We’ve covered “advance fee fraud” several times on Scam Detectives, and have discussed how a phenomenon known as “escalation of commitment” can drive victims to beg, borrow or even steal money to provide scammers with the “last payment” to release a huge amount of money.

Accountant turned to fraud to fund scam payments

A frightening report from the Australian Transaction Reports and Analysis Centre (AUSTRAC) describes the case of an accountant who did just this, sending in excess of $900,000 (£510,000) to various recipients in Nigeria, Hong Kong, Singapore and the UK over a 3 year period after falling for the scam. Much of the cash was later proven to be the proceeds of fraud.

Elderly couple refuse to believe authorities

In another of the 31 case studies listed on the AUSTRAC website we see another common problem.

An elderly couple sent over $512,000 (£290,000) to recipients in Ghana, the UK, The Ivory Coast and Hong Kong believing that they were helping friends who needed money to live and to eventually move to Australia.

The most disturbing thing about this case is that even after being warned by Australian authorities that they were being scammed, the couple sent a further $60,000 (£34,000) to scammers overseas.

This highlights a very common problem, which is the refusal of scam victims to believe that they have been taken in, even when shown compelling evidence by friends, family and law enforcement officials.

If you think someone you care about is being scammed, the OFT have published a useful leaflet giving advice which you can download here

If there’s one thing that really makes us angry at Scam Detectives HQ it’s when scammers use the good name of a genuine charity to give credibility to their scams.

The Make-a-Wish Foundation is one such charity. They do fantastic work with children who are suffering from life-threatening conditions, granting their “once in a lifetime” wishes.

When we heard that scammers were calling up people in the US claiming that they were representing Make-A-Wish and congratulating them on having won a “sweepstake” then we had to spread the word, as these scams often make their way around the world.

What’s the scam?

You receive a phone call from a “federal agent” telling you you’ve won a sweepstake run by the Foundation. In return for an advance payment of tax due on the winnings, you will receive your prize. Of course, there’s no sweepstake, no prize and your money will simply line the pockets of the scammers.

“This is a scam unlike any we have ever experienced before, both in terms of the amount of money that people are being tricked out of, and in terms of the lengths these scammers will go to convince callers they are actually federal agents,”

said Paul G. Allvin, vice president of marketing and communications for the Make-A-Wish Foundation of America.

“Many of the victims truly believed they would receive hundreds of thousands, even millions, of dollars in return for paying these taxes in advance. And they often dug into their savings or raided their retirement nest eggs to pay the money,” Allvin said. “It is a despicable act on the part of the scammers, particularly at a time when so many are suffering from the down economy.”

If you receive a telephone call or email approach purporting to be from the Foundation, please do not respond or make any payments.

If you would like to support the work of the Make-A-Wish Foundation, you can do so by making a secure donation here

At Scam Detectives HQ we are very pleased to introduce you to our newest sponsor shreddingmachines.co.uk

As specialists in the supply of high quality document shredders shreddingmachines.co.uk are well versed in the field of preventing identity theft.

As such, they have kindly agreed to contribute a regular guest blog advising Scam Detectives readers on the ways that they can reduce the risk of being a target of identity thieves which can result in:

• Stolen money from bank accounts
• Credit agreements being taken out in your name
• Loss of credit rating
• Loads of hassle!

We look forward to welcoming shreddingmachines.co.uk to the site and thank them for their sponsorship, which has already enabled us to produce more supporting materials for our community talks on Internet safety.



 

We’re pleased to welcome Nick Parkin of Pimlico Flats as our latest guest blogger. Nick will be blogging about property scams and today warns potential tenants about the scams that could cost them dearly.

Tenants are the potential victims of quite a range of scams because large sums of money are involved in renting a property, and the process of finding a home to rent is quite competitive so tenants can be lured into dropping their guard in their desperation to land the bargain that they think they have found. When tenants lose money depressingly often the scam has common fingerprints and I have 3 rules for tenants to follow that will keep you from being scammed.

Simple Advice:

If it seems too good to be true – then it is too good to be true.

Greed and desperation are the scammers friends, they are 2 sides of the same coin, and whilst there may be bargains out there it is very unusual for a Landlord or Agent to not know the value of their property. The smart scammer will present some rational as to why you are being offered a bargain, and nearly always someone who has lost money has dropped their guard and taken a shortcut bypassing normal precautions in order to secure a better flat or house for less money. Most people who fall for a scam can’t believe that they fell for it afterwards, & are often ashamed to tell people how stupid they were. Sadly we all do it, & the golden rule to keep in mind is that if it seems too good to be true – then it is too good to be true.

