in the best recipe for happiness I ever heard of.”
Jane Austen
The most common scams often have something to do with pyramid selling. These are effectively schemes that have as their sole purpose signing up other people to the scheme. You may be told that it is a sales company and that once signed up you will be making your money by selling cosmetics or drinks or some such but once you have handed over your ‘membership fee’ you will find that making money from the sales is no easy business. Instead the money is in signing up others. And you won’t be able to do that – it takes a particular kind of high-pressure sales personality to get other people in and most of us don’t have it. When I was in my early twenties I was persuaded to join a skincare products ‘multi-level marketing’ company (MLM is a polite term for pyramid selling) but I never made a single sale; in my heart of hearts I knew the stuff I was supposedly selling wasn’t much good and I just wasn’t up to the job of selling it and I certainly wasn’t up to the job of signing up anyone new to the scheme. Anyway all these schemes eventually collapse: they rely on an endless number of people being available to be signed up and the supply of people is, of course, never endless. When the supply of recruits dries up the pyramid collapses.
What to watch out for in particular in the UK is so-called ‘gifting schemes’. The last well-known one was Women Empowering Women (WEW), which began in 2001 on the Isle of Wight. This was a pure cash pyramid – there was no pretence about there being any products of any kind involved. Women were asked to buy one of eight ‘hearts’ on a sheet; above that were four more, then two and finally one – the receiver – at the top. When new ‘gifters’ joined, the original members moved up the pile. When they reached the top they got the £3,000 contributions from the eight new hearts and took home £24,000. There was a lot of talk about helping other women and yourself at the same time and about making money outside the male capitalist society. It was all nonsense – WEW was as much a scam as any other pyramid scheme and like any other pyramid scheme it eventually collapsed. This was a shock to the women who lost money (remember, for every woman who was paid £24,000 eight had to lose their £3,000 stake) but if they had stopped to think about it for just a minute it really shouldn’t have been. Even to move one pyramid down six stages needed a quarter of a million people (8x8x8x8x8x8). To move it down twelve would have required the entire population of the world to be involved. This kind of pyramid still pops up periodically; they call themselves Hearts or Circles. Don’t fall for their stories of sisterly solidarity.
The next money-losing scam to look out for is the lottery or prize draw scam. You’ll get a notification that you have won a huge prize, usually in a US or European lottery. You’re then asked for a registration fee or an admin fee, probably of a few thousand pounds. Don’t pay it – you’ll never hear from them again and you’ll never see your money again. This kind of thing often looks tempting but remember this: if you didn’t buy a ticket you can’t have won the lottery.
Then there are the Nigerian 419 scams. These are called after the section of the Nigerian penal code that legislates against them. They’ve been going for years – first in letter form, then as faxes, now as emails. The idea is simple. They tell you that due to some bizarre quirk of fate they have millions of pounds to hand but they need to get it out of Afghanistan, Nigeria or some other distant country. They want you to help them by letting them use your bank account to receive the cash in the UK. In return they will give you a couple of million to keep. The catch? You have to send them some cash first so that they can pay miscellaneous expenses at the other end. You also need to give them all your personal and account details. If you send the cash you will only hear from them again to demand more and if you send your personal details you leave yourself vulnerable in many ways (never give out your personal details: sounds obvious but people do it all the time). The stories told in 419 emails are always topical and often quite convincing (after the tsunami in 2004, for example, I got an email purporting to be from a newly orphaned teenager who needed help getting his parents’ fortune out of Indonesia – see www.419eater.com for many more fantastic examples). But however good these letters sound you should never respond to them: not only is doing so both greedy and illegal but the authors of the letters are criminals.
Similar fraudsters are involved in the increasingly common eBay/Western Union scam, which works like this. You are selling something online – perhaps a piece of furniture on eBay or a special car on a car sales website such as www.autotrader.co.uk.
You get a response from someone who wants to buy your goods, say for £5,000. They say they will send you a cheque not for £5,000 but for £7,000. The £5,000 is for you but they then ask that you forward the extra £2,000 on to a friend of theirs via money transfer firm Western Union (the story you are spun is that the friend is to arrange shipping or some such for them). You get the cheque. You deposit it and send on the £2,000. Then you get a call from your bank. What’s happened? You guessed it. The cheque has bounced and you are down £2,000. It’s simple but it works brilliantly. One to be aware of whenever you are dealing online.
Finally a word on working-from-home scams. You will often see adverts telling you that you can make money addressing and stuffing envelopes at home. But you can’t. If you reply to the ad you’ll be asked for a registration fee. Then you’ll be advised to make money by placing the same ads you replied to around the place. There is no real job – it’s just a way to con you out of your registration fee. Other similar scams involve adverts that offer work assembling things at home. If you respond you’ll be asked to pay upfront for the assembly kit or whatever materials you might be using. You’ll never get it back and you won’t ever get paid for the assembly – your work will be returned as ‘substandard’. The result? They get to keep your deposit. See www.homeworking.com for more detail on how to avoid falling prey to this kind of con, but most of all remember that you should never have to pay to get work. If you do something’s wrong.
Redundancy
Losing your job is horrible, however much you hated it, however much you kept wishing on a Monday morning that you would lose it and never have to go again. The fact is that being told you are surplus to requirements is a huge blow to your self-esteem. You’ll be shocked, you’ll be angry and you’ll be hurt. But above all you’ll be dealing with the fact that you no longer have an income.
Statutory redundancy pay is pathetic. Between the ages of 18 and 21 you get half a week’s pay for every year of service. From 22 to 41 you get a week’s pay and from 42 on one and a half weeks’ pay. But this is subject to a maximum of a few hundred pounds a week and you can’t claim for more than 20 years of service. This means that the absolute maximum the law can make your firm give you at the moment is less than £6,000.
But there is some good news too. The first £30,000 of redundancy pay comes tax free and you are likely to get more than the very basic amount. This means that redundancy does give you an opportunity to rethink your career and even your life. You could take a few months off to retrain and change direction, for example; now might actually be the time to set up your own business! However, the first thing you will need to do is to get your finances in order to make sure you can weather a few months with no income and to rebuild your confidence. Remember that redundancy usually isn’t personal (if you think it is get a lawyer).
1 Budget. Hopefully you’ll have six months’ worth of money saved up (see Chapter 4) but if not you’ll need to work out how many months you think you could be out of work and budget with your redundancy payment accordingly.
2 Don’t delay in claiming benefits. You should be able to get a job seeker’s allowance, although this will depend on you having paid enough national insurance over the previous two years. If you haven’t
