The scams that target the elderly

Elderly scamsThe Insolvency Service warn the older generation to be careful after finding 78 rogue companies that prey on older people with scams worth £28 million.

The Insolvency Service has uncovered 78 companies that were guilty of scamming older people out of their hard-earned money.
The service, which investigates and shuts down dodgy companies, found that one in ten of the firms they looked into between April 2009 and March 2012 had conned over 2,000 elderly people out of approximately £28 million.

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?

Landbanking companies
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

The top 10 scams of 2011
See Gallery
The scams that target the elderly

Land banking involves plots of land offered for sale, often online, with the promise of sizable returns when planning permission is approved for housing or other development. Yet often the land is located in areas protected from development by planning law.

The companies involved soon disappear with investors' money and as the firms are not protected by the Financial Services Authority, their funds are not covered by the Financial Services Compensation Scheme

It is reasonable to assume that if you take out a mobile phone contract at £30 a month for 24 months that's exactly what you'll pay unless you exceed the tariff. Yet mobile phone providers have come under fire for a snag buried in the small print – a clause to allow mid-contract price rises.

Prices are rising by a median of 81p a month and 70% of consumers are completely unaware off this sneaky move, according to Tesco Mobile, so be sure to check any new contracts before you sign the dotted line.

Fraudsters recruit unknowing accomplices through email under the guise of offering employment, seeking a personal favour, or through internet shopping sites. The recruits are persuaded into receiving what are essentially fraudulent payments and then passing funds on.

The 'mules' are frequently offered a small financial incentive to encourage involvement and face difficulties in proving their innocence when the fraud is discovered.

The scams claim to offer people the chance to profit from carbon credits. Under regulations that permit businesses to emit a tonne of CO2 – the companies claim to offer investment in green projects like a forestry scheme or a solar panel project, which generates carbon credits that are then sold on to heavy industry.

A flashy brochure or website tells of a reliable 'government-backed' scheme which provides reliable returns for investors. Such a scheme doesn't exist however – a reality investors only discovered when they have parted with their cash and the company is untraceable. As with land banking, fraudulent companies are not covered by the FSA so victims have no course for recompense

Receiving an email from the taxman saying you are owed a payment may seem like a nice surprise, but it is actually from fraudsters trying to relieve you of your cash instead.

The emails provide a "click-through link" to a cloned replica of the HMRC website. The recipient is then asked to provide their credit or debit card details - all the information the criminals need to clear your account, and sell on your personal details.

Insurer Direct Line reported a hike in the number of 'crash for cash' scams last year – where fraudsters fake accidents by making unnecessary emergency stops at busy roundabouts or slip roads, forcing motorists to crash into them.

They then make bogus claims to the innocent motorist's insurer, often including fictitious injuries and passengers.

Learner drivers have been taken for ride by being unknowingly taught by trainee instructors. An investigation by the AA found up to 27,000 extra driving tests have been failed in the last year because one in 10 learner drivers are unwittingly taught by an instructor they do not know is learning on the job.

July saw the arrest of a Leicester postman who stole £46,686 worth of mail over two-and-a-half years. Yogeshbhai Patel, 38, was jailed for two years for stealing mail including 2,000 DVDs and 2,250 games along with CDs and other electrical equipment. He intercepting the valuable packages and spent the money on living a luxury lifestyle including helicopter rides and a trip to Las Vegas.

The Trading Standards Institute reported over 200 cases where elderly homeowners have been targeted by telephone cold callers, purporting to be from their energy supplier and offering energy saving devices which could cut their bills by 40%.

The TSI tested the devices in homes where owners had fallen for the scam, only to find they both failed to satisfy electrical safety standards or deliver any tangible energy savings.

Thermal cameras that track ATM pin numbers are the latest weapon in their arsenal and US scientists have warned it is the next threat for this form of crime. Researchers at the University of California at San Diego found that up to 45 seconds after a person types their pin code into an ATM machine or door entry pad the numbers and even the sequence are still readable by thermal cameras.


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