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TELEPHONE SCAMS

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DON'T BE SUCKED IN BY A PHONE CALL

Telephone scams have been around since Alexander Graham Bell invented this device. There are so many scams perpetrated on gullible people who get ripped off by merely pick up the phone when it rings and believe the utter crap that somebody tells them. Here are a few of these scams, but you should treat all calls with the greatest suspicion, even from friends who want to rope you into some multi-level marketing scheme that relies on them recruiting suckers.

FAKE REMOTE COMPUTER FIX SCAM

Many Australians have been targeted by fraudsters, based mostly in overseas call centres, claiming to be Microsoft or other computer company technicians cold-calling potential targets and stating that their computers have been affected by viruses. They use high-pressure tactics, warning that stored information will be lost if the computer is not repaired immediately.

Most of these scammers are computer-literate and spew out all sorts of technical jargon to convince their victims that they really are legitimate. Some of them even offer Australian phone numbers for the victims to ring and verify this, but in literally all cases, those numbers are bogus or they are VoIP services on Australian numbers, but linking to overseas telephones.

This is how it works. In some cases, potential victims are asked to provide credit card payments and call a telephone number that diverts overseas. In other cases, they are directed to a website which gives the scammers remote access to their computer and their personal information. The scammer will also use various tricks to convince the victim that his computer is infected, such as getting him to open up the Event Viewer on the computer, which invariably shows events with error icons. Although these error messages are quite normal on all computers, the scammer will tell the victim that these indicate that multiple viruses are present on the computer.

In reality, there may be nothing wrong with the computer, but if the victim falls for the scam, he will believe that there is a major problem on his computer and that paying the fee is the best way to get it fixed. Often the scammer will also push the victim to buy a computer maintenance subscription that is never honoured. Why would a scammer honour a deal?

But even worse, if a victim allows a scammer to gain access to his computer, especially with administrator privileges, the scammer can then do literally anything, such as loading a keylogger that will record and transmit all keystrokes to the scammer, giving him usernames, passwords and credit card details to bank accounts and commerce websites. The scammer can then do everything that the victim can do, including cleaning out the victim's bank accounts and shopping using those credit card details, including that secret security number on the back.

Getting administrator privileges will allow the scammer to look at and download any files on the victim's computer, including child pornography, sensitive financial and personal information that the scammer can use to blackmail the victim. In fact, the scammer can completely hijack the victim's computer, locking it up so the victim cannot get access to anything until he literally pays a ransom to the scammer to unlock his own property.

Of course there is only one defence against this scam and that is to never ever give anybody, especially a stranger on the phone, access to your computer in any way, no matter what they say. It's that simple. If somebody claiming to be a technician rings up and states that you have viruses, simply tell them to get lost. Don't ever give credit card details or any other personal information. Then download that excellent free virus checker called Malwarebytes, install it and run it. This terrific software will quickly eradicate any viruses on your computer and make a report of your computer's safety and status.

FAKE INSURANCE CLAIM SCAM

This is how it works. Cold calls are made to members of the public by people pretending to be from a crash investigation company acting on behalf of an insurance company or investigation bureau. In most cases, the scammer will ask you whether you or anybody in your household have been involved in an accident of any sort. If you say that this is correct, the scammer will ask for personal details such as name, date of birth, car registration, driver's licence and bank details, supposedly for referral to an injury claims or compensation service promising the call recipient financial gain. The fact that most of these scammers use autodialling machines means that they have no idea who receives their calls and they rely on conning the details that they need out of the person who answers their calls. Then the scammer will state that they can arrange for large compensation settlement for the victim of the accident and then will demand some sort of fee for doing this.

Of course the scammer cannot do a thing to arrange compensation, so as soon as the fee is paid, it vanishes, along with the scammer. Or else the scammer may on-sell the information to an ambulance-chasing law firm - and there are plenty of those - who will try and get real compensation for the victim for a massive percentage of the awarded sum.

There is a very easy way to deal with such scammers. Firstly, never give personal details to cold-callers. Never answer the phone with your name or number, but just say "Hello" or similar. Your friends will know who they are calling. People who ring you legitimately will be happy to identify themselves and state their business and will never mind you phoning them back on their listed phone numbers.

But unless cold-calling scammers have somehow obtained your details from social media and other places, they will not know who you are, so then you can challenge them to prove that they know you. This is how I handle such a cold-calling fake accident phone scammer.

Some of these cold-calling scammers are very slick and persuasive, but the bottom line is that if they cannot verify your name and you have not told them what your name is, then they are obviously fraudsters. It is most important to severely restrict the amount of information that you place on social media. Scammers love Facebook and Linked-In because there is a rich harvest of personal information available in those social media portals.

