"I write to you in good faith and trust that you will take a moment to consider the contents of this letter. I am Andreas Peterson, the Chief Auditor of Lloyds Financial Services Ltd, United Kingdom."

Sound familiar? Most of us are wise to the opening ploy of a scam letter. In this instance, “Andreas” has stumbled upon $15.5m in an account belonging to a deceased customer. He’s willing to share the windfall with you, provided you help him transfer the money overseas.

Scammers like Andreas persist because every now and again someone takes the bait.

According to the Ministry of Business Innovation and Employment’s Consumer Affairs team, close to $4m was lost to scammers in 2012 – up $1.7m on 2011.

Dating and romance scams

Dating and romance scams were the most insidious form of scam in 2012. Statistics from Consumer Affairs indicate more than $2.2m was lost to these scams. Sadly, 3 people reportedly lost more than $100,000 each.

How they work:
Scammers use online dating sites to form relationships with people who are looking for love. Once they’ve built up enough trust, the scammers begin asking for money “to pay medical expenses for a sick aunt” or some other ruse. They request more and more money until the victim cottons on … or runs out of funds.

How to avoid them:

  • Online-dating scammers work from a script, which they copy and paste to several dating profiles. Be wary of messages that are vague or have no relationship to your profile.
  • Scammers may try to email you directly after they've made an approach through a dating site. That way, they can avoid the site's security checks. It's always safer to chat through the site.
  • Bottom line: don't give financial assistance to someone you've only met on the internet.

Investment scams

Reported losses from investment scams totalled $755,400 in 2012. 3 cases alone accounted for more than $450,000.

How they work:
In 2012, a group of fraudsters posed as representatives of a legitimate Japanese finance company. The group was using publicly available lists of shareholders to "cold call" investors. They’d offer to buy under-performing shares for attractive prices, provided the investors were willing to make an upfront payment of a few thousand dollars. The scam was backed up by genuine-looking paperwork and a clone website.

How to avoid them:

  • Don't feel you need to respond immediately to an investment opportunity. A reputable broker will give you time to make a decision.
  • If a caller won't take "no" for an answer, simply hang up. If it’s an email pest, lodge the address as spam with the Department of Internal Affairs' anti-spam service.
  • Before investing, do your own research. Start with the Financial Markets Authority, which publishes a list of firms that have tried to scam New Zealanders.

Upfront money scams

Upfront money scams netted $213,600 in 2012.

How they work:
A scammer sends a spam letter to a list of people. The scammer claims to be the representative of an estate or finance company - such as the Chief Auditor of Lloyds Financial Services - who is trying to track down the beneficiary of a will. Since the letter's recipients share the same last name as the deceased, they're given the opportunity to claim part of the will in exchange for "legal fees".

To add a kernel of truth, scammers often claim the deceased was killed in a real event. One letter used the 2004 Madrid train bombings as a backdrop.

How to avoid them:

  • Don't respond to an unsolicited email or letter. Don't click "unsubscribe" on a spam email, either. It confirms your address and makes you a target for more spam. Simply delete the email.
  • While some scammers are after your money, others want help laundering ill-gotten gains. Never agree to transfer money for someone you don't know.

Online auction scams

Online auction and trading scams were the fourth-most successful swindle in 2012. They reportedly claimed $208,500.

How they work:
One online trading scam targets people selling items such as cars via auction. The scammer pretends to be interested in the auctioned item as a present for someone else.

The scammer says he wants to buy the car but as he's out of town on business he's wired payment via PayPal. The seller receives an email purportedly from PayPal saying the money has been paid. The payment also includes a little extra for shipping costs. To finalise the trade, the scammer asks the seller to forward this extra money to a "shipping company". Unwittingly, the seller forwards money direct to the scammer (who promptly disappears). The original payment never materialises; it turns out the email from PayPal is fake.

How to avoid them:

  • Be wary of overseas traders if you're buying or selling goods through online auction.
  • Avoid sellers or buyers who want you to wire money through a service like Western Union. It's difficult to cancel payment once money has been transferred.
  • Reputable auction sites have systems to spot scams. If you're selling or buying an item on an auction website, don't go outside the site to complete the trade.

