Page last updated at 08:37 GMT, Thursday, 13 November 2008

Fraudsters target money transfers

By Jason Korsner
BBC News

Fraud victim Penny George
Student Penny George was fleeced out of 1,600 by the fraudsters

Fraud experts have urged money transfer companies to tighten their security procedures, as it has emerged that ID fraudsters have been stealing thousands of pounds from people searching classified advertisement pages.

The victims - often flat-hunters - are asked to transfer money either to themselves or a friend, then send a copy of the receipt to prove they have enough funds to cover the rent.

Armed with the receipt, criminals then fake the intended recipient's ID and take the cash from outlets across the country.

Because the money transfer industry is not regulated in the same way as credit card companies are, the victims are unable to claim any money back.

Money transfer companies insist their security procedures are adequate and that they are working with police to stop the fraudsters.

The scams are run by organised, persuasive criminals who lull their victims into a false sense of security.

Receipt copies

One victim was student Penny George who lost 1,600 after being conned by a man posing as a landlord.

After advertising online for a flat to rent near her university in Coventry, she was contacted by a man who emailed pictures of the property and the terms of the lease.

Consumers need to be better educated but at the same time money transfer companies need to take on the responsibility
Tom Ilube
Fraud expert

But before she could view the flat she was asked to prove that she could afford it.

Said Penny: "He wanted me to transfer some money to a friend or family member.

"He said that it wouldn't matter that I was transferring the money because it would be staying with me.

"The man kept saying the money wouldn't be going to him, he wouldn't be picking it up, but I would have show him a copy of the receipt to prove that I'd done the transaction."

Fake ID

Penny was suspicious until another "landlord" contacted her with the same request.

She said: "I thought if a second person is asking, maybe this is a new thing that everyone's doing. Because I'm a student, I've never really looked for flats before."

Penny was persuaded to make two payments, one through Western Union and to the other through the cash transfer company MoneyGram.

She thought by putting the money in her boyfriend's name that it would be safe.

As requested, she sent on copies of the receipts to the "landlord".

Using a fake ID, the scammers then posed as Penny's boyfriend and took Penny's money from a Western Union branch in Manchester and a MoneyGram outlet in London.

She lost 1,600 in total.

Difficult to trace

Penny's MP, Mark Prisk, who is also shadow minister for consumer affairs, is concerned and has promised to investigate.

He said: "These rogue landlords prey on people's need for a roof over their head.

Mark Perryman of MoneyGram International
MoneyGram's Mark Perryman says the firm takes the issue very seriously

"I strongly urge everyone to use conventional and regulated methods of payment and to only pay when a contract has been signed.

"I take this matter very seriously and will be looking at it in more detail."

Charlotte Maguire had a similar experience while looking for student accommodation in Islington, north London. She is frustrated at losing 650 which she thought she had transferred to her sister.

Police say they have heard of many similar cases but say it is difficult to gauge how many people have been affected.

Because the scam artists use fake addresses and small money transfer branches that do not usually have CCTV cameras, the criminals are difficult to trace.

Online warnings

Money transfer companies say that identity fraud is not their fault but a matter for the police.

They say they do carry warnings on their websites and paperwork, urging customers not to disclose details of the transactions to third parties.

Mark Perryman, regional director of MoneyGram International, said the company took the situation very seriously.

"We don't like people to be defrauded in this way. We've taken a lot of steps to try to improve levels of consumer protection. First and foremost we have messages on our website," he said.

Western Union said it worked very closely with the authorities to combat consumer fraud, but ultimately their customers need to be more aware.

A spokesman said: "Consumers are and always will be the first and best line of defence against consumer fraud, especially when it comes to protecting and safeguarding their personal data and identity information."

Fraud frontline

Unlike banks and credit card companies, the money transfer industry is not regulated so victims of fraud are not entitled to compensation.

This will change in November 2009 with the introduction of new legislation, making the Financial Services Authority responsible for overseeing the industry.

But experts say in the meantime money transfer companies need to take more responsibility for combating the scammers.

Tom Ilube, from ID fraud experts Garlik, said: "Money transfer companies are on the frontline of fighting financial fraud.

"They are aware their services are used by fraudsters and they need to step up their game.

"Consumers need to be better educated but at the same time money transfer companies need to take on the responsibility, there are things they can do to tighten up the level of security."

Examples might include additional security checks - such as asking questions only the real customer would know the answer to, or the increased use of CCTV cameras in money transfer company branches.

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