We used to have a “free month” offer. It seemed good marketing – in our adverts we would lead with “Free” & offer tenants a free month – if they signed up for a 12 month tenancy & paid the 11 months on time they would get the 12th month free. It seemed a good idea, we win, they win. We don’t do it anymore because it was just too time consuming explaining to people that no, they couldn’t just come for the free month. There is no such thing as a free lunch.

Scammers have a “signature” that you can recognise

They don’t have a place where they can be traced to, and don’t tie up with other people. They also don’t want to invest much money because very few people will actually fall for their deceit so they rely on the same statistics that power spam – large numbers which land the occasional big reward. Free adverts on Gumtree, Craigslist and other sites cost nothing, a free Hotmail eMail account can be set up in seconds. Also note that scammers may well reply to a “Wanted” Ad. that you yourself have placed. All this contrasts with when you are dealing with a reputable Landlord or Agent – they will behave in a fairly predictable way. They may be cautious (Landlords get scammed too!), but become familiar with what is normal, & what is abnormal. If things are not proceeding in a normal way your alarm should be ringing.

Now you shouldn’t be ashamed of not knowing what is normal when renting a property, although a number of things will be different with different organisations, or when dealing with an agent, hopefully the principles will be constant a tenancy should start a bit like this:

The tenant will read about a vacancy on an Advertising Website, or through an Agency that charges the tenant. The advertisement will show Plans & Photographs of the flat. Note that all this information is readily copied from genuine listings on the Internet by scammers so the listing itself means little.
Properties tend to be advertised from about 2 weeks before the vacancy arises. The reason for this is that few tenants search a long time in advance, most tenants are looking to move in within the week & consequently Landlords waste our advertising placing it a long way in advance. The disadvantage of this is that the viewing, references, & credit checks tend to be done in a rush, and the rush may tempt you to let your guard down.

The tenant will enquire either by telephone or eMail. eMails which say “here is my phone number, phone me” are ignored – if the prospect can’t be bothered to enquire properly, they probably aren’t serious about renting. If after your initial enquiry or perhaps even the viewing, walk away if there is no fixed address for you to meet your Landlord/Agent apart from the property being rented out. Reputable Landlords and Agents have to work from somewhere, scammers don’t. Visit the property with the landlord before you hand over any money. Most scammers don’t want to meet you. Be sure that the property actually exists, and check that the person you’re paying for the property is the person who owns or manages it. Visiting with the landlord also lets you check over the property and spot any other problems before you move in.

A viewing may be conducted by the current tenant, or by Landlords and Agents. If a prospective tenant wishes to proceed with a tenancy they will be ask for a “holding deposit” of around 10 days rent in cash or by Paypal. Flats are never reserved unless a holding deposit has been paid. At this point you must be clear that the Landlords or Agent really does exist and that you will be able to find them if you want your money back. Look for legitimate, provable details. Checkable landline phone numbers, verifiable addresses, emails belonging to companies rather than Hotmail or Gmail are good signs.

Avoid people who’ll only deal via mobile phone or free email providers. And do Google the company name for potential scams.

Expect a receipt for the holding deposit and if you proceed with the tenancy it is credited to your 1st Month Rent. If you do not proceed the deposit covers the Landlords and Agents costs in re-marketing the property.

On receipt of cleared funds for the 1st 2 month’s rent you will be invited to the Landlords and Agents office to sign the tenancy agreement that has been prepared for you (if you prefer you can pay cash at the signing, & you will be given a receipt for cash payments). You will be given a copy of the agreement that we have both signed.

You will be given the keys to your flat on the morning that you move in.

Be aware, alert, streetwise

I haven’t seen a scam that can’t be spotted a mile off, but that probably comes with familiarity. If you follow the guidelines that I have outlined above you should steer your way around the scammers, but it may pay you to read through the descriptions of scam details. I’ve divided the scams into 7 types:

1. Non Existent Property

London student Bethan Moore told The Guardian that she’d spotted a house in Clapham advertised at half the normal price for the area. She said, “It all sounded fine at first.” She exchanged emails with the landlord, and he confirmed that the listed rent was correct. “But then there was a second email from him, asking me to prove I had the money for the deposit. He said he lived in Liverpool and he asked me to meet him half way, in Leicester, where I was supposed to hand over a £1,500 deposit.” …..

