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Commercial fraud: advice for individuals

Lottery scams

This type of scam usually involves a notification that you have won a prize in a draw that you didn't even know you'd entered. You are told the prize may be cash or an electronic gadget and that all you need to do is send a small cash payment to cover adminstrative or shipping costs, or perhaps even state tax which can't be deducted at source.

If you respond you are likely to receive even more notifications of larger prizes and requests for even larger adminstrative costs which you have to pay in advance.

The prizes don't exist and you will end up losing the money you paid up front.

This type of fraud is very common with most letters seeming to originate from Spain and Canada. The reply address may be UK based but will only be a PO Box or office accommodation address.

Reduce the risk:

  • it is very hard to win a competition you haven't entered - whatever the prize, resist the temptation
  • report any communications you receive to the Office of Fair Trading (OFT): 08457 224499

Although the OFT can't take up a case on your behalf, they will collate information and collect evidence which can help in prosecutions.

Visit www.oft.gov.uk for more consumer information.

 

Advance fee fraud

The most common example of this type of scam is operated by West African crime groups and takes the form of a letter from a government or bank official. The author claims to have identified a large sum of money in the name of a dead relative or has over-inflated a contract and wants help smuggling the money out of the country.

In return for help, the fraudster offers you a percentage which can run into millions of pounds.

No money is requested at first, but once you have been drawn in, requests will be made for legal and administrative costs.

In some cases, victims of this scam have lost hundreds of thousands of pounds as well as losing their businesses and reputation chasing a pot of ficticious gold.

The letters are distributed by post, fax and more frequently now by email.

You will not have been targetted personally - thousands of these letters are sent out worldwide on a daily basis. Most contact details will be taken at random from phone books.

Reduce the risk:

  • if you receive one of these letters, send a copy to your local police station or throw it away
  • if you receive a letter by email, do not reply
  • forward the email to your Internet Service Provider (ISP) - they all have advice on their websites about what to do with offensive or unsolicited emails. Use the generic email addresses most ISP's provide, ie abuse@hotmail.com
  • if you have become embroiled in one of these scams, contact your local police or your local embassy if you're abroad

 

Pyramid schemes

A pyramid scheme is a fraudulent way of making money which requires an endless stream of recruits.

In a straightforward pyramid scheme, a recruit is asked to give a sum of money, say £100 to a recruiter. The new recruit then enlists say 10 more recruits to give £100 each. Each of these new recuits must give £100 and then recruit 10 more and so on.

In order for no one to ever lose money the scheme must go on forever.

Reduce the risk:

  • don't be tempted with the offer of lots of money for little outlay - the chances of your £100 turning into £1000 is zero

 

Charity fraud

Charity fraud is currently on the increase. There are three main types of fraud around at the moment:

Bogus charities

This involves the setting up of a fake charity for an emotive issue such as child illness or cancer. A current scam involves fake charities asking for money for the victims of the London bombings.

Telephone marketing and collecting

These are telephone calls from someone acting on behalf of the charity asking for donations. Before you give money, make sure you are confident the charity is genuine.

Some reputable charities do use this fundraising technique but often administration charges are deducted from the donation. You might want find out how much of your money will actually reach the charity before you decide to donate.

Collection agents 

Many charities use volunteers to go round from door to door collecting their behalf. Unfortunately, some collectors are not genuine. Don't be fooled by official looking collecting tins, these may be stolen.

A new approach is to ask people to donate a regular amount by standing order. Often people are approached with this request in the street. Legitimate charities do use this technique although it is becoming less popular.

Reduce the risk:

  • if you are unsure about a collector, ask for ID or contact the charity direct to confirm the person's identity
  • don't let strangers into your house under any circumstances. If you want to check their details by making a phone call or using the internet, ask them to call back later
  • charities have to be registered with the Charity Commission. You can easily check if a charity is registered by going to www.charity-commission.gov.uk - there is a search facility for registered charities on the homepage
  • contact the charity direct to find out about the different methods they have for accepting donations - pick the method that suits you best

 

Phishing

Phishing involves the use of emails alleging to be from organisations such as banks, other financial institutions and other organisations that legitimately hold personal data. These emails will ask for bank account and credit card details, as well as account passwords.

If a reply is sent, the offenders will use the information either to take over the account, or use the information to obtain goods and services in your name.

No legitimate organisation will ever ask for this type of information.

Reduce the risk:

  • if you receive a suspicious email purporting to be from a bona fide institution which requests personal details, do not reply to it. Contact the organisation using a number you know to be genuine
  • if you find the email is bogus, report it to the police and the company concerned Action Fraud UK

 

Report fraud and get advice

You can get more advice and report suspected fraud to Action Fraud UK: