OFT warns on lottery scams

BRITONS have been conned out of £150m by overseas telephone lottery scams in the past year, according to the Office of Fair Trading, the official UK consumer watchdog.

The figure represents at least a tenfold increase on the estimated £10m to £15m that victims had lost in total up to the end of 2003.

In the scam, victims receive an unsolicited phone call from Canada congratulating them on winning the 'big prize' in a national lottery such as the Canadian, Australian or Spanish. The victim is told that before they can claim the prize, they must send money to pay for taxes and processing fees.

The OFT has released information on the con as part of a month-long scam awareness campaign. In the worst reported case, a person sent off £67,000 after being promised it would clear the way for a massive cash prize. They never received any money.

The Federal Trade Commission in the US has been working with Canadian authorities to shut down phone scam 'boiler rooms', mainly in Canada. Last year it released figures that showed 1.8m people had lost money in the con during a year, representing nearly 1% of the adult population.

'It's hard to get true estimates of the problem because people often feel too ashamed to report it,' said an FSA spokeswoman. Fraudsters tend to target vulnerable people, using a database of people who have responded to such offers of cash before. Around 80% of victims are pensioners.

It also becomes hard for people to walk away once they have sent the initial money. Hundreds of pounds, or even thousands, seems a small outlay for the multi-million pound prize awaiting them. But as people send more money to claim their prize, it becomes difficult to cut their losses.

The OFT said North American authorities have been working to close down the telephone operations and that some arrests had been made. It added that some victims had received back between 20% and 30% of their money.

As part of the awareness drive, the OFT today warned about the tell-tale signs which link most scams. It has published 500,000 leaflets and posters carrying the warnings.

Trading Standards departments, Citizens Advice, the police, charities and neighbourhood watch schemes are also involved in the initiative. The OFT says most scams have common elements designed to hook victims. These include:

Catching people unawares by making unsolicited contact via email, telephone or post. Lists of names and addresses are easily bought and sold, said the OFT.

Offering tempting and easy opportunities to make money.

Asking for money up-front to claim a prize to cover administration fees or taxes - no legitimate competition does this.

Asking for bank details or to ring a premium rate number.

Penny Boys, executive director of the OFT, said: 'Last week we named the top 10 scams targeted at UK consumers - but next year, there will be new frauds and swindles to part people from their money.

'Our campaign aims to equip consumers with the skills and knowledge to recognise scams, whatever their form, and so prevent themselves and others from falling victim to persuasive and manipulative approaches.'

Consumer minister Gerry Sutcliffe said: 'Too many people are ripped-off by scams, losing money and unintentionally lining the pockets of these crooks. I am delighted to support the OFT's campaign to highlight the problem of scams and how consumers can avoid becoming victims.'

The OFT estimates that one in ten Britons have been caught out by mass marketing scams.

These can include work-at-home schemes, where would-be workers are asked for money up-front to pay for fictional starter packs, Nigerian advance fee frauds, where people supposedly pay to transfer money from a Government official in exchange for a cut, and pyramid schemes, which offer a return on an investment based on the number of new recruits to the scheme. Such schemes inevitably collapse.

Protect yourself from lottery phone scams

If you receive a phone call:

be cautious: if you have doubts about a caller ? hang-up

never send any money in order to receive a prize

don't give out private financial information

Canada doesn't have a national lottery like the UK.

How to spot a scam:

if it sounds too good to be true, it probably is

you are often asked for money up front to release your 'win'

you are asked for your bank account, credit card details or other confidential information

the caller is more excited than you

the stranger who calls wants to be your best friend

you must reply straight away or the money will be given to someone else.