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Trading Standards Consumer Guidance Scams Introduction The Office of Fair Trading (OFT) estimate that every year, 3 million people in the UK lose around £3.5 billion to mass marketed scams, such as bogus lotteries, deceptive prize draws, get rich quick schemes, and miracle health cures. This factsheet aims to help you not fall foul of these scams, by enabling you to indentify the patterns of a scam and hopefully ensuring that you keep your hardearned money for yourself rather than send it to someone who is trying to part you from your money. It is usually impossible to get your money back after you have sent it to someone who is running a scam, especially abroad. So, however tempted you are by an offer that has just come through your door – DON’T reply and don’t give your money to the scammers! What is a Scam?    A scam can take many formats, but you can usually spot one by the offer of a large amount of money or a great prize, such as a holiday. Alternatively the offer may be a miracle health cure or slimming aid. If it appears to good to be true, it probably is! The main thing that links all scams is that you are usually asked to part with an amount of money to either claim your larger financial prize, or offer This request for money may be upfront, such as with prize draws, foreign lotteries or tips or miracle health cures. Or you may be asked to phone a premium rate number to claim your prize which starts with ‘09’ or ‘070’ which will cost you around £20 - £50. This may not seem like much money, but for the people running the scam, the amount of people responding, each providing £20, can really add up to a lot of money What scams are currently in circulation? There are so many scams around, that it can be quite concerning. Below we have listed a selection of the scams currently around, with details as to how they work. Spanish/Canadian lottery      You receive a letter directly addressed to you. The letter states that you have ‘won’ and ‘been approved’ for a large amount of money, usually in the region of hundreds of thousands of pounds You are required to send a small amount of money Once the organisation behind the scam realise that you are prepared to send money, then the phonecalls and follow up letters start You will receive phonecalls from people claiming to be from banks asking you to transfer money to their account These people will request larger and larger amounts of money from you, usually for ‘fees’ for an agent, until your bank account is cleared of your life savings 1 of 6 February 09 G511 – Scams How to avoid this scam  Don’t reply to these letters, or hang up if you receive a telephone call stating you have won the lottery  Question how you can win a lottery that you have never entered. Do you remember buying a ticket for the Spanish or Canadian lottery? If the answer is ‘no’ then throw away the letter you have received Prize draws      These are similar to the foreign lottery scams but they operate on a much smaller scale You receive a letter, again addressed to yourself by name, rather than just ‘the occupier’ or ‘dear sir/madam’ You are told that you have ‘won’ a prize, which in order to claim you need to send a ‘processing fee’ of between £10 - £30 You are requested to contact the organisation urgently to ensure that you can claim your prize. Note that it is always urgently or immediately Once you have sent your money, you may or may not receive your prize. Note that despite the ‘large’ prize that you have been told is available, if you are sent anything at all, it will usually be a small prize of a very cheap cost, such as a pen, or a voucher for a holiday that requires you spend even more money How to avoid this scam  Don’t respond to these letters. Throw them in the bin. Even though the amount of money requested is small, if you are sent a prize, it will never equate to the value of the money that you have sent – hence it is a scam  Again, like the foreign lotteries, how can you win a prize draw that you have never entered? Miracle health/slimming claims      These can be sent to you via a catalogue, direct mailing or e-mail They usually offer some miracle health cure or slimming aid, and the information includes testimonials from ‘so-called’ previous customers who are always very happy with the product These offers frequently state that a full refund is ‘guaranteed’ if you are not happy with the product However, once you have sent your money and received your ‘miracle product’ or slimming aid, the company seems to ignore any attempts from you to request your money back if you are not happy The company also usually provides a PO Box address rather than a geographical address for you to contact, making it even more difficult to contact them How to avoid this scam  If you are tempted to respond to these companies, do your research first  If you have access to the Internet, try searching for the company’s name or the product to see what information is available. You may be surprised at what you find, and it is not usually positive information  Discard any e-mail or send back the direct mailing to the company G511 - Scams 2 of 6 February 09 ‘Charity’ clothing companies    You receive a leaflet through the door offering to collect your unwanted clothes The scam involved with this is that certain companies will sell the clothes you place in the bag, rather than give them to needy people If you look closely at the leaflet it will show a registered company number, not a registered charity number How to avoid this scam  Take unwanted clothes directly to your local charity shop instead  Look carefully at the leaflet details  Check the registration number stated on the leaflet at the Charity Commission website (details are at the end of the factsheet) Phishing With increasing numbers of people using the Internet, those people who chose to run a scam, now have many more means of reaching people.  