The Office of Fair Trading has identified the top 10 scams targeted
at UK consumers to alert the public to the swindles that may part
them from their money. It estimates that scams are costing UK
consumers around £1 billion per year.
Telephone lottery scams: These include the
Canadian lottery scam and the El Gordo Spanish lottery scam, which
deceptively uses the name of a genuine lottery. People respond to
an unsolicited mailing or telephone call telling them they are
being entered into a prize draw. They then receive a telephone call
congratulating them on winning a big prize in a national lottery -
but before they can claim their winnings, they must send money to
pay for taxes and processing fees. The prize doesn't exist.
Prize draw, sweepstakes and foreign lottery
mailings: many typical scams take the form of prize draws,
lotteries or government payouts. Most appear to be notification of
a prize in an overseas draw or lottery in return for administration
or registration fees.
Premium rate telephone number scams:
Notification by post of a win in a sweepstake or a holiday offer
includes instructions to ring a premium rate 090 number to claim
your prize.
Investment related scams: An unsolicited
telephone call offering the opportunity to invest in shares, fine
wine, gemstones or other soon-to-be rare commodities. These
investments often carry very high risk and may be worth a lot less
than you pay. The shares are not quoted on any stock exchange and
you will not be able to sell them easily afterwards. 'Solid'
valuable investments, such as gem stones, are often said to be
stored in secretive Swiss bank vaults, so you can never see your
investment.
Nigerian advance fee frauds: an offer via
letter, e-mail or fax to share a huge sum of money in return for
using the recipient's bank account to permit the transfer of the
money out of the country. The perpetrators will either use the
information given to empty their victim's bank account; or convince
him or her that money is needed up front for bribing officials.
Pyramid schemes: offer a return on a financial
investment based upon the number of new recruits to the scheme.
Investors are misled about the likely returns as there are not
enough people to support the scheme indefinitely - only the people
who set up the scheme are able to make any money.
Matrix schemes: are promoted via web sites
offering expensive hi-tech gadgets as free gifts in return for
spending £20 or similar on a low-value product such as a mobile
telephone signal booster. Consumers who buy the product join a
waiting list to receive their free gift. The person at the top of
the list gets their free gift only after a prescribed number –
sometimes as high as 100 – of new members join up. In reality, the
majority of those on the list will never receive the expensive item
they expect.
Credit scams: another advance fee fraud,
originating in Canada. Advertisements have appeared in local
newspapers offering fast loans regardless of credit history.
Consumers who respond are told their loans have been agreed but
before the money can be released they must pay a fee to cover
insurance. Once the advance fee is paid, the consumer never hears
from the company again and the loan never appears.
Property investment schemes: would-be investors
attend a free presentation and are persuaded to hand over thousands
of pounds to sign up to a course promising to teach them how to
make money dealing in property. Schemes may involve the opportunity
to buy properties which have yet to be built at a discount. A
variation is a buy-to-let scheme where companies offer to source,
renovate and manage properties, claiming good returns from rental
income. In practice, the properties are near-derelict and the
tenants non-existent.
Work-at-home and business opportunity scams:
often work by advertising paid work from home but which require
money up-front to pay for materials; or by requiring investment in
a business with little or no chance of success.