It is truly amazing how so many people spill their guts on Facebook - names of family and relatives, phone numbers, even addresses. Then they describe everything that happens to them during the course of the day. They tell the world where they are, where they are going, what they are eating, who they are meeting, whether they have had an accident or other occurrence.

These personal details allow a scammer to build a detailed profile of their intended targets and when they have enough information, they can phone these stupid fools and literally sound like they have known them forever. That makes the targets far more gullible and ready to be cleaned out by the scammer. In fact, Facebook is one of the premier hunting grounds for such scammers, both for phone and also Internet scams. So be aware of this and if you must use Facebook, post the very bare minimum of personal information on it and remember that scammers are reading it and could be developing a profile on you.

MISSED PHONE CALL SCAM

There have been countless scams over the decades involving telephone services, but the rapid advent of the mobile phone has ushered in some very inventive methods by which unscrupulous people have taken advantage of this technology to scam money from unsuspecting victims. One such method is not particularly dangerous in itself, but it demonstrates how a little social engineering can make people succumb to paying money for nothing, or in fact be lured into paying large sums for calls to expensive premium services numbers.

This is how it works. The victim receives a missed call message on his mobile phone screen, even though he may not have even heard it ring. He sees the phone number of the caller. Being subject to typical human nature, he will call the number out of courtesy or maybe thinking that somebody has called him with an urgent message. When he rings the number, he is connected to a recording advertising a 1900 premium services number that offers him the chance to win prizes or other such enticements for a call cost of some dollars per minute.

Of course the victim is not forced to ring the 1900 number that is being promoted in the advertisement, but the bait has been presented and many people will be tempted to try and win the prizes or cash offered. In virtually every case, there is really no prize or cash to be won and all the victim will receive is a rather large telephone bill. Unfortunately, there is no redress for the victim with his telephone service provider because he actually voluntarily initiated the call to either the number in the missed message or the premium services number.

The most galling part is that the victim is tricked into paying for a telephone call to listen to a useless advertisement. It does not cost the perpetrators one single cent to run a massive nationwide telephone advertising campaign, simply because they use pre-programmed automatic diallers to call mobile numbers and hang up after one ring, before the victims answer or their message services pick up the calls. In Australia, a call that is terminated before the connection is made is totally free. However the missed call registers on the recipient's mobile phone, complete with the return phone number, because the scammers ensure that their Caller ID number sending is activated. This is the whole basis of the scam.

So because most people are socially programmed to think that missed calls should be called back in case there is an emergency, they ring and find themselves listening to dodgy advertisements at their expense.

This is what social engineering is all about, using people's human nature and gullibility to force or trick them into doing something that they would normally not do. It is very prevalent in Internet scams, for instance where victims receive emails purporting to be from their bank, telling them that they have to click on a link (that actually takes them to a fake bank website) and provide confidential information, such as their usernames and passwords that eventuate in their bank accounts being rapidly cleaned out by the scammers. Read about various scams in other pages on this website and learn how to avoid being fleeced by crooks.

Don't be suckered by the mobile phone scam. If legitimate contacts call and do not reach you immediately, they will soon ring back or leave a message on your answering service if it is important. Most smartphones will display a caller's name if that caller is in the phone's contact list, but if an unknown or unrecognised number is displayed, the best thing is to do nothing. If it really is legitimate or important, the caller will phone back. If it's trivial, a wrong number or a scam, you won't hear from them again.

SMS TEXT SCAMS

There are many SMS companies that promote competitions, quizzes, games, match-making and ring-tones. They advertise in magazines and on television, usually late at night and use high-energy advertisements, distracting visuals and hard-to-read fine print disclaimers.

The Australian Competition and Consumer Commission (ACCC) receives about 4000 complaints a year about telecommunications services, making it the most-complained-about industry. In the 2006-07 financial year, the ACCC had 13 major investigations into consumer protection issues in the telecommunications industry underway. In 2007-08 that number had grown to 22.

One Telstra customer said that she was puzzled when billed for $60 of text messages. When she rang Telstra, she was told the messages had been sent by a company called Sol Mobile, and that she should contact it. She was told by a Sol employee that a cheque would be sent immediately to reimburse her, however a Telstra employee told her that Telstra would refund the money itself.

The safest course of action is to not subscribe to any SMS services, simply because none of them are beneficial or really useful. For instance, many of those companies that ask you to send an SMS to get a ringtone actually enrol you to receive many ringtones, all at a high cost. But if you want ringtones, there are thousands available free on the Internet and these days, most MP3 or other audio tracks can be used as ringtones.

Of course if people are stupid enough to subscribe to idiocies like SMS horoscopes sent to them every day for a cost, then they deserve to lose their money. Many SMS moneymaking schemes do not deliver what they promise, so the best thing to do is to never subscribe to them and if you receive unsolicited SMS advertisements, please note that these are illegal. You should note the sender's number and immediately lodge a complaint with the Australian Communications and Media Authority (ACMA).

