Don’t Be Caught Out by Scams

11Oct11

It is estimated that three million people in the United Kingdom alone fall victim to scams and swindles every year, losing a total of GBP 3.5 billion. This article explains how some common scams work and what to watch out for.

 

Scams take advantage of one or more human instincts, which can include:

Greed – almost all scams promise considerable wealth to the recipient

Fear – some scams are designed to make people fear the consequences of not replying, such as the computer virus repair scam. Computers are an important part of many people’s lives, and many people fear a virus attacking their home PC.

Self-importance – the foreign money transfer scam for example is designed to make you feel privileged that you have been selected as a trustworthy individual. In reality, the communication will have been sent to many people.

Respect for authority – the foreign money transfer scam may use the name of a senior government official, e.g. Nigerian President Goodluck Jonathan.

Some common scams include:

 

Boiler rooms

A phone call offers you the chance to buy shares. You may be told that the shares are likely to increase substantially in value, when they are actually worthless or even non-existent.

If you are contacted by a firm offering financial services, check that they are authorised by the Financial Services Authority (FSA), the United Kingdom’s financial watchdog, via the FSA Register: http://www.fsa.gov.uk/Pages/register/index.shtml. The FSA also maintains a list of unauthorised firms at http://www.fsa.gov.uk/pages/Doing/Regulated/Law/Alerts/unauthorised.shtml. An authorised firm is very unlikely to sell shares via cold calls.

Foreign money transfers

Usually via email, you are informed that an individual based overseas would like to use your bank account to store a substantial sum. In return, you will be allowed to keep a large proportion of the funds. You may be asked to send upfront fees for administration etc. The individual collects these fees and never transfers the promised funds, and may then use the account details you have given to remove funds from your account.

Computer virus repairs

You receive a call saying that a company is monitoring your computer, and that virus activity has been detected. The company then offers to fix the problem, but requires your bank details to collect a fee.

In this situation, the caller cannot possibly be monitoring your computer. As above, they are seeking money from the repair fee, and also your account details so they can remove funds. The company will not fix your computer, indeed there is nothing to repair.

Phishing

You receive an email from what appears to be a high-street bank, saying that you are due a refund, or a security verification is required, or similar. The process involves you being re-directed to a website carefully designed to look like the bank’s website. You will then be asked to input certain details, such as account details, passwords or PIN numbers.

Again the fraudster is after your personal details for their own use. There is no refund or security verification taking place. A genuine bank will never send emails requesting this information.

Foreign lotteries

You are informed that you have won a prize in an overseas lottery. To receive it, you are told to send a processing fee, or provide your personal details. The prize does not exist, and indeed the lottery itself may not be genuine – the Canadian National Lottery is frequently referred to in scam communications.

No genuine lottery will ever communicate like this, and ask yourself – how can I win a lottery without entering?

You will notice that many scams take the form of asking you to send a sum of money in order to receive a larger sum, known as an advance fee scam.

If you are suspicious that something may be a scam, do not deal any further with the other party and contact the police or Trading Standards.

You should never respond to a scam communication, even to say you are not interested, as then your details are likely to be forwarded to other scammers and you will receive more similar communications.

An oft-quoted saying is ‘If it sounds too good to be true, it probably is’.

See the previous post for information on saving for your retirement.

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