Scam watch: Phantom flats and money transfers to landlords

Published 16th Feb 2010

Tenants are being targeted by so-called landlords who ask them to 'prove funds' with a money transfer receipt made to a friend


Tenants who are searching online for a room or property to rent have been warned to watch out for money transfer scams involving "phantom" flats.

National charity Citizens Advice says would-be tenants should be on their guard if they are asked to "prove funds" via money transfer prior to viewing the property.

The charity's Citizens Advice bureau are reporting cases of people falling victim to a scam where fake landlords, who often claim to live abroad, ask prospective tenants to make a "secure" money transfer to a trusted person – either themselves or a relative. They are then asked to send a copy of the receipt to the landlord to prove they have sufficient money for deposit and rent before they are shown the property.

The prospective tenants are told that no one else can access the money, but find when they go to collect it that the money has already been withdrawn by someone else and the room or property doesn't exist.

In one case, for example, a student was asked to transfer £1,800 to a friend via money transfer to prove she had enough money to rent a room she found online. After giving the receipt as proof to the landlord, she asked her friend to collect the money, only to find it had already been collected by someone else. The transfer agency told her that the person who collected it had given the money transfer number and shown identification in the correct name.

When the student reported the crime to the police, she was told there was no case because she was unable to give sufficient information of how the funds had been collected. But when she tried to get this information from the money transfer company, she was told they couldn't give details without a crime reference number due to data protection. She found herself in a catch-22 situation and nearly £2,000 out of pocket.

"Money transfer, used in any situation other than to send money to someone you know, is not secure. It should never be used as a way of proving funds or as a method of payment to someone you don't know," warns Citizens Advice consumer affairs policy officer Susan Marks. "Sharing your money transfer number or copy of your transfer receipt is like handing over your PIN number to a stranger. It's not the same as transferring money from one bank to another, and isn't covered by the same safeguards.

"The very nature of what makes money transfer appealing – that it's quick and easy and that money can be sent to numerous outlets in the UK or abroad – is also the thing that leaves it open to exploitation by fraudsters."

Citizens Advice says it wants to work with money transfer companies, which have been regulated by the Financial Services Authority (FSA) since November 2009, to help them to tackle the misuse of their services and thwart fraudsters by, for example, looking at how their ID-checking processes can be strengthened.

Meanwhile if you are thinking of making a money transfer and/or searching for property to let online, take steps to protect yourself:

• Never share your money transfer number or copy of the receipt

• Never part with any money before you have viewed the property in person

• Never agree to transfer money, even to yourself, to prove you can afford deposit and rental payments

• Offer to provide references from previous landlords and other professionals such as a GP or employer who can vouch for you, rather than transferring money

• If possible, meet the landlord in person and never hand over any money until you have seen a written contract and checked it over

• Do a Land Registry check to confirm that those who say they own the building actually do own it. See landregistry.gov.uk for more information.

• All landlords must be part of a registered tenancy deposit scheme. One way to check a landlord is legitimate is to ask for the details of which scheme they're registered with and check that they are. See direct.gov.uk/tenancydeposit for more information.

For more details of making a money transfer and checking out a firm's credentials, visit the FSA website.

If you do fall victim to this type of scam, complain to the money transfer agency, the National Fraud Authority's Action Fraud line on 0300 123 2040 (actionfraud.org.uk), or your local police station. You can also let the Office of Fair Trading (OFT) know at consumerdirect.gov.uk/scamnesty. And you can get free, confidential advice from your local CAB adviceguide.org.uk.

Source: ' Guardian '

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