Estimates show that small investors lose $40 billion a year to con artists and swindlers, says John Baldwin, director of the Utah Division of Securities and currently serving as president of the North American Securities Administrators Association. "An increasingly large portion of these ripoffs are being committed over the telephone."

That's the philosophy behind a cooperative effort known as the Alliance Against Fraud in Telemarketing involving consumer groups, trade associations, consumer protection offices, labor unions, industry officials and state and federal agencies around the country, The object is to combat fraud through combined efforts and education.The newly formed alliance has come up with a list of the 10 most prevalent telemarketing frauds. While some of the following products and services can be legitimate and are sold by reputable telemarketers, they are also among the most popular promotions by con artists.

Starting with the most common fraudulent offer, the top 10 are:

1. Prize offers (often to get consumers to buy such things as vitamins or water purifiers).

2. Penny stocks.

3. Office supplies.

4. Magazine subscriptions.

5. Credit repair services.

6. Precious metals.

7. Travel scams.

8. Art.

9. Business ventures.

10. Cellular telephone lottery applications.

At a press conference launching the fraud alliance, National Consumer League director Linda Golodner noted: "The variety of these top scams demonstrates the scope of fraud in telemarketing. Consumers need to be aware that these boiler room operations exist and learn how to deal with them so that they can reliably conduct business on the telephone.

"Consumers can take steps to avoid becoming a victim of telemarketing fraud. These steps include knowing the organization you are dealing with on the telephone and understanding the offer being made. Don't believe offers that sound too good to be true."

And from James H. McIlhenny, president of the Council of Better Business Bureaus: "Telemarketing has become a large and important part of the American marketing system. While the vast majority of those engaged in telemarketing are honest and legitimate, it has unfortunately attracted numerous scam artists and swindlers who, through high pressure tactics, dishonesty and outright lying, manage annually to steal millions of dollars from consumers."

Since legitimate companies also get involved in telemarketing, how can you tell if you are dealing with a not-so-honest one? Here are some warning signs to watch for:

- Any offer listed in this top 10. Just be aware that problems are common here and you need extra caution.

- Strangers. By wary any time you are contacted by someone you don't know or a company you don't recognize. That's not to say that all strangers are bad - but just that you should pin them down as to name, address, references, etc.

- High pressure tactics. Be leery of any offers that have to be accepted immediately, where you have to hurry or "do it now."

- A high promise of return on investments.

- Use of the words "guaranteed" or "insured." There are not many times that returns can be guaranteed.

- A company with no documents or literature to send you. Unless they have literature that you can peruse at your leisure, don't be in a hurry to get involved.

- An offer too complicated to understand. If you don't clearly understand what the provisions are, what is expected of you and what you can expect, don't do anything.

- Request for a credit card number. Never give your credit card number over the phone unless you have initiated the call and know who you are dealing with.