Scams cost Brits £3.5 billion a year

1 February 2008

Scams such as bogus lotteries cost the British public £3.5 billion every year with older and vulnerable consumers hit the worst.

The Office of Fair Trading estimates that every year three million people fall victim to scams sent by post, email, text, and phone or over the internet. Rogue traders are also a common cause of cons, with people paying for unnecessary work on their homes or targeted by burglars.

The OFT also warns that scammers tend to target vulnerable members of society, and that older victims are likely to lose twice as much money than others.

Mike Haley, director of consumer protection at the OFT, says: “Scammers use sophisticated psychological techniques to target people who are often the most vulnerable in society.

“Those who fall for these scams not only lose their savings, but often live in fear, suffering debt and depression and are too afraid to tell anyone of their plight.

“We want to ask family members, carers and others to help spot the warning signs before it is too late.”

The government is investing £7.5 million in "scambuster" teams set up to tackle dodgy door-step salespeople, counterfeiters, prize draw scams and cowboy builders.

John Hutton, the secretary of state for Business, Enterprise & Regulatory Reform, says: "Cold calling fraudsters who prey on the elderly and vulnerable bring fear to our communities. We are determined to shut them down and bring them to justice.

"These illegal scams cost people in the UK billions of pounds each year. Consumers deserve a fair deal, not to be ripped off or conned by the bogus sellers that give legitimate business a bad name."

Popular scams

* People receive letters from so-called psychics or clairvoyants claiming they can predict the future. Victims are normally asked to pay a fee upfront in order to receive a prediction.

* Victims are told they have won a bogus foreign lottery or are the sole heir to an inheritance. The amount of winnings/inheritance varies but people are told to pay an administration, tax and customs fee to claim.

* A similar con is when scammers send information that claims you’ve won a large cash prize or sweepstake. You are asked to call a premium rate number, make a purchase or send a fee. The prizes often tend to be worthless.

* Scammers contact people offering them money in return for helping to get money out of a foreign country. However, victims are tricked into sending their bank details or told to send a fee. As well as never receiving any cash, many people will find their bank details are cloned and money stolen.

* Victims are offered the opportunity to invest in ‘golden’ investments like shares, fine wine or gemstones. The OFT says these are often over‑priced, very high risk, and difficult to sell on.

* Companies promise costly miracle health cures to treat common illnesses.

Scams Awareness Month

The Office of Fair Trading has launched a scams awareness month to warn consumers, especially the elderly and vulnerable, to beware scams such as bogus lotteries, deceptive prize draws and sweepstakes, fake psychics and 'miracle' health cures.

Daniel Blake, policy development manager at Action on Elder Abuse, says: “Scammers operate through a ruthless circle of psychological and financial abuse.

“They gain people's trust and exploit fears, insecurities and pain to steal as much money as they can from those who can least afford it. We are supporting this campaign to empower consumers and their support networks to stamp out scams.”

How to avoid scams

The OFT advises people who have received an unsolicited offer that seems too good to be true to avoid:

Making a purchase to receive a prize
Sending their bank details or any money/fees
Ringing a premium rate telephone number

It also urges people to take legal or professional advice before parting with any money.

For more advice on avoiding scams click here.

Have you been a victim of a scam? Share your experiences on the Moneywise forums.

Add new comment