Prepayment -- it's how we buy many goods and services in Ontario. You plunk down your money at the fitness club before losing your first pound. You pay your dues at the martial arts academy before anyone gets to throw you around.

Prepayment usually works out well, because most businesses are honest. But what if it doesn't? What if you pay your money and they don't provide the service you were led to expect -- or worse, don't provide any service at all?

This brochure is designed to help you avoid some of the common risks -- and scams -- that can make a prepaid transaction turn sour. It also explains your protections under the law.

Reducing the Risks

Time to take up the tango? Or learn the finer points of karate?

If you are into self-improvement, there are plenty of clubs willing to help you achieve your goals -- at a price. If all goes well, you will get your dancing trophy, your black belt, or whatever.

But clubs don't always deliver what they promise. Or they go broke. Or they fail to open after collecting your dues. Such are the dangers of this corner of the marketplace.

If things go wrong, there is no law that can totally shield you from loss. But by making good use of the Prepaid Services Act -- which covers clubs devoted to fitness, diet, talent, martial arts and dancing -- you can greatly reduce your risk. Here are some of its protections:

A cooling-off period
After signing a membership contract, you have five days to reconsider. You're entitled to cancel within this period, for any reason you like, by informing the club in writing.

Monthly payments
The club must offer you the option of paying membership dues and initiation fees in monthly instalments. This reduces your loss if the club closes its doors.

One-year memberships
This is the maximum length of a contract. Back in the days of "lifetime" memberships, the failure of a club could cost members a lot of money.

Trust accounts
Money paid to a club by a new member must be kept in a trust account for the five-day cooling-off period. Money paid for services that are not yet available must also be kept in a trust fund.

What if the club's representations or sales pitches turn out to be false or misleading?

This is where the Business Practices Act comes in. Under this legislation you have the right to cancel within six months if you can show you have been the victim of unfair business practices. You do this by registered or hand-delivered letter.

You Ought to Be in Pictures

A man with a clipboard stops you on the street and asks whether you've thought of becoming an actor, or a model. "You're a natural," he says. He offers an audition or a screen test, and you're tempted. But don't do anything rash. Here's what respected talent and modelling agency professionals have told us about their industry:

• Reputable talent agents don't approach people on the street.
  They don't even advertise. If you want to be represented, you go to them.
• They don't take up-front fees.
  If they find you work, that's when they get their money.
• They don't promote courses.
  If an agent tries to sell you acting or modelling lessons, run for the door.
• They don't charge you for photographs.
  In the real world, you arrange for your own photographs.

If you do sign up with a talent agent, remember that you have the same five-day cooling-off period as you have with other prepaid services. All you have to do is write the agent a letter cancelling the agreement. And if the agent's representations or sales pitches turn out to be false or misleading, the Business Practices Act gives you six months in which to cancel the agreement by registered or hand-delivered letter.

Targeting the Unemployed

People who are unemployed and desperate to find work can least afford to see their money go up in smoke. But these are the very people who are targeted by scams involving up-front payment for the promise of work. Here are some to watch out for:

Make big profits working at home!
Big profits are highly unlikely. Ads like these are often designed to rope people in to low-paying work like stuffing envelopes or turning out cheap handicraft products. Or they may ask you to pay in advance for working materials. When they arrive, you find you paid much more than the materials are worth.

We have a job for you!
Beware calls from so-called employment agencies telling you they have been asked by an employer to "screen" you for a particular job. After getting you to pay a hefty "administration fee," they send you to see someone who has no work to offer and has never heard of the agency. They then point to fine-fine print in their contract which says jobs aren't, after all, guaranteed. In other cases, the offer of a non-existent job is used as bait to get you into their offices. Once there, you are pressured to sign up for job-finding services. Payment in advance, of course.

Come fly with us!
You have to be extra careful about newspaper ads promising jobs in foreign countries. In one popular scam, you're invited for an interview -- likely in a hotel suite or rented office -- by individuals posing as foreign employers or their agents. You're told you have won the job, and all you have to do is pay a few hundred dollars for visas and other paper work. The phony employer pockets the money and disappears.

In another version of the scam, ads ask you to send money for an "information package" guaranteed to get you a foreign job. When you get the package, it may contain nothing more than a list of companies taken from an old phone book, and perhaps some instructions on preparing a resume. You can get better information free of charge from a foreign trade mission, or at a good library.

Only You Can Repair Your Credit

Also be wary of newspaper ads offering to clean up your credit profile. For a fee - often substantial, usually payable in advance - so-called credit repair clinics say they will arrange to have negative credit information removed from the records kept by credit reporting agencies. They will tell you this even includes information about bankruptcies and default judgments.

Don't believe a word of it. Credit reporting agencies have contracted with their business clients to maintain complete information about your credit performance. And they have contracted to report it as long as it remains accurate. No credit repair clinic can get them to do otherwise.

One thing that can improve a credit profile is improved credit performance on your part. Another is the passage of time. Consumer reports can't contain a bankruptcy discharged more than seven years ago, unless you have declared bankruptcy more than once. The seven-year cut-off also may apply to writs, fines, non-payment of taxes and information about criminal convictions.

If your credit profile needs improving, start by asking the credit reporting agency that holds your file to show you what is in it. This is something they are required to do under the Consumer Reporting Act. If you find anything that is wrong or incomplete - and it can be proven - the agency has to correct it, make the information complete, or delete it. If your file is corrected, the agency has to inform anyone you identify who has been been given the old information in the past six months to a year.

Once you know your file is in order, you can get on with re-establishing your credit rating. And the best thing about doing it yourself is - it's free!

Where Not to Get a Loan

When a person is most in need of financial help may be the time when help is hardest to find. Lenders may back away when they hear about overextended credit cards or missed loan payments. That's when hard-pressed consumers may be lured by newspaper ads placed by loan brokers - the ones promising to arrange loans "even if you have a poor credit rating." It may be tempting, but credit experts strongly advise against going this route.

If you do choose to deal with a loan broker, you should know that it's illegal under the Loan Brokers Act for anyone to demand payment in advance for arranging a loan. Insist that the broker's fee be taken out of the loan only after it has been approved