· It should almost go without saying – but I’ll say it anyway:

· Never ever pay anything by money transfer (Western Union)

· Never ever pay anything to someone without having checked that they do indeed own the property or are authorised to rent it out.

· Never pay money to someone who doesn’t have an office that you can visit again.

2. Getting Mugged

Be careful about carrying large amounts of cash. Admittedly this scam is less common with Flats, but beware taking large amounts of cash to meet someone that you don’t know, or to an isolated place, especially at night. It’s not just your money that you might lose, but also your life – a man was stabbed in the heart and left for dead after replying to a bogus advertisement for a car on listing website Gumtree. The 42-year-old victim took £5,000 in cash with him to a rendezvous in a street in east London with a man he believed was the seller. When he arrived he was punched and kicked to the ground by two men before being stabbed six times, his life was saved by a passer-by who intervened in the attack and the skills of air ambulance doctors who carried out open heart surgery at the scene. More recently a man was beaten and stabbed in east London when he went to buy a BMW car advertised on Gumtree. Now it is very normal for a landlord to ask for advance rent and deposit in cash, but be careful that you know the situation well. Best of all is to ask a Landlord requiring cash to meet you at your bank – withdraw the cash and hand it over on the premises. Don’t forget to get a signed receipt!

Read More

3. Prove that You Can Afford the Property

Landlords tend to be cautious because there are so many dishonest tenants, & whilst the law goes to great lengths to protect tenants, it expects Landlords to watch out for themselves. Consequently tenants find Landlords quite hard work as we insist on proof that a tenant is going to be honest & responsible before we hand over our keys. Scammers pretending to be Landlords use this to their advantage. In this scam, the “Landlord” advertises a very attractive flat – the flat is a bargain, it’s too good to be true! These ads will pretty much be on free listings (Gumtree, Craigslist) or else will be in response to a Wanted Ad. that you yourself have put out. Nearly always fraudsters use our own greed to overcome our common sense. It is clear to you that the flat is a must have – you can tell from the advert, the description, the photos, even without seeing it, that you simply must secure it before someone else snaps it up. In correspondence it appears that you are going to be the early bird that gets the worm, the Landlord doesn’t realise how much their property is really worth, you are going to land the fish. But just as you have the bargain within your grasp the Landlord comes over all cautious. They want proof that you are Bona Fide. Have you got the money for the deposit & 1st month rent for the flat

The “Landlord” suggests a foolproof way of your proving that you have the money. You simply send a relative (or a friend, or even yourself) the money by trackable means. You pay the money into Western Union for it to be sent to your relative. You get the receipt, & send a copy of the receipt to the Landlord to prove that you have the money. Nothing could be safer – you trust your relative to give you the money back so effectively it never leaves your possession & you can use it to snap up your bargain.

Only when your relative comes to draw the money out to return it to you, they find that someone with the receipt details & their ID has already withdrawn the money. Now don’t say that you wouldn’t fall for that, because lots of very intelligent people have fallen for it already, & lots more who haven’t read this blog are going to. Real people have lost real money.

Read More

4. Substitute Agent

You respond via email to an ad on a listings site from an agent for a flat, and set up a viewing. About 20 minutes before you show up at the flat, you get a phone call from the agent who’s posted the ad, is stuck in traffic and can’t make it, but says that the landlord will meet you at the flat instead. The Agent says that the landlord will quote a higher price than is necessary, and that they will be able to give you a lower price, just give them a ring after the viewing.

You show up at the place, and there may be other people milling around outside, all of whom are there to see the place, or maybe you are the only viewer. The landlord shows up shows you around, and is happy to answer questions. They may be puzzled by the number of people who have turned up. You go back to the agent, sucked in by the promise of a cheaper rent, you pay the deposit and rent to the agent ….. and never see them again.

What has happened is that a scammer has identified a genuine landlord and property, and has copied the listing in their own advertisements. They take calls, and then make appointments with the genuine landlord, who shows you the property, but then you go back to the bogus agent ………

5. Middleman Agent

This scam is clearly unethical, and there is some doubt as to whether it is legal. The other day we had a lady come to view and the company that she mentioned as having advertised our flat wasn’t one that I have heard of, so intrigued I telephoned her to find out more. It transpires that a company has been advertising our flats, and then charging people £200 to give them our details for a viewing. Yes – the lady paid £200 for our phone number.

