Type of scams
Scams can appear in many different forms. These are the most common scam types.
If you need more information on identifying a suspicious letter or email contact WA ScamNet.
Personally addressed letters proclaim you have won a great prize in a competition you don’t remember entering – ask yourself “What’s the catch”.
You will probably be asked to pay a “fee” to access your winnings, or told to call an expensive 1900 phone number. Chances are the cost of the fee will be a lot more than the value of any prize. If you really are a winner, you should not have to pay anything.
Some so-called lotteries are sweepstakes and you have only “won” a chance to enter. Some sweepstakes ask you to pay money every time you play; others are a ploy to sell you promotional material such as poor quality jewellery at inflated prices.
Not all prize and lottery scams ask for money upfront, sometimes they ask for your personal details. Providing any details leaves you exposed to further scams.
An increasing number of approaches to consumers are made by overseas lottery ticket sellers.
The promotion of overseas lotteries in Australia is illegal. Some countries, like the USA, have similar restrictions. Check out the US Federal Trade Commission for further information at http://www.ftc.gov/bcp/conline/pubs/alerts/intlalrt.htm
Aside from the illegal conduct, WA ScamNet has general concerns about these types of promotions:
- The ticket prices may be higher than the face value of the actual lottery ticket;
- Consumers usually don't receive the tickets but instead receive statements providing information about the prize draw and any "winnings";
- Consumers often don’t know if they are part of a syndicate or the size of the syndicate; or even if their money is actually spent on purchasing tickets;
- It is questionable whether any small “winnings” consumers may occasionally receive are actual prize payouts. The so-called “winnings” could be funded from other consumers’ ticket money as a ploy to keep people “in the game”;
- Lottery hustlers have been known to use victims’ bank account numbers to make unauthorized withdrawals or their credit card numbers to run up additional charges.
Learn some tips to help fight back against prize and lottery scams.
Psychics, clairvoyants and other lucky charms
Psychic scams prey on people’s vulnerabilities. Self-proclaimed psychics claim to have had visions or have foreseen your lucky numbers. For a fee, they will send your lucky numbers, “wish amplifiers”, talisman or other paraphernalia, which will bring you great personal wealth, often through playing lotteries or other games of chance. The talisman are often plastic junk items such as beads or even cards.
We have had cases where consumers have sent tens of thousands of dollars to these operators – all in the name of “good luck”.
These scam artists have probably obtained your name and address from a mailing list. Respond once and you will be targeted for further scams.
Learn some tips to help fight back against psychic, clairvoyant and other lucky charm scams.
Advance fee frauds are very common and vary in type, style and delivery but all are after the same thing – to get you to pay time and time again for non-existent funds or goods.
The people who operate these scams are professional at it and will provide you with what appear to be plausible and realistic scenarios. They will not appear threatening or risky in the early stages as they need to gain your trust and confidence.
Advance fee frauds can start out with an unsolicited letter or email, and often progress to telephone calls. Most ask you to wire money because it is very difficult to trace. Wire transfers are in fact one of the common warning signs that an approach is an advance fee fraud.
Advance fee fraudsters are experts in conning people by coming up with various reasons why you need to send money for things like legal fees, government charges, United Nations anti-terrorism or money laundering certificates. The requests for money start small and then invariably increase as they gain your confidence and commitment. There is usually an air of secrecy about the proposition so that you will not be inclined to ask friends or authorities for advice.
The scammers may refer you to others masquerading as banks or lawyers, and often use official looking logos on letters and emails.
Common types of advance fee frauds are:
Beneficiary funds: The scammer needs your assistance to get money out of a bank account located in another country. The scammers often spin you some sob sorry about needing assistance or that the rightful owner of the money has died and the money will be confiscated by government unless you act.
Lottery wins: The scammer claims you have won money in an overseas lottery. Often they use the name and logos of legitimate lotteries like El Gordo or UK National Lottery. But they also make up competitions using the names of legitimate companies like Yahoo or Shell. The letter or email often starts with “congratulations” and a request for personal information, including drivers license and bank account details, so they can confirm your identity and where to send your winnings. Be aware that this information can also be used for identity fraud to fool others. Read more about overseas lottery wins by clicking here.
Investment proposal: A government official or a representative of an investment company or a legal firm needs assistance to invest their or their client’s money offshore. The emails can be a few short paragraphs giving scant details and asking you to contact them. More often the emails detail some intrigue about how the money was gained, why it needs to be shifted offshore, and why the transaction needs to be kept under wraps. Read more about investment proposal scams by clicking here.
