The Citizens Advice organisation has issued a warning about an internet scam in which ‘landlords’ get prospective tenants to make a ‘secure’ money transfer to start renting a property which then turns out not to exist.

The national charity is urging people to take extra care when searching for rooms or property online, if they are asked to ‘prove funds’ via money transfer prior to viewing.

People who have already fallen victim to a confidence trick say that after enquiring about a property the ‘landlords’, who often say they live abroad, ask the interested tenants to make a ‘secure’ money transfer to a trusted person such as themselves or a friend/relative.

They are then asked to send a copy of the receipt to the person claiming to be the landlord to prove they have sufficient money for deposit and rent before they are shown the property.

The would-be tenants are reassured that no-one else can access the money, but find when they go to collect it that the money has already been withdrawn and the room or property doesn’t exist.

One CAB reported a couple who found a flat on an online classified ads site. Before they were shown the flat, they were asked by the advertiser to make a secure money transfer of £650. The couple were dubious about the request and called the money transfer company to seek advice. They were told that without showing personal I.D such as a passport no money could be withdrawn.

Reassured, the man transferred the money to his fiancé and faxed the Landlord a copy of the receipt obscuring all other details except the amount and Money Transfer Number (MTN). When the couple went to pick up the cash they were told the money had been paid out already in California. Upon reporting the crime to the police they were told there was nothing that could be done.

Citizens Advice Consumer Affairs Policy Officer Susan Marks said: “Money transfer, used in any situation other than to send money to someone you know is not secure. It should never be used as a way of proving funds or as a method of payment to someone you don’t know – sharing your money transfer number or copy of your transfer receipt is like handing over your PIN number to a stranger.

“It’s not the same as transferring money from one bank to another, and isn’t covered by the same safeguards.

“Unfortunately the very nature of what makes money transfer appealing - that its quick and easy and that money can be sent to numerous outlets in the U.K or abroad - is also the thing that leaves it open to exploitation by fraudsters.

“Consumers must be warned about the dangers and we want to work with money transfer companies to help them to tackle the misuse of their services and thwart fraudsters. As well as making sure there are obvious warnings on receipts about fraud risks we also want to look at how ID checking processes can be strengthened.”

Since November 2009 money transfer companies have been regulated by the FSA, and whilst they can apply to be ‘authorised’ the only real requirement is that they are registered which involves a lower standard of checks.

Local money transfer agents are not checked at all.

Citizens Advice is also concerned about the reluctance of some local police stations to treat this issue as a crime. Section 2 of the Fraud Act 2006 clearly states that this is a crime, but CABx have had reports from clients who are being told at their local stations that it’s a civil matter as opposed to a criminal one.

Citizens Advice also wants the online sites that advertise property for rent to do more to verify the legitimacy of people who post adverts as well as warning consumers about this and other scams that users of their sites may be vulnerable to.