Phishing is where you receive an e-mail that appears to be from a company you know, such as your bank or HM Customs & Revenue  The text in the e-mail will suggest that you click on a link in order to ‘update’ or ‘confirm’ your details  If you click on this link, you will be taken to a ‘spoof’ website that is an extremely good copy of the genuine website  If you enter details such as your name, address and bank account or credit card details, these details are likely to be used by someone who will pose as yourself, and could take money from your bank account or take out loans in your name How to avoid this scam  Don’t open suspicious e-mails  Think about why that company would have sent you an e-mail; for example, if you use a certain bank, why have you been sent e-mails from a completely different bank?  If you are tempted to click on the link to update your details, phone the company instead on a number that you know to be genuine and ask if they have requested that you update your contact or account details  Alternatively, visit their website by typing in the company’s web address yourself. Don’t follow any links given to you in an e-mail  Remember most banks state that they will never ask you to verify or confirm your personal details via an e-mail The foreign money transfer scam   You receive a letter, fax or e-mail which claims to be from someone like a senior government official who urgently has the opportunity of transferring a large amount of money out of a country, usually because of the collapse of its government or a large corporation A new twist to this is a current e-mail which claims to be from a soldier, who has discovered some boxes in Iraq that contain a large amount of money, which he is prepared to share with you, but he needs to place the money in your bank account. However although the details are different, the scam remains the same The purpose is to get you to provide your bank account details and agree to send an amount of money to the individual/organisation behind the scam You will never receive any of the proposed ‘millions of pounds’ that it is claimed are available 3 of 6 February 09   G511 - Scams How to avoid this scam  Ignore the e-mail completely, delete it or report it to Consumer Direct, via their website at, www.consumerdirect.gov.uk/reportascam  Never send your bank details by e-mail  Question why a senior member of a foreign government would be contacting you to ask you to help them take money out of a country. How did they get your e-mail address? The advance cheque payment scam       The advance cheque payment scam is similar to the one above. However it can result from a transaction that actually occurred such as an on-line auction. You are actually sent what appears to be money in the form of a cheque for a large sum of money, over the cost of the item you were expecting and asked to place it in your bank You can of course be contacted by someone that you do not know, in a format similar to the foreign money transfer above You are then asked to send a cheque for the difference in return Now comes the scam. The cheque will look as though it is clearing through the bank system. So you send your valid cheque back to the person who sent you the overpayment But, then the cheque that you were sent bounces and you become liable for paying all of this money to your bank and the person at the other end has cashed your valid cheque How to avoid this scam  Never accept cheques for a value over an agreed amount  Never offer to help some you don’t know buy cashing a cheque for a large amount of money and sending some of your money in return Landbanking      You visit a stand at a event, or are contacted by telephone by a company who states that they can sell you a ‘prime’ piece of land, which is highly likely to obtain planning permission, and when sold to developers will increase in value You pay a large amount of money, normally thousands of pounds, to this company You then find that the land you have purchased is almost worthless, as it will never be given planning permission, and so no developer will be able to build on that piece of land You are left out of pocket and with a piece of land that is worth only a fraction of what you paid for it Even if you try and claim your money back from the company after you realise you have been misled, chances are that the company will have disappeared, or been closed down How to avoid this scam  Carefully examine any claims made about a piece of land for sale  If a salesperson advises you that a piece of land is ‘likely’ to be given planning permission, check first with the local planning department to see if this is true  Find out some background information on the company who is selling the land. How long have they been trading for, is there any information about them on Internet forums, do they need to be authorised by the Financial Services Authority? Holiday clubs    You are approached whilst on holiday by someone who gives you a scratch card You find out that you have won a prize – something like a free holiday You are then invited to go somewhere else to collect your prize 4 of 6 February 09 G511 - Scams   You are taken by the organisation to a venue – where you are offered drinks and then subjected to a very long presentation and hard sell for a holiday club You may end