Romance scams: Scammers trawl internet dating sites, chat rooms and other profile sites looking for lonely hearts. They may request money for dowries, visas or to help sick family members. Read more about romance scams by clicking here.
Advance fee frauds are commonly called Nigerian scams where these types of scams originally came from. However the scammers are now located in a variety of places including Spain, South America, Asia and Eastern Europe.
Learn some tips to help fight back against advance fee frauds.
Pyramid schemes and chain letters
Pyramid schemes and chain letters operate by recruiting people to make money rather than by selling a legitimate product or service. The victim makes a cash investment and, once they have recruited a certain number of other investors, they will allegedly receive a substantial sum of cash. Most of the time, you’ll never make money and will lose any money you paid to participate. Sometimes theses schemes masquerade as home-based business opportunities such as envelope stuffing. You send away for the material which ends up being information on how to perpetrate the same scam on others.
Learn some tips to help fight back against pyramid and chain letter scams.
Spammers have access to lists of tens of thousands of email addresses. They send fraudulent emails to all addresses on those lists and can cover millions of Internet subscribers very quickly. Often they will attach word lists to registered Internet domains not even knowing if they are actual email addresses.
It doesn’t matter to them that they might only get a handful of replies from the millions of emails they sent. A handful of victims at no cost is still a good deal to them.
In some cases, they may even include the option to unsubscribe to their mailing list. Be wary of this, as it is often a way to verify that they have reached a real email account. By replying, you may find that you are targeted with more spam.
Spam can be used to transmit malicious software that represents an added threat and therefore demands more vigilance.
One of the most common forms of spam is phishing emails, which are used to gain personal information such as your bank account details and passwords. Typically, the email purports to come from your bank, credit card company, or even online auction site. It requests you confirm your details for security reasons by clicking onto a designated link, which redirects you to a fake website that captures your password and account details.
Some emails purport to confirm a purchase you have never made or appear to be an electronic greeting card. Some appear to be news items directing you to newspaper stories.
This software may give the hackers unlimited access to your computer where they can:
- View your keystrokes to steal your personal information such as passwords and bank account details;
- Use your computer to harvest email addresses or even to send Spam to others under your name; or
- Direct you to a paying website such as a porn site.
Just because an email is personally addressed to you, it doesn't mean it's legitimate. There are a number of ways that clever scammers can make the email appear as if it is personally addressed to you. For example, they can install a program in the email they send out to capture your Display Name and embed it in a template email.
Some scammers send invoices for advertising or directory entries that you have not approved or requested. Lottery and prize awards scammers are now turning to the Internet to trawl for victims.
Learn some tips to help fight back against email scams.
Buying, selling and online sales scams
For sale advertisements in newspapers and on websites have become a fertile hunting ground for scammers.
Scammers are advertising non-existent goods, hoping to use their so-called bargain to fleece you of your hard-earned money.
They are advertising anything from puppies to boats, cars and car parts to concert tickets, sometimes masquerading as Australians to lull you into a false sense of security.
A typical example is the “Puppy for Sale” scam. The scammers advertise the puppy in a newspaper or a website, listing a telephone number and email address as a contact point. The telephone number is fake so you are forced to use the email.
The puppy needs to be shipped to you because it is located in a regional town, interstate or overseas. The scammer asks that the money be wired or even transferred to a bank account. You send the money, but the puppy never arrives.
Sometimes scammers hijack other people’s advertisements and online seller or feedback profiles to fool you into believing they are a legitimate and reputable seller. If you do get conned, notify the website operators immediately so they can remove the advertisement.
Sometimes the scammers ask you to transfer the money through a secure payment system. However, the site they refer you to is fake or a copycat site.
Buying something sight unseen from strangers is always risky – particularly over the Internet.
Always try to verify whom you are dealing with and to get someone independent to inspect the goods. For example, if you are buying a car then pay for an independent inspection by a mechanic.
When buying from a commercial shopping website, make sure it is a legitimate business and is a secure site. Scammers have been known to establish false sites. Independently verify that the supplier is a legitimate business with the correct address and phone number. Check that there is adequate information about privacy, terms and conditions of use, dispute resolution and contact details.
Selling to strangers online can also be risky. Scammers have been known to use fake cheques, money orders and stolen credit cards. See our section on overpayment scams.
Learn some tips to help fight back against buying, selling and online sales scams
Overpayment and overseas purchase and booking orders
Consumers and small businesses advertising goods or services on the Internet need to be wary of scammers offering to pay for purchases by cheque or credit cards.
