Renters warned of money transfer scam for ‘phantom’ flats
National charity Citizens Advice is warning people to take extra care when searching for rooms or property online, if they are asked to ‘prove funds' via money transfer prior to viewing.
The charity's network of Citizens Advice Bureaux are reporting cases of people falling victim to a scam where Landlords - who often state they live out of the country - ask prospective tenants to make a ‘secure' money transfer to a trusted person (i.e themselves or a friend/relative). They are then asked to send a copy of the receipt to the Landlord to prove they have sufficient money for deposit and rent before they are shown the property.
The would-be tenants are reassured that no-one else can access the money, but find when they go to collect it that the money has already been withdrawn and the room or property doesn't exist.
One CAB reported a couple who found a flat on an online classified ads site. Before they were shown the flat, they were asked by the advertiser to make a secure money transfer of £650 to a trusted person and fax a copy of the receipt to prove their funds. The couple were dubious about the request and called the money transfer company to seek advice. They were told that without showing personal I.D such as a passport no money could be withdrawn. Reassured, the man transferred the money to his fiancé and faxed the Landlord a copy of the receipt obscuring all other details except the amount and Money Transfer Number (MTN). When the couple went to pick up the cash they were told the money had been paid out already in California. Upon reporting the crime to the police they were told there was nothing that could be done.
Another CAB saw a student who had been asked to transfer £1,800 to a friend via money transfer to prove she had enough money to rent a room she found online. She did so and sent the receipt to the Landlord as proof. When her friend went to collect the money they found it had been collected by someone else, and were told by the transfer agency that the person had given the Money Transfer Number and shown I.D in the correct name. When the client went to report the crime to the police they said there was no case because she was unable to give sufficient information of how the funds had been collected. Having tried to get this information from the money transfer company, she was told they couldn't give details without a crime reference number due to data protection - so she found herself in a Catch-22 situation and nearly £2k out of pocket.
Citizens Advice Consumer Affairs Policy Officer Susan Marks said: "Money transfer, used in any situation other than to send money to someone you know, is not secure. It should never be used as a way of proving funds or as a method of payment to someone you don't know - sharing your money transfer number or copy of your transfer receipt is like handing over your PIN number to a stranger. It's not the same as transferring money from one bank to another, and isn't covered by the same safeguards.
"Unfortunately the very nature of what makes money transfer appealing - that its quick and easy and that money can be sent to numerous outlets in the U.K or abroad - is also the thing that leaves it open to exploitation by fraudsters.
"Consumers must be warned about the dangers and we want to work with money transfer companies to help them to tackle the misuse of their services and thwart fraudsters. As well as making sure there are obvious warnings on receipts about fraud risks we also want to look at how ID checking processes can be strengthened."
Since November 2009 money transfer companies have been regulated by the FSA, and whilst they can apply to be ‘authorised' the only real requirement is that they are registered which involves a lower standard of checks. Local money transfer agents are not checked at all.
Citizens Advice is also concerned about the reluctance of some local police stations to treat this issue as a crime. Nationally, people affected by fraud can report it through the new Action Fraud line: 0300 123 2040. Section 2 of the Fraud Act 2006 clearly states that this is a crime, but CABx have had reports from clients who are being told at their local stations that it's a civil matter as opposed to a criminal one. Citizens Advice want all police staff who may deal with crime reporting to treat this problem as a crime.
Citizens Advice also wants the online sites that advertise property for rent to do more to verify the legitimacy of people who post adverts as well as warning consumers about this and other scams that users of their sites may be vulnerable to.
The charity has come up with some ‘Top Tips' for anyone thinking of making a money transfer and/or searching for property to let online:
Never share your money transfer number or copy of the receipt - it's not secure
Never part with any money before you have viewed the room or property in person
Never agree to transfer money, even to yourself, to prove you can afford deposit and rental payments
If you or the prospective Landlord live abroad, offer to provide references from previous Landlords and other professionals such as a G.P or employer who can vouch for you, rather than transferring money
If at all possible, meet the Landlord in person and never hand over any money until you have seen a written contract and checked it over
Do a Land Registry check to confirm that those who say they own the building actually do own it. See landregistry.gov.uk for more information.
All Landlords must be part of a registered Tenancy Deposit Scheme which protects your deposit. One way to check any prospective Landlord is legitimate is to ask for the details of which scheme they're registered with and check that they are. See direct.gov.uk/tenancydeposit for more information.
Use a reputable letting agent from the High Street, who is registered with the National Approved Letting Scheme (NALS). Agencies belonging to this scheme have agreed to follow a set of standards which include a complaints procedure.
If you need to make a money transfer, you can visit the FSA site: moneymadeclear.fsa.gov.uk for info on how to check out a firms credentials and what you can expect.
If you have been the victim of this type of scam complain to the money transfer agency and the National Fraud Authority's ‘Action Fraud' line: 0300 123 2040. actionfraud.org.uk , or your local police station
You can also let the Office of Fair Trading (OFT) know at: consumerdirect.gov.uk/scamnesty
If you have been affected by a scam or are concerned about the legitimacy of a property you have found online visit your local Citizens Advice Bureau for free, independent, confidential advice: adviceguide.org.uk
More than three million adults in the U.K - one in 15 people - fall victim to scams, losing a total of £3.5 billion every year. Citizens Advice is flagging up this issue during Scams Awareness Month run by the Office of Fair Trading. oft.gov.uk/news/campaigns/scams