Ever received a letter congratulating you on winning a lottery you're sure you never entered, or received a phone call telling you to ring some expensive premium-rate telephone number in order to claim your 'star prize'?
While some scams are fairly easy to spot, others aren't. Although we might pride ourselves on our ability to smell a rat a mile off, swindlers aren't stupid; they make their operations look as plausible as possible.
In fact, according to Consumer Direct, three million UK adults fall victim to mass marketing scams every year – losing on average £850. And these of course are only the official figures; a large number of victims don't report their experiences.
Unfortunately, if you've fallen victim to a scam, catching the swindlers and getting your money back is extremely tricky. "It's a sad reality that it's very difficult to get any money back at all, because a lot of the scammers are based overseas and can be incredibly difficult to track down," says Frank Shepherd, a spokesperson from Consumer Direct.
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With so many mass-market scams ready to trip us up, and our relative powerlessness in the face of them, the best cure is prevention. "If it sounds too good to be true, it probably is. Exercise a good degree of scepticism," advises Shepherd.
Moneywise reveals below how to spot the top 10 most common scams, how to avoid them, and what to do if you've been caught out.
Scam watch: If you think you have been scammed let us know so we can warn others.
1. Premium-rate telephone numbers
You will receive some form of correspondence via post, a text message or automated voicemail informing you that you have won a major prize and all you need to do to claim it is call an 090 premium-rate number.
You will invariably be kept on hold for a long time, all the while racking up more costs. Even though you may realise each minute is costing you more money, the temptation is to keep on waiting to find out what you've won. Nearly everyone who does call in gets a prize, but it's a token gesture, particularly when compared with all the money you have spent on the phone call.
An estimated 1.08 million people fall victim every year, according to the Office of Fair Trading (OFT), making this one of the biggest scams. The average victim loses around £80.
To protect yourself against these types of calls and texts, register your phone number with the Telephone Preference Service at tpsonline.org.uk or call 0845 070 0707, which will reduce unwanted sales calls and messages.
You can also check with your telephone company if it offers a number-blocking service: it should be able to block withheld UK numbers. To report the scam, you can forward the unwanted texts to Phonepayplus on 020 7407 3430. Alternatively, call it on 0800 500 212 or go to phonepayplus.org.uk.
2. Pyramid selling
These schemes invite you to sign up to a money-making club, typically through websites but also through friends' invitations. The premise is that you have to pay a small joining fee and then invite a specified number of other people to join in order to claim your reward.
The reality is that only those at the top of the pyramid can expect lucrative rewards. Matrix schemes work in a similar way but offer a gadgety gift instead. We fall for pyramid and matrix schemes in part because they come across as reasonable propositions.
However, you should steer clear of these types of money-making schemes, especially the ones that ask you to sign up new members. The swindlers are relying on you failing to recruit enough members – and so far this has paid off, with the average victim of pyramid selling losing £930.
3. The Nigerian letter scam
The Nigerican letter scam is a letter or email offering you a huge payment if you can help get money out of a foreign country.
The writer might claim to be a government official, an accountant or a lawyer. They will tell you that they need to transfer millions of dollars to the UK – perhaps because of some major event in their country such as a coup or natural disaster. You're promised a slice of that money for helping with the transfer.
You may be asked for your bank details. The fraudsters then raids your bank account. Alternatively, you will be told to send an upfront fee. Either way, you never see a penny of the promised payment.
This scam is sometimes called the '419 scam'.
4. Bogus Holiday Scams
This is one of the most costly scams, with the average victim losing £3,030, according to the OFT. They usually work as follows: you're handed a scratch card and discover you have won a free holiday. You have to attend a presentation to collect your prize. The presentation is usually at a swanky hotel, with glossy brochures and posters all adding to the air of authenticity.
However, genuine holiday clubs will allow the consumer time to look over a contract before signing it, while bogus holiday clubs will pressurise hopeful holidaymakers into signing on the dotted line, without reading through everything properly.
After committing yourself you will suddenly find that your 'free' holiday has a lot of extra costs, such as transport and other less obvious but nonetheless 'compulsory' extras.
Be especially wary of presentations that ply you with unlimited alcohol or offer special discounts that only last that day, and withstand the pressure to sign anything until you have taken the information away with you to study in your own time.
If you have already signed up to one of these clubs, contact the UK's European Consumer Centre (ECC) on 08456 040503 or via its website, ukecc.net. The ECC can advise you on your rights in your specific case and help in cross-border disputes.
5. Prize draw/sweepstakes
You will usually receive a letter, email or telephone call that tells you that you have won a large prize. To claim your winnings you have to purchase some smaller prizes or send an administration fee.
Swindlers rely on the fact that the small print is in a font that's so small most people won't bother to scrutinise it. However, if you do read it, you'll discover that you've simply been given the opportunity to enter a sweepstake you have only a very small chance of winning.
Compared with bogus foreign lotteries and advance-fee scams, which offer much vaster sums in prize draws, these scams seem more plausible because the amount of money is more realistic.
You can check if the mailing comes from a member of the Direct Marketing Association (DMA) at dma.org.uk. To reduce unwanted mail, register for free with the Mailing Preference Service at mpsonline.org.uk or call 0845 703 4599.
6 Work at home / job opportunities
Who wouldn't relish the idea of rolling out of bed, making yourself some breakfast, and then settling down to work while still in your pyjamas?