PONZI SCAM

This is a prevalent scam that has sucked in a lot of greedy and gullible people, as well as innocent investors over the years. The Ponzi operator calls his targets and convinces them that he has a wonderful investment opportunity that offers a far greater return than the average investment, such as rock-solid bank or bond interest. In many cases, the returns promised by the scammer are in the order of over 30% interest or more, which should set off alarm bells in anybody who has the sort of money to invest in such ventures. The scammer will even produce fancy paperwork that he has fabricated to con the sucker into believing that the proposed investment is legitimate.

For a short while, the investor will receive that huge interest payment periodically and is encouraged by the scammer to tell all his friends about this fantastic moneymaking opportunity. The scammer ensures that the new flock of suckers also get paid that high rate of return for a while, but when no more suckers can be enrolled, the scheme can then be folded.

The basis of the Ponzi scam is ludicrously simple. The scammer does not invest the money he has received from the suckers into any sort of real investment or a legitimate earning strategy. He merely pays the suckers those high interest payments out of their own capital and the money given to him by new targets until he decides that no further people will put money into this bogus investment. At that point, he informs the suckers that the alleged high interest investment has gone bad and has been liquidated, with no possibility of recovering the capital that was invested. The suckers lose all their money and the Ponzi scammer keeps everything he has collected from the suckers, less the relatively small amount of money that he paid them in alleged interest.

Some Ponzi scammers even have the gall to inform the suckers that the interest rates on their bogus investment have dried up because the alleged company is experiencing hard times and only an injection of further capital will enable it to return to that mythical high percentage interest payment regime. Thus the scammer often actually squeezes more money out of the suckers, who throw good money after bad in the hope that they can recover what they have already lost. The whole Ponzi scam relies on the greed and naivety of people, but of course most scams operate on this basis.

Ponzi scammers do not look like common criminals. Their scam relies on them looking prosperous and having the trappings of success. Many lawyers have operated Ponzi scams, snaring their clients who trusted them implicitly and then betraying their trust. Some Ponzi scammers will go to extraordinary lengths to suck in their victims, taking them for cruises aboard luxury yachts on the harbour while spruiking their scams. A Ponzi scammer will never look like Fagin from Oliver Twist, but will arrive in a Rolls Royce and be wearing a very expensive Armani suit and have a gold Rolex on his wrist. But even a simple check of his credentials will reveal that it's complete baloney.

CASE HISTORY OF A PONZI SCAM

A highly respected solicitor by the name of John Gordon Bradfield had a legal practice in the suburb of Dural, an affluent semi-rural area of north-western Sydney. He latched onto a scheme to defraud his clients by offering high return investments in the form of interest on loans to a property developer who was allegedly building units and town houses at Hawks Nest and other areas of NSW.

The interest that Bradfield offered on these private loans were in the order of 10% to 15%, far above bank interest rates at the time, so it was tempting for Bradfield's clients to invest to let Bradfield allegedly lend the money to this builder and reap the high interest rates. Bradfield assured the investors that the loans were fully secured by Epitomes Of Mortgage and he issued these papers to his clients whenever the money that they invested was rolled over into ongoing loans to this builder. So his clients believed that their investments were secured by mortgages over property and they trusted Bradfield, who had performed their legal work for decades.

Bradfield's Ponzi scam came to grief when a number of his victims demanded the principal, the original money that they had invested when the period of the loan was ending. Bradfield did his best to try and convince the investors to roll over their funds into ongoing loans to this builder, but when some of them demanded the return of the funds, Bradfield's Ponzi scam was exposed in all its glory.

In fact there was no builder and the Epitomes of Mortgage were all phoney. Most of the properties listed on them existed, but there were no mortgages taken over them as security and in many cases, the owners of the properties had no idea that their apartments and town houses were being used in Bradfield's scam. After Bradfield had repeatedly tried to dissuade an investor from retrieving his money, a close friend of that investor decided to check the Epitomes of Mortgage to see if the Land Titles Office actually had registered these mortgages against the properties on the Epitomes.

Of course it was discovered that none of the properties listed as security on those Epitomes had mortgages registered against them, so the authorities were called in. Within a few days, they had raided Bradfield's legal practice and barred him from operating as a solicitor. Investigators and auditors discovered that Bradfield had scammed people whom he had known and dealt with on the basis of trust for over 40 years out of more than $30 million. Bradfield was charged with multiple counts of fraud.

But this and other Ponzi scams prove one thing, that the scammers rely on presenting a facade of trust and respectability. They are not the stereotyped criminals and thugs one sees on TV shows, with ugly unshaven faces and close-set eyes. No successful scammer looks like a crook. Ponzi scammers look like respectable bankers, financial advisors and lawyers, which they often are and this is why people are lulled into a false sense of security and hand over money to them to invest without ever checking to see if those investments are real.