Computer-hacking scams

This category is a catch-all that includes goods of dubious value bought online as well as malicious online adverts and computer hacking. Kiwis lost a reported $142,900 to these types of scams in 2012.

How they work:
The standard computer-hacking scam used to begin with a spam email, which contained an intriguing link. When recipients clicked on the link, it launched spyware on their computer. But according to Symantec, an internet security provider, more and more scammers are using social media sites to spread malware and phish for information.

Fake gift cards and survey scams account for more than half of all social media attacks. Typically, scammers post an advertisement on a social media site that reads "click here for a $100 gift card". When users follow the link, they're duped into handing over personal details in exchange for a non-existent voucher.

How to avoid them:

  • Don't click on unusual links in emails or social media messages - even if the message comes from a friend. Scammers spread malware by sending links to the contact list of a compromised account.
  • Don't click on an online advert if you're unsure of its validity. If you're really interested in the advert, why not google it first?
  • Regularly download the latest security patches for your internet browser and operating system - and keep your anti-virus software up-to-date.

Other scam types

Other common scams fall into these broad categories:

Betting schemes

These usually require that you purchase software - often at a cost of several thousand dollars - which will enable you to predict the outcome of horse races or lotteries.

How they work:
Despite the fraudster's claims, it is not possible to predict the outcome of random events such as horse races with any certainty.

Betting software is often marketed by showing what you would have made had you invested money in the previous year. Of course, it is easy for the fraudster to demonstrate that you could have made wads of cash when they know which horse won every race - hindsight is a wonderful thing.

Employment scams

These can turn up anywhere from a newspaper’s situations vacant pages to your email inbox. They offer the chance to work from home at your own pace - and still make loads of cash.

How they work:
These scams usually have you sending money to a PO box or forwarding your credit card details in advance. You never see your money or hear from the company again.

Holiday scams

If you're looking for a cheap mid-winter holiday, be wary of telemarketers selling "discount" vouchers for accommodation or flights. These scams are regularly on the go, enticing victims with bogus offers of an exotic vacation at a fantastic price.

How to avoid them:
While there are legitimate companies offering holiday vouchers, don't buy any vouchers without first checking out the company that sells them. It also pays to check whether organisations at the other end will accept the vouchers. We’ve had many calls about problems with these schemes.

Mail order

Mail order can be a great way to buy, and there are many legitimate companies using this selling approach. However, there are also lots of mail order scams and ripoffs.

How to avoid them:
To reduce the risk of dealing with a ratbag, look for:

  • A written, money-back guarantee if you are not happy for any reason.
  • A physical (street) address, contact phone number or GST registration number. Never buy from a company that just gives a PO Box number.
  • A New Zealand-based company. This is an advantage because you can take a New Zealand-based company to the Disputes Tribunal if you have problems with a product or service.
  • A company which is a member of the Marketing Association. Members are required to meet the association's code of ethics and follow its recommendations.

For overseas companies, it's advisable to stick with large and well-established firms.

Rent scams

With the property market flat, scammers have turned their attention to websites listing houses and rooms for rent.

How they work:
They pretend to be interested in a room, send an overpayment of rent in advance and then ask for a partial refund. But after you’ve sent the refund, you find the cheque they paid you has bounced.

Sometimes it’s the scammer offering a place to rent. You’re asked to pay upfront before you’ve even seen the room. If this happens, report it to the website owner.

Mobile menaces

Mobile malware is on the rise as more people take up mobile devices. It’s estimated there are more than a million apps, so it's not surprising to find a few bad apples among them. And while the small size of tablets and smart phones make them convenient, it also makes them easy to lose and steal. If your tablet or smart phone isn't locked, whoever gets hold of it has access to personal information.

Take these steps to secure your mobile device:

  • Set up a screen lock: use a pass code that includes more than 4 letters, numbers and symbols. Or use a finger-slide pattern or facial recognition if your device offers these features.
  • Install apps cautiously: only download apps from reputable sources. Be wary if an app wants access to information that seems superfluous to its function. A flashlight app, for example, shouldn't need access to your contacts.
  • Don't respond immediately to messages of unknown origin: double-check the number of a missed call or text message from an unknown source. Don’t respond if it’s a 0900 number – or a number in a strange format. Scammers sometimes use "premium rate" numbers. If you return the message, you'll be charged a hefty bill.