Global fraudsters hit UK public for £1bn

The government has released a league table of top-ten swindles that defraud the British public by about £1 billion a year.

The Office of Fair Trading says publishing the list of scams is one way to alerting consumers to a raft of hoaxes that sometimes start outside UK borders.

Top of the list, and causing the most headaches for the watchdog is the large number of telephone lottery scams, including dodgy prize draws or authentic sounding schemes, declaring a gift is available.

The OFT spotlighted the El Gordo Spanish lottery and Canadian lottery scam, which deceptively use a genuine name to entice cash out of people to pay for delivery and taxes on their mystery prize.

Typically, users never receive a prize, but they are happy to send funds from answering the unsolicited e-mail or telephone call - in the hope a bigger award is on the way.

Almost as prolific in defrauding the public are addressed invites to houses, which claim a cash prize is theirs, if they are willing to phone a premium rate number to get more information on the item.

Sweepstakes, foreign lottery mailings and government payouts all work on a similar basis, by attracting people to expensive phone lines or swaying them to pay for registration or admin fees, just so they can receive their non-existent gift.

Christine Wade, who is director of consumer regulation at the OFT, said: "Scammers are resourceful, enterprising and manipulative. By exploring the same routes to market as legitimate business, they damage not only individual consumers, but the interests of fair-trading as well."

The OFT also warned of costly investment scams, designed to target those who desire the finer things in life, like fine wines, gemstones and soon-to-be-rare commodities.

According to the league table, these operate in a similar way to high-profile share scams, where a rogue caller tempts the consumer into a false investment that has no money available.

One of the most notorious swindles known to the OFT is the "advance fee" trick from Nigerian criminal gangs.

These are invitations sent to Britons via fax, e-mail or letter, and request private bank details so the Nigerian party can send a massive cash payment to help transfer money out of the country.

Likewise, this is a spurious approach to a consumer and often results in bank accounts being completely emptied or requests follow for more cash to help bribe officials.

Further hoaxes to online audiences include the dangerous 'pyramid' scam that effectively convinces people to get more recruits for a financial investment so it can payout to a ring of lucky recipients.

Similar to a 'matrix' scam - which tempts internet users into receiving a free gadget for a cheap price - this simply leaves consumers out of pocket and without any item to show for it.

Particularly of interest to aspiring entrepreneurs is the tempting hoax of a generous looking loan, which the OFT says never materialises from the rogue Canadian senders.

Similarly, those Britons eyeing the property market in the UK and abroad are the likely victims of a prolific property investment scam.

This rip-off capitalises on ambition, and tries to coax £1,000 out of people to enable them to start property investment and lucrative buy-to-let ventures.

In this instance, consumers are often told they can start investing by taking advantage of soon-to-be built houses that will deliver large financial rewards.

However, in practice, such properties – wherever they are located, are near derelict and the tenants non-existent.

"We will continue to work with our partners within the UK and overseas to enforce the law against perpetrators of these misleading and fraudulent schemes," said Ms Wade.

She added this would be carried out "to provide the public with the knowledge and skills they need to recognise these scams."

Freelancers also need to be vigilant against the spate of home-working deals, which promise paid work from home but which require money up-front to pay for materials.

The scams can also operate by pitching a business deal to a home worker who has no idea they are about to invest in an enterprise with little or no chance of success.

The OFT said they are actively working with over 30 countries to tackle the scams , many of which originate and operate from overseas, making detection and prosecution more difficult.

 

3rd February 2005

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