Research published by the OFT today has revealed that UK consumers lose
around £3.5billion to scams every year. Download a copy of the report from
www.oft.gov.uk.

The groundbreaking study into the prevalence of mass marketed scams in the UK
provides the first ever detailed analysis of the financial impact and harm
caused by such scams. The survey, involving over 11,200 interviews, found
that nearly half of the UK adult population has been targeted by a scam
and that every year one in 15 people (3.2 million adults) in the UK fall
victim to a scam involving deceptive unsolicited mailings, phone calls,
or emails. The average amount lost per scam was £850.

The research suggests that consumers lose around £1.2 billion every year
to bogus holiday clubs, £490 million to high risk investment scams, £420
million to pyramid and get-rich-quick schemes, and £260 million to fake
foreign lotteries. On average a victim has a 30 per cent chance of falling
for another scam within 12 months of first being caught out, most likely
because their personal details are added to a so-called ’suckers list’,
which are then sold on to other scammers.

Whilst older consumers were more likely to be targeted by a scam, the highest
percentage of victims were aged between 35-44 years. Of those who fell for
the scams, 32 per cent said it was because of the legitimate and professional
appearance of the marketing, 30 per cent said they were caught off guard,
and 13 per cent because of the excitement at the prospect of getting a good
deal or winning a prize.

In addition, the research showed that less than five per cent of those scammed
reported their experience to the authorities, and more than half of victims
have since changed their shopping behaviour, for example by becoming less
likely to respond to any unsolicited offers or shop on the internet.

Mike Haley, Head of Scambusters at the OFT, said:

‘This research shows for the first time the full extent of damage done
to individuals and to the wider UK economy by manipulative and malicious
scams. The £3.5 billion stolen from the public, which will line the pockets
of scammers this Christmas, equates to about £70 per year for each adult
living in the UK. This research explodes the myth that only the elderly are
victims of scams. Young and old, and people from all backgrounds are taken
in by increasingly sophisticated scams.’

NOTES

1. The OFT commissioned Carol Goldstone Associates, together with GfK NOP
to undertake research to improve the OFT’s knowledge of the prevalence and
impact of scams on the UK public. It included initial interviews with more
than 11,200 people and 1,900 detailed follow-up interviews with people who
reported they had been a victim of a scam, or knew someone who had been a
victim, or target of a scam.

2. The research found that more than 1 million adults fall victim to premium
rate prize scams each year, 480,000 to pyramid and chain letter scams,
and 380,000 to prize draw scams.

3. The highest average losses per victim were £5,660 for investment scams,
£5000 for African advance fee scams, £4,240 for property investor scams,
£3,030 for bogus holiday club scams, and £1,900 for foreign lottery scams.

4. The mass marketed scams included within the research were premium rate
telephone prize scams, prize draw and sweepstake scams, pyramid selling
and chain letter scams, bogus holiday clubs, foreign lottery scams, work at
home and business opportunity scams, miracle health scams, fake loan scams,
internet dialer scams, African advance fee fraud, property investor scams,
clairvoyant mailing scams, high risk investment scams, career opportunity
scams, and internet matrix scheme scams.

5. The research also highlighted that whilst men and women are equally
likely to be victims of scams, women are more likely to fall victim to
miracle health scams (71 per cent of overall victims), clairvoyant mailings
(70 per cent), and career opportunity scams (63 per cent), while men are more
likely to lose money to investment scams (72 per cent of overall victims),
property investor scams (68 per cent) and advance fee scams (65 per cent).

6. Nearly all scams operate on the basis of offering consumers something
for nothing, such as a major win in a lottery or prize draw (even though you
have never entered), an exclusive entry to a scheme, or a way to earn easy
money. They will ask for consumers to send money up front.

Posted on December 20th, 2006 by lbraum
Filed under: UK