by performing small tasks and investing little money. Stuffing envelopes, reading books and assembling products are some of the more common work-at-home schemes. The target of these advertisements are homebound consumers such as the elderly and mothers of small children.

Consumers almost always have to pay a fee in order to get further information. These small payments from interested consumers are the heart of the schemes. Promoters can make a tidy sum when each consumer sends $15+ to an out-of-state post office box. The information consumers receive after sending money often consists of only a list of companies which may be interested in hiring consumers to "work at home" for them.

Consumers must contact all of the companies at their own expense and wait for a reply.

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