We’re starting to get reports in from both Alicante and Malaga airport, that a few people have cropped up saying they’re working for me, and doing surveys about PPI misselling. This is a lie and a fraud, and with one exception (see below) everyone should walk away from them.

How their scam works…

The following is one e-mail I had from a lady who had been approached by a company calling itself Life Style…

“A very friendly woman approached me in the restaurant area at Malaga airport at around 12.30 on Monday 6th July. She held a clip board and said to me “have you heard of Martin Lewis, the guy on TV?” I said yes and she said “I am carrying out a survey on his behalf to help people that have been mis-sold insurance, can I take 5 minutes of your time?”

I said yes and she then continued to distract me with comments about how she liked my T-shirt, my bracelet and what colour was my lipstick. I was obviously still in “holiday mode” and would not usually take part in surveys, but as she said it was for Martin Lewis I guess I put my guard down.

She showed me a questionnaire sheet that she had on a clip board with the company name “Lifestyle” in blue lettering across the top. I explained that my partner is a financial adviser therefore I understood the subject of mis-sold insurance but that I could probably not give her any information as I have not had any personal experiences myself.

She then said “That’s OK if I can just take your details a member of our team will give you a call”. I then stupidly gave her my name, address and email address and then signed the sheet to say that I was happy to receive a phone call.

To date I have not received any phone calls but I have received no end of junk emails which I would assume have been sent due to me providing her with my email address. As I said before, I generally do not give out my details but on this occasion I misread the situation.

Luckily I think that it has only resulted in my email address being used as a marketing tool, but thinking about it if she had of asked my date of birth she may have been able to use my identity in some way.”

Please DO talk to them.

If you’ve read this and you’re a reasonably confident person who gets approached by this company please do play along.

We’re desperately trying to get any info we can on who they are, exactly what they’re saying, and especially, contact details. So if you’re in the airport and this happens I’d love your help to try and get whatever info you can.

Comment and Discuss

I’ve been contacted via GMTV by the founder of the ThinkJessica campaign, which has been set up by the daughter of the victim of a hideous scam mail to try and stop something similar happening to other people. She wants me to record the voicemail message that people get when they call it up.

Before I explain my dilemma, here’s the original email contact… (I hope she doesn’t mind me reproducing it):

“Dear Martin

Please could you help us warn all those who may be tempted to part with there cash, by recording the phone message for us.”

Now of course this sounds a fantastic cause and very worthy of supporting. I’ve written before about my anger of sales calls to my grandma and this is something I want to support. My problem is the phone message is an 0871 number, something which as people will know from the saynoto0870 guide, I’m not exactly a fan of. So, what to do?

I called…

Funny what writing a blog can do. I stopped myself at that point and decided the best thing to do was pick up the phone and talk to Marylin about this issue directly. After talking to her, I found her inspiring: she’s a battling campaigner, doing this on a shoestring as a one (wo)man band, determined to make a difference after what she’s been through. And she’s already made progress…

I spoke about the 0871 issue, which is in her words “not something I knew about, I’ll try and get it changed”. I’m not sure quite how easy that will be for her in the short term, especially with no funding just yet (I suggested a few avenues to try, including the MSE Charity). Yet with the number of scams increasing I think it’s best we just get on with it; the damage they do to people’s lives far outweighs the phone number issue.

Comment and Discuss

The Madoff scam in the USA is thought to have cost people up to £50 billion, and there’s talk of similar schemes having been operated in the UK.

Yet I’ve read a lot of confusion about what’s happened. Sometimes it’s called a pyramid scheme; other times a Ponzi. So I thought I’d do a quick blog to explain the difference between the two (Madoff is a ponzi not a pyramid).

• Pyramid Scam. While fundamentally flawed, pyramid schemes are the more honest of the two, as the participants in them know what’s happening.

  Essentially they’re networking schemes: each person who’s recruited is then expected to recruit more people, and as long as that happens people make money.

  For example, you pay £1,000 to join, on the promise that you’ll get £5,000 back, providing you recruit six people yourself (with some money going up the pyramid). You usually don’t get their £1,000s directly, and are distributed some money as your recruits pay up, and some more as the people they recruit pay up… and so on.

  These schemes rely on continued redistribution of income. No new money is being created, it’s just being moved, and is by its nature a zero sum game. The problem is it doesn’t take long before you need to be recruiting the entire world’s population for the thing to continue.

  Tier 1: Needs 1 person
  Tier 2: Needs 6 people
  Tier 3: Needs 36 people
  Tier 4: Needs 216 people
  Tier 5: Needs 1,296 people
  Tier 6: Needs 7,776 people
  Tier 7: Needs 46,656 people
  Tier 8: Needs 279,936 people
  Tier 9: Needs 1,679,616 people
  Tier 10: Needs 10,077,696 people
  Tier 11: Needs 60,466,176 people (every adult & child in UK)
  Tier 12: Needs 362,797,066 people
  Tier 13: Needs 2,176,782,336 people
  Tier 14: Needs 13,060,694,016 people (2x every adult & child in the world)

  So a pyramid isn’t innately dishonest, as everyone knows how it works. It is, however, pretty immoral, as it only works out well for the people at the top, and they do it in full knowledge the entire scheme MUST break down at some point, and that’ll happen quite quickly. Yet in the meantime they can make a fortune.

• Ponzi Scam.

  These are much more dishonest, and much more plausible, hence they can draw in more sophisticated investors. Unlike pyramid schemes, the entire premise is based on a lie, but it’s a plausible one. The best way to explain how it works is to give you an example.

  I’m going to use a gambling Ponzi, which has often been the underlying proposition, though Madoff is being accused of running an investment Ponzi, working in a very similar way.

  Honest Paul is a mate of a mate’s mate. He says he’s got this sure fire gambling system, and if you put money in, he will give you FIVE TIMES it back in just two months. You’re sceptical, but your mate’s done it and got the cash to show for it…. so has his mate.

  So you put £100 in, to dip your toe in the water, and guess what happens… you do get £500 back. The gambling system is WORKING.

  So you get asked to put £2,000 in and to recruit your friends too… who will also get commission. You’re more than happy to do this as you’ve made so much money and now KNOW they system works and have the information three times down the line.

  The problem is, what’s really happening underneath this is a pyramid scheme. Your money (or most of it) isn’t coming from successful gambling (or investing), it’s coming from other new recruits’ pockets.

  And the whole system will only keep working as long as people can keep recruiting. However, here there’s the advantage that as it’s dressed up like a legit investment, so more people are fooled into it, and it carries on going until the whole thing goes kaput. Plus if you lower the returns e.g. the Ponzi-master only says you’ll get 30% on your ‘investment’ then it can keep going longer, as each new recruit can subsidise three people up the tree.

  Yet ultimately this is a zero sum game too. And after a number of levels it stops and everyone loses. And of course the longer its gone on for, the more people are at the bottom step of the pyramid losing.

Comment and Discuss