There are many ways to defraud people.
These scams all play on human greed, fear and emotion, and
use social engineering to con folks out of their cash.
A good example is this scam from The Real Hustle where they take a car straight off the showroom
court without the salesman even realising what was going on:
So simple, and yet not something that most people do.
It’s the same message that Tony Sale gave when he spoke at
the Financial Services Club earlier this year. His key comment is that most
people don’t catch criminals because they don’t think like criminals, they
don’t believe people would be like this or do these things … but people do.
His core statement was: “to understand how a fraudster sees
the world, you must see things through their eyes”.
That’s more easily said than done, when you would never do
the things that the fraudsters do. For example, just as some people use
hard drugs, abuse children, traffic sex slaves and kill, some people will dupe
their best friend or mother if it means getting some cash.
Most of the people reading this blog probably don’t take hard
drugs, abuse children, traffic sex slaves and kill or commit fraud, which is
why you don’t understand it and cannot see things through the eyes of those who
Then we need to think about what scams people run to hustle
folks out of their hard-earned cash and there’s many.
The ten most common scams, according to moneywise,
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. Over a million
people fall victim to this scam every year, according to the Office of Fair
Trading (OFT), making this one of the biggest scams. The average victim loses
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.
3. African advance fees
One of the swindler's most lucrative ways to make money — on average, a victim loses £5,000. They pose as a government official, charity worker or similarly well-respected professional, and ask for help transferring money overseas. In return for using your bank account, they promise to give you a chunk of money — typically, around 25-30% of the transfer sum. All they really want, however, is your bank account details.
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.
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.
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? 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.
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". Invariably,
they don’t work and are designed to get you to part with your cash.
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. 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
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
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.
One of Tony Sale’s scams was a simple one, where he
called unsuspecting consumers and persuaded them that they could save cash by
signing up to his imaginative but non-existent offer.
Meantime, some of the scams are more complex than others,
and the one that’s caught my attention is a form of card scam going around the
It’s been running for a while now, and music journalist Andy
Welch has been writing in depth about it. His experience has also been reported
in the Daily Mail today, so I thought it worth repeating here:
My landline rang. It
was a Sunday morning and I was surprised because I’d given the number to only
three people as I tended to use my mobile phone instead.
‘Hello Mr Welch, Visa
Card Services here.’ That was the line with which my nightmare started.
The person on the other
end of the phone — Mark — told me there had been a number of fraudulent
transactions on my bank account since midnight, adding up to about £1,100.
I’d never heard of
Visa Card Services before, but then I’d never had money stolen like this
before. Maybe this is what happens.
Mark then confirmed
the last genuine withdrawal I’d made — at a Barclays cashpoint in North London,
opposite Highbury & Islington station. He then gave me a reference number
and told me to ring the number on the back of my bank card.
I did just that,
quoted the reference number and spoke to someone who knew all about the
tricksters had apparently cloned my card at the ATM I’d used and then treated
themselves to a few things in the Apple Store on Regent Street.
Something didn’t ring
true about the whole thing: why, for starters, would someone with a stolen bank
card spend only £400 in the Apple Store? But I watch enough consumer TV to know
these things happen.
The person helping me,
Rajesh Khan in HSBC’s card protection department, had my full name, date of
birth and, crucially, my address. He said a courier was on the way to collect my
bank card for further examination.
Initially I flinched,
but when he explained they needed to analyse the chip, it seemed to make sense.
After all, I’d called the bank myself: this had to be genuine.
And that is probably
the same reason I typed my PIN into the keypad of my phone when he asked.
I packaged the card as
requested — wrapped in kitchen roll, packed into an envelope so it didn’t look
like a bank card — and waited for the courier.
Rajesh called back
twice: once to say the car was five minutes away and again to say it was
outside, quoting the car’s number plate and describing the driver.
He called again later
that afternoon to say they’d received the card and that I’d have my money back
in a few days. ‘Great,’ I thought.
So taken in was I by
the efficiency of it all that I went through exactly the same process the
following day when Visa Card Services called to say there was now a problem
with my credit card.
The fraudsters had
somehow hacked into my online account, got my credit card details and maxed it
Good old Rajesh told
me this time there was a shred of hope the criminals would be arrested as
they’d made the mistake of buying Eurostar tickets to Paris on a specific
train. The police would be waiting for them at St Pancras. Amazing news!
A few days went by and
Rajesh stopped calling. By then I was about £4,000 out of pocket, so I called
the bank, this time from my mobile.
After explaining the
situation to two or three people, I heard the most chilling phrase of all: ‘But
Mr Welch, your cards haven’t been reported stolen.’
I’ve never been
speechless before. I’ve never been able to feel the colour drain from my face
either. But now I was, and I did.
Why had I given my
card to a stranger? Why had I typed my PIN into the phone? How did they know my
landline number? How did they know my mother’s maiden name? How did they have
The police still
haven’t been able to establish the answers to these last three questions, but
say that such criminals are remarkably adept at gleaning personal information
from the internet and the electoral roll.
And, most infuriating
of all, why hadn’t I checked my balance before I even called the bank that
When I did check,
things were far worse than I’d expected. The Apple Store story was all a lie.
In fact, they had spent thousands in clothes shops and, best of all, treated
themselves to a Dixie Fried Chicken each evening. To cap it all off, my rent
payment had bounced.
By then, I was
panicking. What if I didn’t get a refund? The security expert at the bank said
this was a possibility. It would take me years to pay off debt like this.
I called the police,
who put me onto their dedicated fraud line.
After explaining my
idiocy once again — it’s pretty humbling, repeatedly telling people you’re the
type of person who gives your bank card and PIN to the first person who asks
for them — they went through the likely series of events that led to this
In the end, the total
taken from my account was about £5,500.
It all started, said
the police, on the Saturday night when one of this gang will have watched me
take money from the cashpoint.
That’s details of my
last transaction taken care of. The police then believe that I was followed
home, which is how they got my address. My name and landline number they
doubtless obtained with a bit of research online.
As for the call, well,
it’s pretty clever. Only the person who initiates a landline call can cut it
off. If the person who receives the call puts down the receiver, it doesn’t
So, when I went to
find my bank card, the fraudsters were still on the other end, waiting for me
to pick up the phone and call ‘the bank’.
As I did this, they
first played a dial tone down the line and then a ring tone.
‘Rajesh’ will have
been sitting next to ‘Mark’, the first person who called me, no doubt both
laughing their heads off at how stupid I’d been. I was right to praise the
bank’s efficiency, though. They got me all my money back within ten days,
though I did have to get new bank accounts and cards.
Take note, if you don’t to get swindled, note the following
advice from moneywise:
Swindlers' top tactics
strive to look as professional as possible, even warning people of 'bogus
scams' to make themselves look more genuine.
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
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.
make the victim feel that they have been personally approached or targeted
so they believe they are special.
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.