The top three most dangerous phone scams

Homeowners have been targeted in a new scam where they receive phone calls from bogus firms promising Council Tax refunds. We uncover the worst telephone scams in circulation - and show you how to protect yourself.

As consumers increasingly wise up to many of the email and online scams in circulation, criminals are falling back on old-fashioned techniques to try and part us from our cash. The Trading Standards Institute has noted a sharp rise in the number of telephone scams in operation.

These scams see criminals cold-call people and attempt to trick them into handing over their bank account or credit card details. Some are crude, some are sophisticated, but all are dangerous to your wealth. We uncover three of the worst ones in circulation and show you how to avoid them.

Council Tax scams

The latest incident has seen bogus callers posing as council officials informing homeowners that they've either paid too much or too little Council Tax due to their homes being put into a new tax band.

During the scam, the victim is urged to hand over their bank details to ensure a refund can be made or to avoid a fine for late payment. Of course, what actually happens is very different: the fraudsters empty the victim's bank account and are never heard of again. Trading Standards officers are warning homeowners to be on their guard and official warnings have been issued in Northumberland, Portsmouth, North Tyneside and Stafford.

Local authorities have stated that no council would ever contact a resident in such a way and that all correspondence in such cases is written. So, if you receive such a phone call, just hang up.

'Disconnection' Phone Scams  

Not every phone scam plays on our greed with the promise of a quick buck: many play on our fears instead, including 'disconnection' scams. This trick sees fraudsters pose as representatives of telecom providers, such as BT, and inform consumers that their account is in arrears. To remedy affairs swiftly, the victim is urged to hand over their bank details.    

What makes the scam convincing is a trick designed to fool people into thinking that their line has been temporarily cut off. The 'disconnection' supposedly proves the caller's authenticity but in reality the fraudster simply stays on the line with the 'mute' button on - leaving the victim unable to make calls.

BT states that it never carries out disconnections over the phone and promises consumers that any employee will be able to give the customer their employee ID number and an 0800 number to call. Find out more about this scam at the website of telecoms regulator OFCOM.

'Boiler Room' Scams

Many scams are circulated through a variety of methods, be it phone, email or the written word, but one scam typically perpetrated by phone is the so-called 'boiler room' scam. This trick sees criminals pose as stockbrokers and target victims with the promise of 'cast-iron' investment opportunities.

The callers don't typically ask for financial details during the call but instead send willing victims professional-looking brochures outlining their services. If you choose to buy shares through them, however, you could be left severely out-of-pocket. At best, they might sell you shares at vastly inflated prices and with exorbitant dealing charges: these shares are typically listed on illiquid markets, impossible to sell and quite literally not worth the paper they are printed on. At worst, the criminals simply take your money and walk away.

If you're approached by anyone offering to sell you shares or investments, check that the firm is regulated by the Financial Services Authority (FSA). If you fall victim or suspect a firm of operating a boiler room, again inform the FSA. Find out more at the FSA website.

Ways to Stay Safe

The first way to protect yourself is simple - just hang up! The problem is, however, that many of these offers are plausible and the callers persuasive - so how do you spot a scam? The first thing to consider is that if anyone calls you out of the blue with an offer that sounds too good to be true, it probably is.

Another alarm bell is if the caller urges you to act quickly before any offer expires - this is a trick to get you to act before properly considering the offer. Finally, never pay upfront for 'free' gifts and never hand over any financial information such as your credit card details over the phone.

It's worth registering with the Telephone Preference Service to request that unsolicited phone calls be stopped, although some scammers may find a way to call you regardless. BT customers can register with the scheme for free through the BT privacy service which, in addition, will give caller display at no extra charge. BT customers can call 0800 916 5544 or visit the privacy section of BT's website for more information. 

Finally, if you're ever in doubt about whether a company is legitimate, why not head over to Q&A to ask the opinions of your fellow lovemoney.com readers?

More: How to spot a scam