The scams that target the elderly
The Insolvency Service has uncovered 78 companies that were guilty of scamming older people out of their hard-earned money.
The Insolvency Service is now working with Age UK, the Alzheimer's Society and Action on Elder Abuse to highlight how vulnerable sections of society are being exploited.So what sort of scams should the elderly and their carers be aware of?
Of the 78 companies investigated by the Insolvency Service, 49 were involved in so-called landbanking scams These involved 'hard sell' techniques where a salesman offers plots of land with the promise that the investor will be able to develop there at some point in the near future and make a substantial return.
This is not illegal but the land is usually sold to the investor without the necessary planning permission and in some instances is in fact green belt land which is protected from development by law and so is in reality worthless.
Robert Burns, Head of Investigation and Enforcement for the Insolvency Service, confirmed that not a single landbanking company that the Insolvency Service investigated produced a profit for an investor.
Case study: Century Property Group Ltd
Century Property Group Ltd, formerly Century Land Group Limited, was forced into liquidation by the High Court in April 2012 following an investigation by the Insolvency Service. It was found that the company exaggerated the investment potential of land, claiming that the plots they were selling had considerable development potential when there was no evidence to support this.
The investigation found that 228 plots of land had been mis-sold to the public, making the company £10 million. The company managed to trick one family into investing £600,000.
For more information on Landbanking please see here.
Mobility product retail scams
Mobility retail scams typically target the elderly and involve home visits or phone calls where aggressive tactics are employed to make a sale.
Case study: Reo Marketing Ltd
Reo Marketing Ltd sold orthopedic products to elderly people. It used telesales staff to cold call people and convince them to let a salesperson make a home visit under the guise that they would be participating in a survey.
In reality the company used the opportunity to send agents in who used high pressure tactics and lies to make a sale. For example, sales representatives would make false claims about the medical benefits of a product and sometimes pretended to represent social services.
The average age of this company's customers was 79 years. Home visits were reported to have lasted hours and some customers told how they had been followed around the house. The only way to get rid of the salesperson, in most cases, was to agree to the purchase.
The company had a turnover of £1.3 million in less than 10 months attained by high pressure sales, a confusing pricing structure and non-existent discounts. The company marked-up the price of the products, in one instance by 1,326%. They also were guilty of breaching data protection and VAT laws.
The Insolvency Service wound up this business in the public interest in March 2012.
Home alarm system scams
This retail scam operated in a similar way to the mobility product scam. Pushy and aggressive salespeople visit a customer's home or telesales cold callers are used to secure a deal.
Case study: SAS Fire and Security Systems
These two companies based in Cheshire sold burglar and fire alarms. High pressure tactics and false promotional offers led to sales worth over £18.1 million.
The companies marketed the product by cold calls claiming the customer had been chosen to receive one of a limited number of alarm systems for only £1. The call was followed by a lengthy home visit by a sales representative who would add to the package, bumping the price up to £6,000 and tieing victims into a 15-year contract. The alarm system would usually be installed within 48 hours, limiting a customer's ability to use their right to cancel the contract within seven days.
The customers were on average 69 years old.
This company was shut down by the Insolvency Service in March 2011.
Getting your money back
Unfortunately victims rarely get their money back when they have been scammed. Reputable companies refer you to the small print while the con artists simply disappear.
If you used your credit card to make a payment you may be covered under some circumstances. Section 75 of the 1974 Consumer Credit Act says that the credit card provider must reimburse you if a retailer doesn't deliver the goods or service, or if the product is not as described, so long as you spend over £100 and under £30,000.
Unfortunately, the Insolvency Service is not able to compensate victims of these scams. The service will make a record of assets and pay off creditors and cover the cost of liquidation but cannot offer financial help to those who suffered.
What the Insolvency Service does do is close these businesses down and stops them from doing any further harm. If you suspect a company of a scam refer them to the Insolvency Service via its website. It can then investigate and potentially shut down dodgy companies in the public's interest.
If you are a victim
It is vital that if you think you have been a victim or have experienced an attempted con that you report it. You can report companies to Action Fraud online or by phone on 0300 123 2040.
Tips to avoid scams
Protect yourself and your loved ones from falling victim of these schemes by getting more information and advice.
The Metropolitan Police Service's Specialist and Economic Crime Directorate has compiled a useful booklet The Little Book of Big Scams which offers advice on how to stay aware of people trying to swindle you out of your hard-earned cash.
Here is a round-up of some golden rules:
- Nothing comes for free – never pay anything towards a prize or free gift
- Take your time – a reputable company won't force you to make a decision there and then
- Do your own research – check a company's credentials and seek independent information
- Be cautious if you are asked for payment upfront and never give your bank details out to people you don't know
- Listen to your doubts – if something is too good to be true, it probably is
- Reduce the number of scams you are exposed to by registering with the Mailing Preference Service to stop receiving direct marketing mail
- Hang up the phone if someone is trying to sell you something aggressively
- Don't answer the door to doorstep sellers
- Get some advice – ask family and friends what they think