Generally overpayment and booking scams work like this:
- A consumer or small business places an Internet advertisement to sell a product or service, such as a vehicle or accommodation;
- The consumer receives a generous offer to purchase the product or service by email;
- The price is agreed upon and the seller’s details are obtained for the scammer to send payment;
- The scammer sends a cheque payment for an amount well in excess of the agreed amount, together with some excuse about the overpayment. The scammer then asks the seller to electronically transfer the excess back to a specified bank account;
- Having done as requested, the seller later finds that the cheque has been dishonoured, with little chance of them recovering the funds from overseas;
- The item is still unsold with legitimate offers probably lost.
Accommodation providers such as bed & breakfast stays and motels are particularly vulnerable to overseas booking scams and should exercise considerable caution when taking bookings.
Typically, the scammer:
- Will not address your business by name in the first email. This is because they send out mass emails and wait for someone to respond;
- Requests long stays but will be vague about numbers;
- Is very flexible on dates and nights booked and rarely query the room rate or ask for discounts;
- Will have no interest in your location or the local attractions;
- Will often use free email service.
Some scammers are also using the lure of a substantial booking to hoodwink accommodation providers into purchasing goods for them such as mobile phones. In this case, they often pay by credit card which is later discovered to be stolen.
Retailers also need to be careful of orders from overseas. Some retailers have been caught out after sending the goods overseas, such as printing cartridges, only to find the credit card used had been stolen.
Learn some tips to help fight back against overpayment scams.
(see also pyramid schemes and chain letters)
Scammers are using the Internet, newspaper advertisements, seminars, mail and direct approach to lure people into self-employment schemes which end up costing them money - instead of making them money.
Key phrases to look out for:
- make large amounts of money quickly and with little effort
- work from home (often using your computer)
- requires payment for 'registration' or for more information material
Some schemes sell information of no value, some pretend to provide skills which turn out to be unmarketable, and others pyramid schemes which rely on recruiting or luring others into joining.
Computer gambling or share market software programs, which guarantee winners, are a common scam.
Money transfer or “money mule” schemes are a more sinister scam. They want you to be involved in illegal money laundering.
The schemes are often promoted by email and on the Internet as “work from home” opportunities. The operators offer you commission (between 7% to 15%) for receiving money into your bank account and then transferring it out again. They often claim it is to get around tough tax laws in their home country.
Anti-fraud experts say the money being transferred is often stolen from other people’s bank accounts via the Internet. Scammers use Trojan and key logging viruses to capture customer online banking details. They need Australian bank accounts to launder the money through. Once you receive the money, you take your cut and pass the rest to a pre-arranged overseas destination.
There are laws against money laundering. There is a real possibility that you will be prosecuted. It is not worth the risk of prosecution and a criminal record.
The United Kingdom’s banking industry website www.banksafeonline.org.uk/spotting_scams.html has an up-to-date list of money mule scams.
Learn some tips to help fight back against employment scams.
190 Fax-back and telephone numbers
Fax-back scams often offer weight loss programs, employment opportunities or competitions. They use 190 premium rate numbers which charge high costs per minute. Scammers can use slow responding fax machines to con you out of more money.
New technology is now offering premium rate telephone services to enter competitions for luxury cars. You have to ask yourself do you want to pay up to $35.00 to enter a draw to win a car.
Learn some tips to help fight back against 190 fax-back and telephone-number scams.
Directory Listings/registry schemes
These scammers are referred to as “blowers” because they often telephone their victims, posing as publishers of magazines, directories or Internet sites.
They target businesses and community groups either by telephone, post or email.
They repeatedly send invoices and demand payment without signed authority for an advertisement (in a poorly circulated or sometimes no-existent publication).
Some scammers offer services for inflated prices or pretend to be official government departments. For example, some scammers have sent businesses invoices to “renew” registration of their Internet domain names – for double the real price.
Learn some tips to help fight back against directory listing and registry schemes.
Telemarketing, in the form of cold calling, can be used to promote scams. To attract and hold the victim's curiosity, some scammers will pretend to be investment advisers, stockbrokers or community workers from a religious organisation.
The calls often come from overseas and offer you above-average returns on your money. They sometimes make an appointment for a “senior advisor” to ring you back. They generally offer share, mortgage or real estate “investments”, “high return” schemes, option trading or foreign currency trading.
The scammers are persistent and play on your emotions, making you feel like a fool if you say “no” to them.