6. Charges

Again the scam is clearly unethical, and there is some doubt as to whether it is legal. You come across a bargain – a flat too good to be true, there is nothing wrong with the property so, eager to beat off competition, you put down a deposit, signing a short contract which included the following innocent-sounding clause: ‘I, the Landlord herewith confirm having received the amount £xxx (one month’s rent) as a deposit for one-bedroom flat with a view to entering into a rental agreement … subject to being provided with satisfactory references. Should the references not be satisfactory, the deposit will be paid back (less a fee for checking the references, depending upon the time spent at a rate of £75 per hour, plus expenses such as phone calls).’

Problems arise, with the referencing process – referees get upset, things go badly. In one case a landlord refunded £200 of the £900 deposit, claiming the balance was time spent on checking the references. Another couple of prospective tenants were told that they had failed the reference check because their combined income was not enough to cover the rent, and received only £240 from the £865 deposit. The couple insist their references were ’spotless’ and their combined income of £2,500 a month was adequate. A citizens advice bureau adviser has advised four sets of would-be tenants who have put down deposits of close to £1,000 each for the elusive apartment and all have lost most of their deposit. ‘He could well be making a good living out of doing this if our suspicions are right,’.

· Read the small print. Don’t get pressurised or rushed into signing any agreement. Ignore the assurances of landlords that ‘it’s just a formality’ or ‘that clause doesn’t really matter’.

· Bring your own references from an employer, previous landlord, bank etc. Get other references yourself if necessary in case the landlord or agents try to charge you for obtaining any additional references. Consider negotiating a clause that any deductions for reference checking, for example, don’t exceed £50.

7. Agents Charges

Entirely legal – but do bear in mind that your advisor may not have your interests at heart. When you visit an agent try not to be carried away with their stylish office, this is not necessarily a sign of probity. I talked about the importance of accountability, & the signs of a normal transaction – the 3 Ps of Property might be said to be Presence, Premises, Phone. Well – the reverse applies also – beware a triumph of Presentation. An agent’s life is a difficult one, they sit between Landlord & Tenant with nothing to survive on but their wit, blamed by both for the failing of the other, & very often reviled for no reason of their making. You could be forgiven for thinking that an Agent’s role is to sell property to tenants – in fact that is of secondary consideration, there is a surfeit of both tenants & agents, & the 1st objective of any agent will be to convince landlords that they are best served registering their properties with that particular agency. This means promising a higher rent than anyone else can achieve.

The same luxurious office, car, & suit works to impress a prospective tenant of the value of the flats that they have on their books, but now the business model is slightly different. The competition is other agents, & the idea is to keep the prospective tenant viewing their flats, to keep their choice to one of their landlords. The ideal way of achieving this is to drive you around from flat to flat & not let you out of the car, flat, or their offices until a tenancy agreement has been signed. They don’t care which flat you sign for – but they do care that you sign for one of them!

So what’s the Scam? Well – there is nothing actually illegal, but you do need to beware that you don’t end up paying far more than you need have. Your chauffeur come property consultant is on commission, & this means that it is in his/her interest to see you spend as much money as possible. Agents charge Landlords from 10+% for finding a tenant to 17% for a fully managed letting (I’ve included the VAT as it isn’t an output for residential letting) – & a big chunk of that will go to the negotiator, so they will be trying to negotiate a managed letting, & also a longer contract than you might have thought of, locking you into the higher rent that they have sold you on. Don’t kid yourself – that commission is coming straight out of your rent!

It’s not a scam in the sense of fraud, but nevertheless I know of a tenant who ended up spending £3000 to buy himself out of a 24 month contract that he should never have been signed up for by a reputable agent.

• Visit properties from more than 1 agent
• Visit properties not let through an agent
• Be clear what length of tenancy you want to commit to, & don’t sign for anything longer than you know that you need.

At Scam Detectives we fully endorse and agree with Nick’s advice. To rent affordable flats in London contact Nick via email or catch up with him on Twitter @pimlico_flats. We look forward to catching up with Nick again soon when he’ll be telling us about scams from the other side, looking at ways that landlords can fall foul of scammers.

14th June 2010

I’ve just arrived back at Scam Detectives HQ after a great interview on the Calon FM Breakfast Show in Wrexham.

Hosted by Dave Williams, the show focussed on the work Scam Detectives is doing to educate our readers about online scams and fraud, as well as talking about our community events and highlighting real life experiences of scam victims.

A huge thank you to Dave and the team at Calon FM for inviting me along to be on the show this morning!