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UK CONSUMERS TARGETED BY 'CANADIAN LOTTERY' SCAM

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A deceptive telephone marketing scam hitting the UK from Canada is ...
A deceptive telephone marketing scam hitting the UK from Canada is

the focus of a new OFT campaign.

Thousands of UK residents have already received unsolicited phone

calls and sent thousands of pounds to fraudulent lottery schemes

operating out of Canada.

How does the scam work?

People respond to an unsolicited mailing or phone call telling them

they are being entered into a prize draw. Their names are then added

to a target or 'sucker' list which is made available to numerous

direct-marketing and telemarketing operators.

Victims then receive an unsolicited phone call from Canada

congratulating them on winning the 'big prize' in a National Lottery

such as the Canadian, Australian or Spanish. The victim is told that

before they can claim the prize, they must send money to pay for

taxes and processing fees.

The OFT is aware of people who have lost up to £67,000 as they

respond to more and more telephone calls demanding payments to cover

costs in order to receive their prize. The prize doesn't exist, and

they never receive any winnings in return for their cash.

Why do people respond to the calls?

People are led to believe that they have won hundreds of thousands of

pounds so sending one or two thousand pounds in taxes to claim the

prize seems like a small cost in comparison. As people send more and

more money to claim their prize, it becomes difficult for them to cut

their losses and they become caught in the trap of, 'well, I've sent

£3,000 already, I might as well send more.'

Who is at risk?

The elderly are particularly at risk. Over 80 per cent of victims are

more than 65 years-old, but anybody can receive a phone call. In many

cases victims have received a number of phone calls from somebody who

tries to befriend them, asking them about their family and interests,

before they call them again to tell them they have won a prize. The

caller may pose as a government official, customs officer or lawyer.

Evidence shows that most victims do not report the crime through

embarrassment. Some fear that they may lose control of their finances

because of their age.

How big is the problem?

Over the past year there has been a large increase in the number of

cases reported to the OFT about the Canadian lottery, with more than

300 complaints since August 2003 alone. It is estimated that UK

consumers have already paid out £10-£15m to the scam. Research

has also shown that there are 15 call centres in Canada solely

targeting the UK. One centre is already known to have defrauded UK

consumers of around £450,000.

The OFT Campaign

The OFT is launching a campaign to make people aware of the 'Canadian

lottery' scam. It is urging people not to respond to these telephone

calls and to encourage them to alert their family and friends to the

scheme and it dangers.

The OFT is working closely with the Canadian authorities to try and

take action against the fraudsters. The Canadian authorities have

already had some major successes arresting over 50 people and closing

down numerous call centres. Where the Canadian law enforcement

officers have been provided with evidence, they have also been able

to disrupt the fraudsters' activities and intercept maildrops.

A telephone hotline has been set-up by the OFT to collect evidence

which the Canadian authorities can use to prosecute the fraudsters.

Although, the OFT cannot take up cases on behalf of individuals,

anybody who has received a phone call and/or sent money to the

Canadian lottery can call the hotline to give their evidence and help

put a stop to the scam. The number is: 020 7211 8111.

What to do if you receive a phone call?

If you receive a phone call the general advice is:

- be cautious: if you have doubts about a caller - hang-up

- never send any money in order to receive a prize

- don't give out private f inancial information

- Canada doesn't have a national lottery like the UK.

How to spot a scam

There are a number of key behaviours that people can look for to spot

a scam:

- if it sounds too good to be true, it probably is

- you are often asked for money up front to release your 'win'

- you are asked for your bank account, credit card details or other

confidential information

- the caller is more excited than you

- the stranger who calls wants to be your best friend

- you must reply straight away or the money will be given to someone

else.

Penny Boys, OFT executive director, comments:

'This is a professionally organised operation and the people involved

are very persuasive. By alerting consumers to such scams we hope

people will recognise the tactics they use and will think again about

sending their money away.'

Visit the OFT website for more information: www.oft.gov.uk/consumer

ANNEX 1

Real life case studies:

- Mr J received a phone call from a representative of the First

National British Holdings in Canada and was told he had won

£225,000 on the Canadian National Lottery. The caller told him that

under Canadian Law he was required to pay a tax of 1% of the

winnings, £2,250. Mr J then received a series of calls from

individuals who claimed to be Canadian and UK customs officials,

lawyers and file administrators. He sent six further payments for

customs fees, insurance levies, and legal release fees due to the

series of convincing calls which included claims that First

National British Holdings had gone into administration. By the time

Mr J received a call claiming to be from UK Customs, asking for

£2,000 he felt he couldn't afford to cut his losses and sent the

money.

Mr J lost £18,750 in total. At no point did he contact any UK or

Canadian Authorities and was only tracked by materials seized in an

arrest in Toronto.

- Ms T received a call from a representative of Global Call Centre

stating that he knew a guaranteed way of winning the Canadian

lottery. The caller said that all Ms T had to do was forward a

cheque for £49 to an address in Vancouver. Within a month of

this contact Ms T received a series of telephone calls asking her

to send money to pay for the tax on her winnings. She sent a total

of approximately £200 in tax payments but has never received any

form of prize.

- Mr N received a call from the 'Head of the Legal Department' and

told he had won £250,000; he would just need to send a 1.5% tax of

£3,750 to the Toronto Authorities. Within a month he had received

another call claiming the tax was also payable to the Vancouver

Authorities and he would need to send a further £3,750. Mr N never

saw his prize but he did receive more calls from an individual

claiming he had won £250,000; again the release of this prize was

subject to a £3,750 payment for tax.

- Mrs K received a number of different phone calls claiming she had

won between £4,500 and £135,000. The callers claimed to be from

Canada and Australia and she sent a number of payments of between

£60 and £2,000 for taxes and release fees. She never received any

prize.

NOTES

1. A new gateway for disclosure to overseas public authorities under

Enterprise Act 2002 (Section 243) has made it easier for the OFT to

work with overseas counterparts by enabling the sharing of

information which will allow civil proceedings and the investigation

of crime.

2. The OFT will be holding an emergency summit with a number of

consumer organisations and those who represent the interests of

senior citizens such as Age Concern and Help the Aged.

3. The OFT is also coordinating the response from UK Law Enforcement

agencies including the Met Police, National Criminal Intelligence

Service, Th e Royal Canadian Mounted Police Interpol and Trading

Standards.

4. The OFT is working with the Royal Mounted Canadian Police, the

Competition Bureau of Canada, Phonebusters, the Ontario Provincial

Police, the Toronto Police, Ontario Ministry of Consumer and Business

Services and the Attorney General's Office for British Colombia.

5. Canada does not have a state backed national lottery. Super Sevens

and the 6/49 are legitimate private lotteries which operate

nationally in Canada, neither is state funded and the calls do not

emanate from them.

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