Some scammers target people with specific religious or community interests, enticing them with promises to send profits to charity or worthy causes.
More information is available from the Australian Securities and Investments Commission. The links are included in our fight back against investment scams section.
Door-to-door scams involve promoting real or false goods and services. Even in the case of genuine businesses and products, unscrupulous operators can still act illegally to the detriment of other people.
They often offer roof repair, maintenance, bitumen work or telephone services. Most of these people are itinerant and leave the district or state as soon as they have their money.
Scammers will ask for either deposit or full payment, in cash or by credit card. They seldom accept cheques as they can be easily cancelled later.
They will fail to tell you about your legal rights, including your 10-day cooling-off period and demand you accept their offer on the spot.
In contrast, genuine door-to-door salespersons:
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show personal identification.
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should give you written information, and tell you about your cooling-off period for door-to-door sales and give you documents which allow you to cancel the sale easily.
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abide by the law, call only during the legally permitted hours, and neither pressure nor require you to purchase any good or service.
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give you an official receipt with their Australian Business Number (ABN), name, address and telephone details.
Learn some tips on how to fight back against door-to-door sales scams.
Ask yourself why would anyone sell you a system to make money if it was a certainty? It is like finding a goldmine and then giving the location to everyone else to mine the gold.
Gambling systems are often promoted as business opportunities or investments. Often they promote a system to reap money from horse racing, lottery syndicates or share investment systems. Professional people, retirees and others with funds to invest are often targeted.
More often than not the word gambling does not appear in the glossy brochures and promotional material. The promoters go to great lengths to portray the systems as legitimate business opportunities, even recruiting well-known personalities to help sell the systems.
The promotional material promises huge returns, supposedly based on past results. But these so-called results are worthless because they are manipulated to prove a particular outcome.
In fact, these are high-risk schemes.
Equipment supplied varies from a single disk for use on your computer, to a calculator, to a whole computer system. Prices range from about $1000 up to $15,000, with some systems requiring ongoing costs.
The schemes may involve a SMS service to your mobile phone to tell you what horses or teams to bet on. Many systems require you to open a TAB account and maintain a balance in that account to gamble on horses.
Invariably, to comply with the instructions within the system, many hours of detailed data entry and slavishly obeying instructions are required. This is partly designed to ensure that if you don’t get a return (and we predict you won’t), the promoters will blame you for making a mistake.
Ask yourself how a computer can make accurate predictions on horse races based on weather conditions, the barrier draw, and the state of the horse and jockey? How can a computer predict what numbers will be drawn in games of chance like lotto? Past results cannot assist in predicting these variables. How can a computer predict what shares will go up and down when their performance is based on various economic factors?
Why would anyone sell you a system to make money?
Consumers who have purchased these systems have often discovered that:
- The systems do not work;
- The money back guarantee is not honoured;
- Requests for refunds are rejected because of clauses in the contract that the consumer was not aware of or did not fully understand;
- The consumer is blamed for not correctly following the criteria to use the system.
Learn some tips on how to fight back against gambling systems.
Telemarketing
Telemarketing can be annoying but it is a legitimate marketing practice. However consumers need to be alert to scammers who use it to try and deceive you.
Telemarketing comes in many forms:
- Direct approach where you are contacted by an operator, sometimes a telemarketer based overseas;
- Automated pre-recorded voice messages and, pop-up Internet advertisements or spam, which require you to contact a telemarketer. (Some encourage you to respond to voice interactive premium telephone services which can charge up to $5 a minute);
- Automated dialling equipment which randomly dials numbers, and if you answer the phone, the telemarketer is switched through to you. (Sometimes there are not enough telemarketers to take the calls, and the calls drop out resulting in a silent call).
Telemarketing is big business with companies wanting to sell you goods and services, to participate in surveys, or to make donations to charities.
But some are more reputable than others. Telemarketers are very good salespeople, and by catching you off guard, try to get you to agree to something right there and then.
Consumers have agreed to buy services and goods without understanding exactly what they are getting, or the exact terms and conditions of the offer.
For example, people have agreed to buy overseas accommodation without realising the package does not come with airfare.
Some telemarketers start their sales pitch with “Congratulations you have won” or ask you to participate in a survey, when in fact they are just trying to hook you in.
Never agree to buy anything until you have had time to research the offer and decide whether it is good value. Introduce a delay to allow you to “sleep-on” the offer.
Be very wary of telemarketers offering investment schemes. For more details check out our section on Investment Scams.
Learn some tips on fight back against telemarketers.
