Five recession-inspired scams
During times of economic crisis everyone is looking for ways to make more money, and unfortunately fraudsters are no exception.
Here we reveal five recession-inspired scams that you need to be aware of.
1. Pay-in-advance credit
Companies are targeting cash-strapped borrowers with offers of pre-qualified low interest loans and credit cards.
All you have to do to access the deal is pay a ‘processing fee’, which could amount to hundreds of pounds.
Never pay for a promise, advises Consumer Direct. A legitimate lender would never offer guaranteed credit without a full application or credit score.
And even if you do pay the fee, you will still have to apply for the credit and may well be rejected.
2. Used cars
Second-hand car buyers are being advised to check that any car they look to purchase legally belongs to the seller and does not have any outstanding finance on it.
According to the Finance & Leasing Association (FLA), nearly 40% of all motor fraud cases relate to people selling their cars before settling any outstanding finance – a crime known as 'conversion fraud'.
Paul Harrison, head of motor finance at the FLA, adds: “We have seen conversion fraud increase as some people look for an easy way out of financial difficulties by selling a car that doesn’t belong to them.”
Worried buyers can check whether a used car has outstanding finance, is stolen, an insurance write off or a clone online through HPI or The AA.
Nicola Johnson, consumer services manager for HPI, says: “Buyers need to be aware that some vehicle history checks do not include finance information, which leaves them vulnerable to any type of finance fraud.
"The provision of a seller receipt or a purchase receipt will not offer legal protection for a buyer if the car later turns out to be on outstanding finance. The hard truth is that finance companies can and will take back their asset if it is defaulted upon.”
3. Letting scams
People looking to rent a room or property should be wary of landlords who ask tenants to ‘prove’ their financial position before viewing.
Citizens Advice has warned of a new scam where landlords are asking would-be tenants to make a secure cash transfer to a trusted person (such as themselves or a friend or relative) and send a copy of the receipt to the landlord to prove they have sufficient funds.
The landlord reassures the tenants that no-one can access the money but when they go to withdraw the money they discover that the supposed landlord has used the details from the receipt to raid the transfer account - and that the property or room never existed.
Citizens Advice says potential tenants should never transfer money – even to themselves – to prove they can pay the rent or deposit. Nor should they pay any money before viewing a property.
Should you make any money transfer, keep the receipt secure as the details on it could enable someone else to access the cash.
4. Work-from-home scams
According to the Office of Fair Trading (OFT), 17% of adult have been targeted by a work from home scam in the last 12 months - and it’s a figure that’s on the rise as cash-strapped households look to boost their income.
Scammers advertise paid work from home in local newspapers, shop windows and increasingly via email, and promise a lot of cash for only a little work. The catch is that you usually have to pay your ‘employer’ a fee up-front for materials or so-called advice.
Once the money is paid you are unlikely to get any work or you only earn a commission for recruiting further victims.
Heather Clayton, senior director of the OFT’s consumer group, says: “Genuine work-from-home schemes should tell you in writing exactly what you will be expected to do, how much you will be paid, and how and when you’ll be paid.”
Consumer Direct also advises job hunters do a web search on the company, ask to speak to current workers and to walk away if you have to pay money in advance.
5. Online dating
As more of us go online to find love, scammers are increasingly turning to dating websites to target vulnerable romantics.
Scammers write to their victims over a period of months to gain their trust before the requests for money begin. Often from overseas they might want money for a flight to the UK or claim that they have been robbed, are stranded or need urgent medical treatment.
Surprisingly enough, once they’ve got your cash the romance sours and the scammer can’t be traced.
Consumer Direct’s golden rule is to never send any money to someone you have not met, however plausible their story.
If you have any suspicions test your date by asking to phone them or post them something. If you only get a PO box number or a phone number that never gets answered stay well clear.
Your credit score is a three-digit number (ranging from a low of 300 to a high of 850) calculated from the information in your credit report. Your credit score enables lenders to determine how much of a credit risk you are. Basically, a low credit score indicates you present a higher risk of defaulting on your debt obligations than someone with a high score. If you have a low credit score, any products you successfully apply for will carry a higher rate of interest commensurate with this risk.