Word of Advice

15 September 2008

Don’t be stung by inheritance scams

There are fraudsters out there trying to trick you into sending your hard-earned cash to overseas scammers. They’ll promise huge rewards or what looks like an easy way to make money. Be on the look out – and don’t respond!

One of the common scams that involve transferring money is described below. Regardless of what the scammer tells you, you should be very cautious about sending money to someone you don't know. Remember that once you send money to someone, it can be very difficult to get it back - especially if they are based overseas.

How the scam works: you receive an email or letter offering you the key to a large amount of 'locked' money. But to unlock the money, you must send money upfront, for legal, administration or processing fees. And guess what? You’ll never see that money again.

Inheritance scams

Following this pattern is an inheritance scam. These scams claim to be from estate companies trying to track down the beneficiaries of a will. Often purporting to be from the UK, they want you to send legal fees in advance of receiving your inheritance.

The letter may also come from an individual wanting you to act as 'next of kin'. The name of the deceased person may even share your last name.

Scammers often try to make their claims sound real by referring to a cause of death you can check for yourself, such as an airline crash. Do not be convinced just because the letter makes reference to an event that actually happened.

The fraudsters may also claim that money is 'trapped' for a number of reasons, including government restrictions or local taxes which you have to pay before the funds are released.

The simple advice is: don’t respond. There are no get-rich-quick schemes. This type of approach is always a scam, even if the letter sounds genuine and enticing. The only people who get rich from this are the scammers.

Counting the cost

Every year New Zealanders lose money to this type of scam. One couple lost $30,000 when they were tricked into giving the money to fraudsters. They received an email from a person claiming to be a British solicitor, who said they had inherited £10 million sterling (more than $25 million). They had a distant male relative in Europe, and since this relative had no other living relations, the claim seemed credible enough.

They had phone conversations with people they thought were solicitors over the next two weeks, and received what they believed was a death notice and legal documents about their inheritance.

The couple were told an account had been set up for them with an American bank, and that the money was in it. They were given a phone number for the bank, to call and confirm their account number, security access number and a PIN number. Then they were then asked to deposit £55,000 into the account, to cover the ‘legal costs’ the solicitor had incurred.

The couple paid $30,000 into the account, and then tried to borrow more from their own bank. When the bank refused, they sought legal advice and were alerted to the scam. The police were contacted by the couple after realising they had been victims of a scam.

Interpol believed the couple had been in contact with people operating from Russia or Nigeria, and that similar scams caught people out all over the world every day.

The lesson - seek legal advice before responding to requests to give out money or personal details to people you don’t know.

Stay safe from scammers – the warning signs

Signs that it’s a scam:

• These types of emails/letters tend to have grammatical or spelling errors. For example, the Americanised spelling “favor” instead of the English “favour” from a bank claiming to be in the UK.
• Low quality images and logos. These have most likely been ‘cut-and-paste’ from the internet, or poorly reproduced with different fonts.

What to do:

• Don’t respond to an unsolicited email or spam.
• Don’t be pressured into making decisions about investments and your money. Always get independent financial advice.
• Check out the sources yourself. If the letter claims to be from a UK bank, find out their number from the Internet (not from the letter/email) and call them directly.
• Never send personal, credit card or online account details through an email.
• If you have begun to pay out to a scammer, the only answer is to stop paying the fees. There is no reward waiting at the end of this process.

Further information

For more information, visit the Ministry’s Scamwatch website