Be careful: they are out to get you

Fraudsters and scam artists will stop at nothing when it comes to parting you from your cash. Some schemes have been around for years, while others have evolved or emerged more recently. The Office of Fair Trading, which estimates that consumers lose £1bn a year to cons, will next month publish its list of scams to watch out for. Here are some classics still doing the rounds, and newer ones to expect - and avoid - in 2006.

Psychic scams

The OFT says it will consider this a priority area. It preys on people who are superstitious and arrives in the form of letters predominantly from Europe, usually Switzerland. The letters purport to be from a clairvoyant who will claim to have seen something in your future and will ask for money to disclose what it is. Sometimes the letters are more sinister and claim that the 'clairvoyant' has seen that something terrible will happen to you or a loved one. They then demand money saying they will use their powers to prevent it from happening. 'This is not a new scam, but is causing us increasing concern,' says an OFT spokesman.

What you can do: Don't be frightened into sending money in response to letters which contain threats or use scare tactics. 'Think logically: how many others have had such letters; how can they say that they see problems for your star sign when they are asking you for your date of birth in the letter?' says the OFT.

Pyramid selling

In December the OFT gained an interim injunction against a businessman for his involvement in what it believes was a pyramid selling scheme known as the VIP club. Gurdeep Singh, who denies the club is a pyramid scheme, was claiming to provide significant discounts on travel and leisure services through the club in exchange for a £1,700 membership fee. The club was then offering members large amounts of commission for introducing other people (usually family) to become members - often a sign of a pyramid scheme.

Pyramid scheme operators do not always promote with high-pressure sales presentations but, however they lure you in, they always promise money in return for the number of people you are able to recruit to pay and join the scheme.

What you can do: Schemes are illegal if their sole purpose is to make money from the recruitment of other people. Don't sign up to them and report them to your local trading standards office. 'We would also like to receive information about any seemingly exorbitant claims being made in high-pressure sales presentations,' says an OFT spokesman.

Lotteries and prize draws

The highest number of complaints the OFT receives in relation to scams are about lotteries and prize draws. Most appear to be notification of a prize in an overseas draw or lottery in return for administration or registration fees.

What you can do: Never send any money to receive a prize, and do not give out private financial information.

Nigerian advance fee fraud

There are a number of these '419' scams - named after the Nigerian criminal statute against fraud - which essentially offer to pay you thousands, sometimes millions, of pounds for allowing a large amount of money to be paid into your account. The catch? Before this can happen you are asked to pay an upfront fee. Once the fee has been paid, the correspondent offering this unbelievable deal disappears - along with your money.

You may think these are old tricks no one would fall for, but they are evolving all the time and the OFT, along with the Nigerian financial crime squad, issued a fresh warning about them in November. 'These people are very convincing if you speak to them on the phone - they have an excuse for every question,' says the OFT.

Some of the more topical 419 scams include a young person orphaned by the tsunami disaster asking for help in moving their parents' millions out of an overseas bank, and a war reporter who has unearthed Saddam Hussein's missing millions and needs to deposit them in your account in return for a share.

What you can do: 'If you are targeted, recognise the 419 for what it is - an attempt to defraud you. Do not reply and do not give out your personal details,' says Christine Wade, the OFT's director of consumer regulation enforcement.

You should also send the email to the internet service provider from which the scam email originated. These emails should be addressed as: abuse@the ISP name (eg abuse@yahoo.com).

Second buyer scam, and other eBay frauds

The internet auction giant has changed the way we shop, but it's also been hit by fraud. One of the most convincing is the 'second-chance offer'. Someone claiming to be the seller in a (genuine) auction that just ended emails a bidder saying that the highest bidder has pulled out, and offers to sell the goods to this runner-up. Once the money is handed over, the 'seller' disappears and the goods never materialise. eBay is also banning the use of money transfer providers as a way of paying for transactions from mid-January, after bidders mistakenly wired money to fraudsters.

What you can do: eBay has a webpage on how to spot a genuine second chance offer at pages.ebay.co.uk Beyond that, it 'strongly discourages anyone from taking a transaction "off eBay" as you are not be protected by eBay's safety measures' .

It says an offer to sell an item directly to another eBay member through email violates its rules and should be reported to eBay. When it comes to paying, never use money transfers. Use a reputable payment systems account.

Card fraud

While in the first half of last year total card fraud losses fell by 13 per cent compared with the same period in 2004, partly due to the impact of chip and Pin, internet, phone and mail order card fraud grew by 29 per cent.

'Scams aren't necessarily asking for money upfront any more - which can make them seem more legitimate. One increasing area of concern for us is people giving out their personal details to fraudsters,' says an OFT spokesman.

A survey by Which?, the consumer organisation, found that 60 per cent of Britain's cardholders make it easy for fraudsters to rip them off. Twenty-three per cent said they used the same Pin number for different accounts and 21 per cent would give their account number to a caller claiming to be their bank or credit card company. It estimates fraud is costing £12 a year per cardholder through higher bank charges, interest rates and fees.

What you can do: Check your statements regularly and never divulge details of a password or Pin to callers who say they are from the bank or police.

Ways to spot a scam

The Office of Fair Trading has identified elements that are shared by a variety of scams. Their operators will:

· catch you unawares by making unsolicited contact with you by email, telephone or post (lists of individuals' names and addresses are easily bought and sold - your details may well be on one)

· offer you tempting and easy opportunities to make money

· ask for money upfront to claim your prize to cover administration fees or taxes (no legitimate competition does this)

· ask for your bank details or to ring a premium rate number (all UK premium rate numbers start with 090)

· insinuate that you have to buy something in order to get your prize