Don't take the bait

Gone Phishing
Here comes another. As I sit at my computer an email arrives informing me that my bank account at SunTrust has been frozen and in order to use my account again I should click on a link to re-enter my security details. Of course I don’t have an account with SunTrust, nor with Barclays, Lloyds TSB, Citibank, Woolwich or most of the endless stream of online banks which warn me that to get access to my own money I must tell them my security details. It is called ‘phishing’ because these clever bits of email bait are dangled in their millions in the internet ocean. Like traditional fishing bait, they look very much like the real thing. They have the bank’s logo, appear to have a return address at the bank, and will even sometimes warn you of the dangers of replying to unsolicited emails which don’t come from the bank – before inviting you to reply to this genuine one. So it is no surprise that a some fish bite and send their user name, password and security information to the phisher. He is probably located half way round the world in an anonymous internet café. He uses the information to log on to the victim’s bank, clean out the account, move the money to a temporary account somewhere else in the world where an associate takes it out in cash and disappears. It beats burglary and mugging as a risk-free way to steal money.

In the nine months up to June 2004 around 2000 people in the UK took the bait and lost £4.5 million out of their accounts – an average of £2250 each. The banks refunded it all. But recently banks have warned that those refunds cannot go on forever. There will come a time when we should all be aware of the fraud and remember the simple rule to avoid being hooked – don’t take the bait.

Mark Bowerman of APACS, which runs the electronic pipes our money travels through, says "So far everyone has been refunded. In the future we cannot guarantee there won’t be a change of policy if people are careless. When you leave your house, you lock your door and wouldn’t dream of giving your key to a stranger in the street."

Your online bank will never – ever – email you to ask you to confirm security details. It will never – ever – send an email asking you to click a link to update your security details. If you have any doubts log on to your bank the normal way or ring the helpline. The answer will always be – ignore this bait. It has a very nasty hook in it. Care is particularly important over the holiday period. Emails – and crooks – don’t take a New Year break but bank call centres do. When you are in a hurry, dashing to get to the shops or make the last train, you are just that bit more likely to take the bait.

Excess fare
A railway ticket from Poole to Wimborne now costs £2,352. And that’s second class. No, it is not the latest price rise on the railways but the record amount paid by a collector for a used single ticket for the seven mile journey. The 141 year old piece of card was dated 8 September 1863. Altogether there were 47 tickets in the sale and the total price was a staggering £15,268.

The star of the next hardware sale, run by Chris’s colleague Ian Wright, is a nameplate from the 1935 LNER engine Golden Fleece. It is expected to fetch between £40,000 and £50,000. But even common or garden station nameplates, as sold off for a couple of pounds by British Rail in the 1970s, now fetch several hundred pounds, some more than £1000. It seems it will be some time before collecting railwayana comes to the end of the line.

More information: www.paddingtonticketauctions.co.uk and www.sheffrail.f9.co.uk

Thanks a billion
If you have a billion pounds you should not spend more than around £30 or at most £40 million a year or you risk running down your fortune. That sober advice comes from experts who advise the super-rich – the 600 people on the planet who personally own at least one billion dollars. Spending £82,191 a day might sound a bit extravagant. But that is what being a billionaire is all about. A yacht can cost £10 million and another £1 million a year to maintain – some cost far more. A personalised and guided holiday in Africa, Guatemala or Brazil can cost £30,000 per person. A good wine cellar can cost £100,000 – a single case of 12 bottles Chateau Petrus 1990, a red wine from the Pomerol region, currently costs more than £14,000. In a few years Richard Branson will be offering the super-rich the chance to visit space in a commercial version of SpaceShipOne, the first privately built vehicle to travel 100 kilometres straight up to reach the edge of space. Trips will cost around £110,000 for a couple of hours, and just a short time to feel zero gravity and see the blackness of space with the Earth spread out below.

A survey by the Financial Times of 25 top billionaires found they have their own ways of spending their money. Bill Gates of Microsoft, the world’s richest person, gave $27 billion (£15 billion) to his charitable foundation to find a cure for AIDS, hepatitis B and malaria. Michael Bloomberg spent $100 million of his fortune to become Mayor of New York, Thaksin Shinawatra, worth $1.4 billion, became Prime Minister of his country Thailand and Sylvio Berlusconi, with $10 billion, did a similar thing in Italy. Oprah Winfrey, the only woman in the list, has used the power of her TV show to get Americans reading good literature. John Caudwell (£2.3 billion), the founder of mobile phone chain Phones 4u, still buys his orange juice from the cash and carry. But he does live in a 65 room Jacobean mansion.

Tax cloud lifted
Older people who have raised money by selling part of their home to an insurance company will not face a hefty tax bill. Accountants had warned that a new tax, designed to catch people who had paid for complex schemes to avoid Inheritance Tax, would also penalise people who had simply been trying to realise some of the value of their home to boost their income in retirement. After weeks of speculation Treasury Minister Dawn Primarolo finally assured Parliament that the new tax would not affect them. She promised to amend the law to make it clear that these ‘home reversion’ schemes would not be caught by the new tax as long as they were genuine, with an insurance company rather than a member of the family, and not "aimed merely at avoidance". Accountants are still warning that until the changes in the law are published people should remain cautious. There is another sort of ‘equity release’ scheme called a lifetime mortgage (or a mortgage annuity) where you borrow against your home and repay only the interest with the capital being repaid from your estate. These schemes have never been threatened by the tax are now regulated by the Financial Services Authority.

Ensure cheaper insurance
Not everything goes up in price. Insuring your home and its contents has cost pretty much the same for the last ten years. But if you have a car, it is a different story. Premiums have nearly doubled in that time, growing far faster than inflation.

Over the last ten years inflation – the rise in overall prices – has been 31p in the pound. But a survey by the AA shows that the cost of insuring your car has almost doubled with comprehensive insurance up 84p in the pound and third party fire and theft up by even more – 94p in the pound. The good news is that prices have levelled off in the last couple of years and are now slightly lower than a year ago. Over the same period, the cost of insuring your home has not changed and insuring your possessions has gone up by just 5 per cent.

However, if you are paying the average for any of these insurances you are wasting money. The AA research shows that the average cost of buildings insurance is £208 a year. But by searching out the cheapest prices you can cut that by £76. Similarly you can save £64 on the average £151 a year for contents. And if you have a car you can cut the average £752 a year for comprehensive car insurance by £285. The total saving for shopping around is £425 a year. In fact the keenest prices for car insurance now are not much more than the average price you would have paid in July 1994.

More from the AA insurance index

January 2005

e-mail Paul Lewis on paul@paullewis.co.uk