Thanks to more people facing financial worries, work-at-home scams have claimed a special place in the swindlers' armoury. Whether you've been made redundant and are looking for interim work, or need to supplement your existing income, these scams offer opportunities to earn extra cash for very little effort.
Promises such as "You could make a small fortune in your coffee break" or "Get paid over £76,000 for just 90 minutes' work", illustrated by personal case studies, are appealing and usually appear genuine.
The swindlers make their cash through registration fees, but you'll soon discover that the amount of work you need to put in to recoup your initial outlay – let alone make a profit – is totally disproportionate.
If you would like to work from home, it's better to approach local companies that have a known presence as opposed to a faceless website or telephone service you've seen advertised on a poster. Contact Homeworkers Worldwide on 0113 217 4037 or go to homeworkersww.org.uk.
7. Miracle health cures
Who wouldn't pay for diet pills that meant you could literally have your cake and eat it? Like other unsolicited mail or emails, health swindlers aim to appear as professional as possible, reeling off an impressive amount of medical qualifications and fake personal testimonials from "satisfied customers".
Look out for exaggerated claims and don't let your desire to believe the claims overrule the logical part of you that knows they probably aren't true. Philip Hodson, fellow at the British Association for Counselling and Psychotherapy, illustrates how the scams work:
"I recently got a spam email, apparently from HM Revenue & Customs, offering me a £1,500 rebate on my tax. I forwarded it on to my accountant, asking 'Is this a spam email?' I knew it was, but I still asked the question."
Although Hodson's example isn't medically related, the same principle applies – even more so when the scam exploits the desire to be thin, or free of an illness or debt problems. Seek professional advice before answering this kind of email.
8. Clairvoyant letters
Victims receive letters in the post warning them that if they don't reply they could face bad luck or even endanger their family. The letters appear to be addressed personally to the sender and often come with a photograph of the supposed expert.
Marilyn Baldwin, founder of the Think Jessica campaign, which supports families of chronic scam victims, points out how scammers particularly prey on the older and often more vulnerable members of society.
"Older generations can be overly trusting and don't understand that they are mass mail-mergers," she says. "They imagine it's one person at a typewriter tapping out personal letters."
The average victim loses £240 to swindlers, but in addition to the financial loss, bogus clairvoyant schemes, like other mass-mail schemes, can also cause emotional damage. Baldwin set up the Think Jessica campaign after her mother Jessica became a chronic scam victim.
A chronic victim is someone who repeatedly falls victim to scams – if you think a family member is being targeted, contact thinkjessica.com for support and advice.
9. Foreign lottery scams
Logically, if you haven't entered a lottery, you can't win it, so any letters or emails that tell you otherwise should be treated with suspicion.
The 'winner' will be told to phone the prize line, which unsurprisingly is a premium-rate number, or asked to send off a cheque for a small amount to cover administration fees.
Of course, the promised huge cash prize never materialises and the swindlers make a tidy sum from the thousands of victims' payments. The key to their success is to offer such a large amount of money that you're blinded by the figures, and the admin fee appears minimal in comparison.
"You fall into the trap of thinking 'it's only £20'. But if you send it you're likely to be put on a list [known as a 'sucker's list'] for other mailings and will be more regularly targeted in the future," warns Shepherd. "Consider contacting the mail and telephone preference services to reduce this type of marketing."
10. Money loans
You often come across advertisements in local papers offering fast money loans without formal credit checks. You call up a freephone number and are then told that your loan is agreed but you need to pay insurance costs via a money transfer. But once you've paid the fee, you never receive your loan or hear from the company again.
Never, ever give your bank details to someone you don't know, and be sure to report the swindlers too. If you have fallen victim to this scam, report it to the police and the OFT.
Although it isn't easy to track down the perpetrators, the more victims report their experiences, the easier it will be to stop them in the future.
Other scams to avoid at all costs...
Career opportunities: Aspiring novelists, models and inventors are lured by advertisements promising to turn their dreams into reality. However, in order for the manuscript to be published, the invention patented or the model to step onto the catwalk, initial outlay costs and fees must be paid upfront.
Property investment: These scams cost victims an average £4,240 a year. You are invited to attend a free presentation about making money from property investment, but whereas the real thing would allow you time to go away and think it over before handing over any money, the fake setups push for money straight away.
Swindlers top tactics
- They strive to look as professional as possible, even warning people of 'bogus scams' to make themselves look more genuine.
- They create a sense of urgency to make victims respond immediately so as not to lose out, and this prevents them from reading through the information carefully.
- They create an air of secrecy to supposedly protect the 'win', but actually to protect themselves and make 'winners' less likely to tell friends and family who might convince them it is fraudulent.
- They make the victim feel that they have been personally approached or targeted so they believe they are special.
- They offer amounts of prize money or returns that seem feasible. Or they ask for a relatively small admin costs compared with the final prize, making these costs appear very reasonable.
Five ways to make sure you don't get swindled
- Read the small print on any documentation you receive and make sure you understand it all before agreeing to anything. Don't rush into decisions.
- Don't be taken in by the apparent authenticity of a document or professional appearance of a company.
- Check the company is legitimate by asking for full contact details, including the street address and local telephone numbers.
- Never pay for a 'free' gift or reveal any personal information; this will be used to bombard you with future scams and possibly take more money off you.
- Trust your gut instinct.