Top 10 money scams

By Emma Tyrrell

2 February 2005

Forget Del Boy and that chirpy cheeky chappy image. In the real world, conmen are often aggressive, sometimes vicious and always gits. They prey on the elderly and vulnerable, exchange “sucker lists” of past victims, and leave thousands of people feeling ripped off and humiliated every year.

According to the Office of Fair Trading these fraudsters, often linked to organised crime, manage to swindle UK consumers out of £1 billion a year. The scale of the problem continues to grow, as victims are targeted by telephone, mail and email, often by overseas conmen.

Classic cons include lottery scams, where victims are told they are winners of a foreign lottery, but have to pay a “tax” or “administration fee” before they can claim the money, which turns out to be non-existent.

Prize-draw mailings are also rife. These will also tell you that you are a winner of one of a list of glittering prizes, and ask you to pay a fee or ring a premium-rate number to claim. But instead of the grand prize of the car, or the thousands of pounds in cash, you are likely to have won something with little or no value. One such mailshot listed a "limited edition Australian artwork of philatelic value" as its bottom prize – or in less slippery language, an Australian postage stamp. To collect it you had to send a £6.97 acquisition fee.

Roger Hislop at the OFT says lotteries and prize draw scams are the most common in terms of the numbers of people targeted, but says other types of con are equally serious. One causing particular concern at the moment is an advance-fee credit scam, originating in Canada. “The conmen have placed adverts in local UK newspapers, saying that they can get you a large loan, regardless of your credit history, “says Hislop. “To get the loan you have to send an upfront fee – but there is no loan.” Although the OFT has only had a handful of complaints about these credit scams so far, it is concerned because the evidence from Canada and the US, where the con has been running for several years, is that thousands of people have fallen victim.

Yesterday the OFT launched its scams awareness month, by identifying the top ten scams threatening UK consumers, including lottery, prize draw and advance-fee credit cons.

Other member countries of the International Consumer Protection and Enforcement Network (ICPEN) are running similar awareness campaigns, in an effort to combat what is becoming an increasingly international problem. They will also run a worldwide internet sweep, co-ordinated across the 30 ICPEN member countries, aiming at rooting out scams which target victims via unsolicited emails.

A concerted effort is essential, because the scams are on the increase.

According to Hislop, it's not that we're getting more greedy and stupid – it's the scamsters who are getting better at relieving us of our hard-earned cash.

“Con-men are getting more sophisticated,” he says. “Some of the scams may sound improbable when you read about them in the papers, but these people are professional scam artists. They can be very persuasive, but also very nasty, and they know how to pick their victims.”

Hislop says people from all walks of life, from educated professionals to lonely and vulnerable pensioners, have been taken in by conmen. However, the elderly are particular targets.

Research for Canadian anti-fraud organisation Phonebusters, one of the organisations working with the OFT to combat international scamsters, has found that fraudulent telemarketers prey on pensioners on the assumption that they will be more trusting and polite towards strangers. “Offenders have told police their ideal target is an elderly person, home alone, with little or no contact with family members,” it says.

Something which seems to good be true, very often is, but consumers still need their wits about them when it comes to spotting the fraudsters. The OFT's list of top ten scams should help consumers avoid the worst of them:

• Telephone lottery scams , which often use the name of a genuine foreign lottery, use unsolicited mailings and phone calls to tell people they are being entered into a draw. They are then contacted to tell them they've won, but have to send a fee to cover taxes and administration before they can claim. The victims send off their cash only to find the whole thing was a lie.
• Prize draw, or sweepstake scams also ask for fees before people can claim their prize. Some instead suggest that you have to buy a product in order to claim. The result is usually the same – a prize worth less than the amount victims have paid to claim it.
• Premium rate telephone number scams are another variation. They inform people by post that they may have won money or a holiday, but have to ring a premium rate 090 number to claim the prize.
• Investment related scams involve an unsolicited phone call offering investments in shares, fine wine, gemstones or other soon-to-be rare commodities. The investments are often high-risk and may be worth a lot less than the victims pay. Some “investments”, such as gem stones, are often said to be stored in Swiss bank vaults, so you can never see them.
• Nigerian advance fee frauds contact victims by letter, fax or email, offering to share an emormous sum of money in return for using their bank account to transfer money out of Nigeria. Once your bank details are handed over, the conmen will often empty your account.
• Pyramid schemes offer investment returns based upon the number of new recruits to a scheme. There will never be enough people to support such a scheme indefinitely, so only the people who set it up will definitely make money.
• Matrix schemes are an internet variation on pyramid schemes. They offer expensive hi-tech gadgets such as ipods as free gifts, to those who spend £20 or similar on a low-value product. The buyer is put on a waiting list to get their gadget, but will only receive it after a set number of new members have subsequently signed up. As a result, many people on the list will never receive their free gift, and spend their time trying to recruit other victims in order to bump themselves up the list.
• Credit scams, which target those often struggling with their debts. The conmen place newspaper adverts offering loans to those with poor credit histories. People who apply have to send a fee to cover insurance, but after they have paid, they never hear from the company again.
• Property investment schemes invite would-be investors to a free presentation, where they are persuaded to hand over thousands of pounds for a course promising to teach them how to make money as a property dealer. Information provided on the expensive courses is often free and readily available elsewhere, or common-sense. Schemes sometimes offer to source, do-up and manage rental properties, but the OFT says in practice, the properties are near-derelict and the tenants non-existent.
• Work-at-home and business opportunity scams offer paid work from home but either require you to pay money up-front for materials; or ask you to invest in the business when it has little or no chance of success.