Just this summer, Onagie, 73, encountered an interesting proposition while visiting a mall in Dubai. A salesman invited him to fill out a form to be eligible for a raffle draw. No payment was required, and Onagie happily obliged without asking for details.
About 30 minutes later, he got a call and was told he had won a holiday package abroad: seven nights stay in any hotel in the world. To claim the prize, however, he had to attend a 90-minute presentation in Deira.
The retired expat from Nigeria excitedly relayed the news to his daughter, Nikky, who runs a business. "I didn't feel good about it at first, but my dad pleaded repeatedly, so I decided to take him there," Nikky recalls.
Eager to claim the "prize", the father and daughter drove to Deira on the same day and sat through the presentation, which turned out to be an investment pitch involving hotels abroad. Fast forward to more than an hour later, Nikky found herself signing a contract and paying Dh7,300. "It was supposed to be half of something. I didn't have the time to read the contract. I was pressured. And, though I was not completely comfortable about it, I went ahead because my dad kept insisting me to do so. He was convinced it was a good investment."
When she finally found the time to review the contract, Nikky felt she had just entered a dud deal. "The guaranteed return on investment they had promised verbally was not in the contract. It was not what I signed up for," she says.
"I later learned that several people wanted to cancel the deal because they never got anything out of it. So now I want to get my money back. But I was told that what I paid was non-refundable". "At this point, I'm convinced it was a scam. It's just such an unfortunate situation and I cannot forgive myself because that money is a lot when it comes to what it would do for my family," says Nikky.
Experts advise consumers to always be careful when dealing with sales pitches, because it can be a potential scam, and any transaction involving money has a certain degree of risk.
There's been a flurry of data suggesting that scam artists still abound, preying on average-income consumers who are looking to improve their life, secure their retirement or create a steady income.
The financial impact of investment scams on gullible consumers is severe. Not too long ago, the Office of Fair Trading, which released a research on impact of mass marketed scams, found that consumers in the UK lose about £3.5 billion (Dh20.29 billion) to fraud each year.
This includes estimated annual losses of £1.17 billion to holiday club scams, £490 million to high-risk investment scams, £420 million to pyramid and get-rich-quick schemes and £260 million to foreign lottery scams.
Like any other place in the world, the UAE is not immune to financial fraud. "Scams exist the world over, but there are some that occur repeatedly here," observes Steve Gregory, managing partner at Holborn Assets.
One of the illegal schemes that have occurred in Dubai, Gregory says, is called "boiler house scams". They are run by sales outfits from abroad who make phone calls to unwitting investors, enticing them with a hot story about a hot share in a great company.
Once you transfer your money, you will then get regular reports about how well your investment in the shares is doing. If you want money out, the company will send you the money they received from new investors. They then convince you to buy more, based on the fact that the last investment worked so well. Sooner or later, you discover the company has closed and you've lost all your money.
"Just this week in the UK a father and two sons were jailed for taking £15 million, some of which was raised in Dubai," Gregory points out.
Reports have it that the jailed father, identified as Tomas Wilmot, and sons Kevin and Christopher allegedly sold low value or non-existent shares to over 1,000 investors. Companies, back office operations and accounts used in the scam were operated in many countries and cities.