Millions of us are now at risk of losing thousands of pounds thanks to recession-related crime. Figures from the Home Office revealed a 25 per cent increase in bag snatches and pickpocketing in England and Wales over the past financial year, and a 10 per cent increase in shoplifting.
Think crime and you think doors kicked in and televisions nicked – it happened to me only last week. But in the shadows of cyberspace, and from behind the anonymous trappings of official-looking adverts and documents, more subtle ways of parting you from your hard-earned cash are gathering pace.
Here we look at just a few of the recession-fuelled scams and exploitative practices becoming commonplace up and down the country, and how you can protect yourself from their effects.
Cybercrime – when you are ultimately relieved of your cash via the World Wide Web – increased by 159 per cent between 2007 and 2008, according to the UK's Fraud Prevention Service. Card fraud and identity theft thanks to phishing or scam emails are among the most prolific. Professor Howard Rush of the University of Brighton believes the soar in incidences can be directly attributed to the global economic downturn.
"The growth in credit-card fraud and identity theft is due to communications technology reaching regions of the world where many underemployed people with information technology skills lived," he claims. "Criminals there can take advantage of cybercrime opportunities, and the current global recession will likely increase this trend still further."
According to the university's research, there are now thousands of attempts being regularly made to scam victims by phishing for their details, and techniques are varied and imaginative. Even HM Revenue & Customs recently warned that criminal gangs are targeting taxpayers with thousands of scam emails offering bogus tax refunds.
The scams tell the recipient they are due a tax refund and ask for bank or credit-card details so that the fictitious tax refund can be paid out. All customers who provide their details to the fraudsters run a real risk of their accounts being emptied and credit cards used to their limit, it warns, adding that the victim also risks having their personal details sold on to other organised criminal gangs.
Lesley Strathie, the chief executive of HMRC, says: "We only contact customers who are due a refund by post. We never use emails, telephone calls or external companies in these circumstances. I would strongly encourage anyone receiving such an email to immediately send it to us for investigation and delete it from their computer."
If emails, calls or other communication raises suspicion, take no action, ignoring any requests for information no matter how urgent the demand appears, or where it appears to come from, including your bank or credit-card provider. Contact the company independently – not via any links provided in the email, for example – and check whether they have been in touch, raising your concerns. Remember that companies you really do deal with will already have your personal and financial details and will only ever ask for random elements, such as the characters from your password – never the whole thing. Question any communication asking for your personal information, no matter how authentic it appears.
Online auction sites have changed the way a whole generation of us buy second-hand and new goods, but this kind of remote selling will always entice the less than honest – from misrepresenting the quality or origin of the item to selling stolen goods. The merchant may just take your money and run, sell you pirated or fake merchandise, or bump up the price using phoney bids. If you're doing the selling, beware of fake money orders or cheques and stolen credit cards. The purchase may go well, but if the item is valuable, beware of the buyer switching the item with a forgery and returning it to you for a refund.
EBay, for example, advises its users to read carefully the item's description. Check the seller's other items and their sales history, and make sure the method of payment you use offers purchase protection like a credit card. "Keep a record of all your purchases, contact the seller to verify their contact information and arrange payment," the online auction site suggests.
The small print in all those glossy brochures from financial service providers warns "your investment can go up as well as down and that past performance is no guarantee of future success". But then there are so-called boiler rooms, a totally different kettle of fish operating outside of the UK's Financial Services Authority (FSA) jurisdiction and conning investors out of an average of £20,000 a time.
It's an incredibly simple concept. Investors receive a cold call from someone claiming to be a stockbroker from a prestigious-sounding company, seemingly with news of undervalued stocks that are about to soar in value. They use hard-sell techniques to push investors to buy in, but these shares are actually worthless, and often don't exist. Once they have your cash, the fraudster simply disappears with it.
But these scams hit the experienced investor and the novice alike, and only 12 per cent of boiler-room victims are new to investing, according to the FSA. David Kuo, director at financial website The Motley Fool, says: "With plummeting interest rates from savings, it is easy to fall prey to a boiler room's guarantees of high returns. This is especially true of older people whose retirement income has been hard hit.
If you are ever contacted out of the blue by someone you don't know, who works for a company you have never heard of, selling you an investment that sounds too good to be true, it is likely to be a boiler-room scam. They will promise you heaven if you invest with them, but life will be hell as soon as you do.
"Always check if an investment firm is FSA-registered," Kuo warns. "Never disclose personal information to cold-callers, and always remember that if it sounds too good to be true, it probably is."
Anyone who fears they may have been the victim of this kind of scam, or who has concerns over a suspect call or other contact, should call 0845 606 1234 or go to www.fsa.gov.uk for more information.
All that glitters
Alongside all the illegal actions are the plain old rip-offs. As the recession continues, more of us will find it difficult to pay our bills. And suddenly there is a deluge of companies offering to buy your unwanted gold. But anecdotal evidence suggests that although you'll never get 100 per cent of the value of your scrap, many jewellers are paying less than half the going rate. The scrap rate for 9-carat gold, for example, is between £6 and £7 per gram, but offers are often £4 or less. Dealers have even been known to offer just £1 per gram for your unwanted jewellery. Some dispute the quality of the gold, and others will underestimate the ratio of gold to gemstones.
Then there are the other pitfalls. Pawnshops or high-street dealers may seem less salubrious than a nice, clean website, but if you deal online or via post, there may be charges for returning your items if you're not happy with the offer. And be sure your parcel is adequately insured.
If you do want to sell unwanted gold, always shop around for the best deal available. Try to keep an eye on the gold price. A fair deal would be around 80 per cent of the bullion price, and some gold dealers, such as Chard Limited, which operates www.taxfreegold.co.uk, actively display the gold price for their customers. Meanwhile, be aware that dealers sell at a fixed price, so companies spending a lot of cash on expensive television advertising will by default have less to spend on buying your precious metal.
Yet more television adverts or even cold-calling recorded messages are now offering to solve your debt problems for you. They may help you negotiate with your creditors for reductions on your bills or monthly payment, but they will most likely charge a huge fee for the service. See below for how to get debt advice without having to pay for it.
Getting debt help
There's no doubt many of us need debt-management help. The total amount of UK personal debt at the end of July 2009 stood at £1,457bn, according to the latest report by Credit Action.
Of those households with unsecured loans, each owes an average of £21,457, excluding mortgages.
There are several excellent independent debt charities operating in the UK that won't charge you for their bespoke help, including the Consumer Credit Counselling Service.
They will assess your debt problems and arrange amended repayments to your creditors. Contact www.cccs.co.uk or call 0800 138 1111 for more information.