Credit Cards
Savings
Life Insurance
Car Insurance
Mortgages
Travel Insurance
Loans
Home Insurance
EnergyThe scandal of benefit frauds abroad
Filed under: Scams & Fraud
Share
Text Size
A
A
A
Emilio Morenatti/AP/Press Association Images
But what are they doing, and how are they falling foul of the rules?
Retirement Tips & Tools
The rules
The rules about the benefits you are allowed to claim overseas are fairly complex. You can, for example, pick up your state pension, but you can't claim pension credit.In many cases fraudsters aren't declaring the fact they have moved, and are still picking up a number of non-exportable benefits, including Disability Living Allowance (mobility), Pension Credit, Income Support, Jobseekers Allowance (income based), Employment and Support Allowance (income based).
Retirement Tips & Tools
Other fraudsters declare where they are living, but use the distance to break the rules. So, for example, Jobseekers Allowance (Contribution based) can be paid in the EU and Switzerland for three months providing the claimant registers as a jobseeker. Some are therefore claiming and working simultaneously. This applies to sickness benefits too.
Spain a hotbed
The epicentre for this kind of fraud is Spain. In a visit to the DWP's Pensions, Benefits & Healthcare team in Madrid, Iain Duncan Smith warned British people living abroad not to break the strict rules on what benefits they can and can't claim. He said: "This money should be going to the people who need it most and not lining the pockets of criminals sunning themselves overseas."He is calling on expats living legally in Spain to call the Spanish benefits hotline on 900 554 440 to report fraud. Since its launch in 2008, over 750 calls to the Spanish hotline have resulted in criminal investigations by fraud investigators in the UK and over 100 people have been sanctioned or prosecuted. Some 134 cases are currently being investigated and £3.1 million in benefit over payments have been identified and will be reclaimed. In Spain, claims for Income Support or Pension Credit are the most frequently investigated for fraud.
Allowed to claim
He added that there are plenty of people claiming benefits overseas that they are perfectly entitled to. This includes Employment and Support Allowance (contribution based) which can be paid in EEA and Switzerland provided the claimant has paid enough in NI contributions to qualify, Winter Fuel Payment which can be paid in the EU and Switzerland provided a claimant was entitled to it before they left the UK and Attendance Allowance, Disability Living Allowance (care), Carers Allowance, State Pension and Child Benefit which can be paid abroad providing the claimant has met the UK entitlement conditions.He highlighted that not all benefits claimants overseas are doing the wrong thing. However, he added that those who were breaking the rules were actually breaking the law, and that the government has pledged to stamp this out.
The top 10 scams of 2011
- 1. Mid-contract price hikes<p>It is reasonable to assume that if you take out a mobile phone contract at £30 a month for 24 months that's exactly what you'll pay unless you exceed the tariff. Yet mobile phone providers have come under fire for a snag buried in the small print – a clause to allow mid-contract price rises.</p> <p>Prices are rising by a median of 81p a month and 70% of consumers are completely unaware off this sneaky move, according to Tesco Mobile, so be sure to check any new contracts before you sign the dotted line.</p>
- 1. Land banking<p> Land banking involves plots of land offered for sale, often online, with the promise of sizable returns when planning permission is approved for housing or other development. Yet often the land is located in areas protected from development by planning law.</p> <p> The companies involved soon disappear with investors' money and as the firms are not protected by the Financial Services Authority, their funds are not covered by the Financial Services Compensation Scheme</p>
- 2. Money mule<p> Fraudsters recruit unknowing accomplices through email under the guise of offering employment, seeking a personal favour, or through internet shopping sites. The recruits are persuaded into receiving what are essentially fraudulent payments and then passing funds on.</p> <p> The 'mules' are frequently offered a small financial incentive to encourage involvement and face difficulties in proving their innocence when the fraud is discovered.</p>
- 3. Carbon credit fraud<p> The scams claim to offer people the chance to profit from carbon credits. Under regulations that permit businesses to emit a tonne of CO2 – the companies claim to offer investment in green projects like a forestry scheme or a solar panel project, which generates carbon credits that are then sold on to heavy industry.</p> <p> A flashy brochure or website tells of a reliable 'government-backed' scheme which provides reliable returns for investors. Such a scheme doesn't exist however – a reality investors only discovered when they have parted with their cash and the company is untraceable. As with land banking, fraudulent companies are not covered by the FSA so victims have no course for recompense</p>
- 4. HMRC phishing scam<p> Receiving an email from the taxman saying you are owed a payment may seem like a nice surprise, but it is actually from fraudsters trying to relieve you of your cash instead.</p> <p> The emails provide a "click-through link" to a cloned replica of the HMRC website. The recipient is then asked to provide their credit or debit card details - all the information the criminals need to clear your account, and sell on your personal details.</p>
- 6. Crash for cash scams<p> Insurer Direct Line reported a hike in the number of 'crash for cash' scams last year – where fraudsters fake accidents by making unnecessary emergency stops at busy roundabouts or slip roads, forcing motorists to crash into them.</p> <p> They then make bogus claims to the innocent motorist's insurer, often including fictitious injuries and passengers.</p>
- 7. Driving school scams<p> Learner drivers have been taken for ride by being unknowingly taught by trainee instructors. An investigation by the AA found up to 27,000 extra driving tests have been failed in the last year because one in 10 learner drivers are unwittingly taught by an instructor they do not know is learning on the job.</p>
- 8. One man mail scam<p> July saw the arrest of a Leicester postman who stole £46,686 worth of mail over two-and-a-half years. Yogeshbhai Patel, 38, was jailed for two years for stealing mail including 2,000 DVDs and 2,250 games along with CDs and other electrical equipment. He intercepting the valuable packages and spent the money on living a luxury lifestyle including helicopter rides and a trip to Las Vegas.</p>
- 9. Smart meter scam<p> The Trading Standards Institute reported over 200 cases where elderly homeowners have been targeted by telephone cold callers, purporting to be from their energy supplier and offering energy saving devices which could cut their bills by 40%.</p> <p> The TSI tested the devices in homes where owners had fallen for the scam, only to find they both failed to satisfy electrical safety standards or deliver any tangible energy savings.</p>
- 10. Thermal camera fraud<p> Thermal cameras that track ATM pin numbers are the latest weapon in their arsenal and US scientists have warned it is the next threat for this form of crime. Researchers at the University of California at San Diego found that up to 45 seconds after a person types their pin code into an ATM machine or door entry pad the numbers and even the sequence are still readable by thermal cameras.</p>
More stories
