If your mobile phone is stolen, in many cases you are hit with a bill of thousands of pounds for fraudulent calls. But who are the thieves calling? And why?
Having your mobile stolen is stressful enough. Firstly you're without a phone and uncontactable. Secondly you have to go through the rigmarole of calling your network, getting your SIM cancelled and arranging a replacement.
However the real sting in the tail comes when you get your next bill and it turns out thieves have used your phone to ring premium rate phone lines anywhere from Algeria to Mexico, landing you with a bill of thousands of pounds.
For a long time I rather naively thought the thieves were calling their mums back in their home countries – but the truth is a lot more sinister than that.
Premium rate and profit share
The mobile phone thieves who nick your phone from your bag in the pub are part of much bigger organised gangs.
The gangs rent premium rate telephone numbers around the world and, after they've stolen your phone, use it to call them. These numbers can cost anything from £1 to £10 a minute to call.
Because premium numbers share revenue between the provider and the person who purchases them, the fraudsters can generate significant revenues by keeping your phone connected to their own premium rate number.
So, the premium rate number provider profits from the theft, the thief does, and so does your mobile network which bills you for the calls.
Liability for calls
If you're on a monthly contract there is generally no cap on the bill you can run up each month. Contracts state that you're responsible for all the calls made on your phone until the phone is reported as lost or stolen. So if you lose your phone on a night out but don't report it lost until the next day, you'll be liable for the calls made all night.
Thieves tend to act quickly – they'll start calling premium rate numbers the moment they steal your phone. This means that people who leave it only a few hours or a day to report their phone stolen can still face a massive bill.
Mobile phone insurance won't protect you either. The small print of policies says the insurance will only kick in once you've reported the phone's theft. So although it may pay out for a new handset, you'll be left footing the bill for fraudulent calls.
Mobile phone networks
So, what are the networks doing about this scam? Well, nothing. Why would they when it's such as nice money spinner for them?
Critics have repeatedly asked UK mobile networks why they don't immediately spot fraudulent activity on a mobile phone account. After all, if you usually only use your phone to call landlines and mobiles in the UK and never exceed your monthly minutes allowance, surely a bill of £5,000 calling premium rate lines in Eastern Europe would arouse suspicions?
Unfortunately mobile phone firms are under no legal obligation to inform customers when they inadvertently run up high bills.
This lack of protection compares unfavourably with banks and credit card providers who have a legal duty to protect customers from fraud under the Consumer Credit Act. Banks have processes in place which alert them to suspicious activity on an account and then either the customer is contacted or card cancelled. Mobile phone companies have no such system.
Some networks, such as Virgin Mobile, do allow customers to have a credit limit on their account but, worryingly, this doesn't necessarily protect you.
The networks themselves say that these limits can't be relied upon and don't work abroad. They claim this is because there is a technical delay – of several days – in foreign networks reporting usage back to the billing network in the UK.
This, of course, begs the question of how pay-as-you-go (PAYG) phones work? If you use a PAYG phone abroad and run out of credit you won't be able to make any more calls.
A cynic might say that as mobile networks are raking in profit from phone theft, they have no interest in protecting customers who fall victim to this type of crime.
But, then, I'm just a cynic.
10 of the biggest consumer rip-offs
What really happens when your mobile is stolen
Using a mobile phone to make and receive calls, send texts and browse the web while abroad can be extremely costly – especially if you are travelling outside the European Union (EU), where calls can cost up to 10 times as much as at home.
To avoid high charges, Carphone Warehouse suggests tourists ensure a data cap is in place, use applications to check data usage, turn off 'data roaming', avoid data-intensive applications such as Google Maps and YouTube and use wi-fi spots to update social networking sites.
Payment Protection Insurance (PPI) is supposed to help people to continue meeting their loan, mortgage or credit card repayments if they fall ill or lose their jobs. However, policies are often over-priced, riddled with exclusions and sold to people who could not make a claim if they needed to.
At one point, sale of this cover - which was often included automatically in loan repayments - was estimated to boost the banks' profits by up to £5 billion a year.
Now, though, consumers who were mis-sold PPI can fight back by complaining to the bank or lender concerned and taking their case to the Financial Ombudsman Service (08000 234567) should the response prove unsatisfactory.
It could be you, but let's face it, it probably won't be. In fact, buying a ticket for the Lotto only gives you a 1 in 13.9 million chance of winning the jackpot.
With odds like that, you would almost certainly be better off hanging on to your cash and saving it in a high-interest account.
No-frills airlines such as EasyJet may promote rock-bottom prices on their websites. But the overall fare you pay can be surprisingly high once extras such as luggage and credit card payment fees have been added - a process known as drip pricing.
Taking one piece of hold baggage on a return EasyJet flight, for example, adds close to £20 to the cost of your flight, while paying by credit card increases the price by a further £10.
It may therefore be worth comparing the total cost with that of a flight with a standard airline such as British Airways.
Cash advances, which include cash withdrawals, are generally charged at a much higher rate of interest than standard purchases.
While the average credit card interest rate is around 17%, a typical cash withdrawal of £500, for example, is charged at more than 26%.
What's more, as the interest accrues from the date of the transaction, rather than the next payment date, costs will mount up even if you clear your balance in full with your next payment.
Supermarkets such as Tesco and Asda often run promotions under which you can, for example, get three products for the price of two.
However, it is only worth taking advantage of these deals if you will actually use the products. Otherwise, you are simply buying for the sake of it, which is a waste of your hard-earned cash.
Buy a train ticket at the station on the day of travel and the price is likely to give you a shock - especially if you are travelling a long distance at a busy time of day.
However, you can cut the cost of train travel by 50% or more by going online and making the purchase beforehand - especially if you book 12 weeks in advance, which is when the cheapest tickets are on sale.
Other ways to reduce the price you pay include avoiding peak times and taking advantage of so-called carnet tickets, which allow you to buy, for example, 12 journeys for the price of 10.
Most High Street banks offer packaged accounts that come with monthly fees ranging from £6.50 up to as much as £40, with a typical account charging about £15 per month.
Various benefits, such as travel insurance and mobile phone insurance, are offered in return for this fee. But whether or not it is worth paying for them depends on your individual circumstances.