up signing a contract for an overpriced holiday club – where you pay a subscription fee to use hotels that are generally very restricted as to their availability How to avoid this scam  Be aware whilst you are on holiday of being approached by people offering scratch cards  These companies are usually British companies and will use that to make you feel more comfortable about the scam  Don’t go to collect your ‘prize’ as you will lose valuable hours of your holiday time  If you do go to the presentation, only sign up to something if you are sure you really understand the terms and conditions  Otherwise, just walk away – don’t sign anything as the contract will not have been formed under UK law and it will be almost impossible to cancel The Foreign Cars Scam        You are looking for cars for sale via a well known website You notice a car that seems cheaper than others of the same make, model and year The car is advertised as having a UK location When you contact the seller to ask questions or try to view the car, you are told that for business purposes (or some other reason) the seller has had to move abroad However, the seller assures you that the car matches the advert description and all you have to do is to transfer the money for the car to their foreign bank account They will then arrange for the shipping of the car to your door The scam is that the car will never arrive and you will be out of pocket by thousands of pounds How to avoid this scam  Be wary of advertised cars that seem much cheaper than others of the same year and model  Only buy cars that you can see in person before you part with your money  Never send any money abroad  Report the seller to the website administrators How can I recognise a scam, as there seem to be so many variations? Whilst we have covered many variations in this factsheet, there will always be someone who has a new idea for a scam.  We recall two scams in particular that were very cleverly worded and did not involve much money. The first was the scam of an offer of 50 cigarette lighters for a £5, however what was delivered was a box of matches!  The other was an offer for a miraculous new diet, which was guaranteed to work, every time, without fail. After sending in money, consumers received a post-it note which just said ‘Eat less, do more’! However if faced with an offer that seems too good to be true, consider asking the following questions. The answers will usually lead to the conclusion that you will be looking at a scam in whatever format it is presented to you  Why do you have to pay money to receive a larger amount of money or a prize in return?  Is it necessary that you phone a premium rate number to collect a parcel or a prize? How much will the phonecall cost in total?  Have you actually entered a competition or prize draw? How can you win something you haven’t entered? G511 - Scams 5 of 6 February 09   Can you confirm that the e-mail/leaflet/letter is from who it says it is from? If you can’t then you should not reply or take the action that you are being asked to do Why do you have to send money abroad for a product that you cannot see before you buy? What can I do if I have sent money off for something I now believe to be a scam?    The sad thing is that in most cases where the company running the scam is based abroad, it will be virtually impossible for you to get your money back If the company is based in the UK, there is more of a chance that you can get your money back, as the company will usually be breaking UK law if they run such a scam. However there is never a firm guarantee that you will see your money again Be aware that once you have replied to one scam, your name and address is usually circulated to many such companies, so you can become inundated with offers that are too good to be true. Please don’t reply to any of them – throw them in the bin Can Trading Standards do anything about the companies who send out these scam letters?  It depends on whether the company perpetrating the scam is based in the UK. If the company that you have received information from have a UK address, then report the matter to Consumer Direct. Consumer Direct will then forward the information on to your local trading standards service If the scam is run by an organisation outside the UK, there is little that can be done to get your money back. However, UK police are working with police abroad to try and find the people who are running these scams – an example of this is the work done by Westminster Trading Standards, the OFT and the Canadian Mounted Police to get to the bottom of those running the Canadian lottery scam  Our final word If you receive any letters, or e-mails or see any adverts with offers that seem too good to be true, DON’T REPLY. Prevention is always better than cure. Keep your money safe; don’t give it to the scammers! Contact Details Financial Services Authority Consumer Helpline: 0845 606 1234 Website: www.moneymadeclear.fsa.gov.uk/ Charity Commission Telephone Helpline: 0845 300 0218 Website: http://www.charity-commission.gov.uk/ Companies House General Enquiries Tel: 0303 1234 500 Website: http://www.companieshouse.gov.uk/ This leaflet is not an authoritative interpretation of the law and is intended for guidance only. Should you require any further assistance on these, or other consumer advice matters please contact Consumer Direct, a Government funded agency that provides initial advice. They can be called on 08454 04 05 06. If you are an Ealing resident, it is quite likely that your enquiry will be passed to Ealing Trading Standards for more detailed advice. G511 - Scams 6 of 6 February 09