Prize draw scam tricked 'winners'

27 October 2008 12:06am

More than 20 elderly people have collectively handed over £350,000 in a prize draw scam which tricked people into acting as money mules, the consumer watchdog has warned.

The Office of Fair Trading (OFT) said it had identified at least 22 people who had not only been tricked into handing over their own money, but who had also been groomed by the fraudsters to launder other people's.

The fraud involved people being telephoned and told they had won an international sweepstakes or prize draw worth up to £500,000.

But they were told that in order to claim their winnings, they had to pay refundable taxes and insurance fees, and they were told to send the cash by money transfer to Canada.

The victims were then later informed that their prize had arrived at a UK airport, but that further sums of money were required to release it.

They were instructed to send personal cheques, often for thousands of pounds, to UK "agents", who were typically other victims of the fraud.

The victims who received the cheques had often exhausted their life savings, and were told that the money was from sponsors to help them pay the release fees for their prize.

They were told to bank the cheque and transfer the money overseas, and in doing so they were inadvertently acting as money mules, helping the fraudsters to launder the money.

Victims of the scam, which was investigated by the City of Westminster Trading Standards Service and the police, were often encouraged to borrow large sums of money once their savings had been depleted, with some people losing more than £50,000.

The OFT said one of the reasons victims were being used to launder each other's money was that many people were less suspicious if their money was sent to a genuine UK address, while people also believed that the prize win must be genuine if they were receiving cheques from sponsors.

© The Press Association