Five More Scams To Shun

Before Easter, we showed you seven swindles to beware of. To keep you safe, we reveal five more con-tricks to avoid.

Before Easter, in Steer Clear Of These Scams, we alerted you to seven common swindles which could relieve you of your cash faster than you can say "A fool and his money are soon parted"!

However, there is no end to the cunning and ingenuity of scammers, so our job isn't over yet. To keep you safe, here are five more fiddles to steer clear of. (By the way, the next instalment of this series, in which we expose five more rip-offs, will be published in a day or two -- so watch this space.)

1. Criminal cashback

This clever trick relies on the fact that it usually takes five days or more before cheques deposited in UK bank accounts are 'bounced' -- that is, rejected, dishonoured or returned unpaid.

Let's say that you decide to sell something (for example, a car), so you place an advertisement online or in your local newspaper. Someone who appears to be a genuine buyer then sends you a cheque or banker's draft for a sum which is considerably more than your asking price. The phoney buyer asks you to bank this cheque and then send him/her the excess by money transfer. The catch is that your money transfer takes effect immediately and is irreversible, but the fake cheque might take weeks to bounce. Thus, you end up seriously out of pocket with nowhere to turn to.

For more advice on criminal cashback, read this Fraud Alert from the Metropolitan Police.

2. Home-working scams

One universal feature of home-working scams is that they all promise a high income for very little effort, usually by running a business from home. I wrote about a typical example in Beware 'Working From Home' Scams, which is still relevant four years on.

Although there are legitimate multi-level or networking marketing businesses (such as cleaning-products firm Amway), the vast majority of these home-working 'opportunities' promise a great deal more than they deliver. Some are outright frauds and deliver absolutely nothing -- you send off your joining fee and never hear from them again. Others promise high wages for menial work such as stuffing envelopes, but fail to pay out anything like the amounts pledged, if anything at all.

If you're thinking about starting your own business, check out our Working From Home discussion board and read this Fraud Alert from the Metropolitan Police.

3. Fake invoices and data-protection services

These scams are usually aimed at businesses and corporations, but we should all keep an eye out for them. With the 'fake invoice' trick, a scammer sends out thousands of bogus invoices for modest amounts, say, £50 for print supplies. Although most accountants and book-keepers will recognise these bogus invoices for what they are, a few will slip through the net and be paid. (Trust me; this wouldn't happen at the Fool, because our chief financial officer watches over our accounts like a hawk!)

Another variant on this theme is the dodgy data-protection or company-registration swindle. This attempts to rip-off businesses by demanding money for allegedly 'compulsory' registration under 'new' data-protection laws, or by inviting businesses to advertise in bogus company directories. As the owner of a small business, I've had a few of these letters in my time -- and they all end up in my shredder.

4. Dodgy share-trading software

In my twenty years as a private investor, I've seen thousands of adverts for share-trading software. Many of these packages promise the Holy Grail of investing: guaranteed market-beating returns with low risk. Frankly, these claims are utter pants!

Think about it: if you came up with a sure-fire way to beat the market, the smart thing to do would be to keep it to yourself in order to reap maximum rewards. Alternatively, you could sell it for tens of millions to an investment bank such as Goldman Sachs and then retire to your own private island. The last thing that you'd want to do is to share your secrets with the public, right?

By the way, don't confuse these packages with responsible paid-for investment newsletters such as The Fool's Champion Shares service, which is written by experienced investor and long-time Fool writer Maynard Paton.

5. Gambling syndicates

These scam syndicates have a lot in common with the share-trading software packages. In essence, you are invited to buy a piece of software which promises to help you to beat the bookies, or you pay a fee to join an exclusive gambling syndicate which provides you with umpteen 'winning' tips each month.

Watch out for the third instalment in this series in a few days. In the meantime, before you leap into any 'easy money' scheme, ask yourself this simple question: "Where does the money come from?" If you have any doubt, just stay out!

More: Visit the Office of Fair Trading's Scambuster website and the Canadian Crimes of Persuasion website.