Samll businesses are being targeted by callers demanding money for services that are unnecessary, non-existent or deceptive.

There has been an increasing number of reports of small firms in Brighton and Hove being offered cheaper deals on utilities, such as phone lines and council tax, by people who appear to be from Government agencies or departments.

But many of the deals turn out to be either misleading or fraudulent.

Richard Tatum, owner of Fruity clothes shop in Gardner Street, North Laine, said one letter he received, asking for a £120 fee to register for data protection, had been extremely convincing.

He said: "The wording and the letterhead gave me the impression they were a Government department but I rang the Federation of Small Businesses (FSB) to check and it turned out the fee was far higher than it costs to register."

Businesses holding employee records must register for data protection but it can be done directly with the Information Commissioner for £35.

Mr Tatum said another ruse was offering businesses free listings in a directory which costs a fortune.

He said: "They tell you about the free bit and then offer to send you two copies of it. They tell you so quickly you are not meant to hear the cost is £175."

Co-owner Sam Cummins said they received frequent calls, visits or letters from people touting for business.

She said: "There was one man who came in and said he could bring down our business rates.

"He said he was a freelance working for a legal company and, for a £50 deposit, he could go to a hearing to see if the case could be taken to tribunal - but there was no guarantee the rates would go down.

"He might have been genuine but you can never really be sure."

She said she was wary of cold callers offering what sounded like a good deal.

She added: "Some of them can be really pushy. Even when you say you are happy with who you're with, they promise you the lowest deal ever if you sign up now.

"I tell them to send me something in the post but they always want to hurry it through immediately."

One Bond Street shop owner was persuaded to sign a new line rental agreement, not realising the company would charge for calls as well.

The agreement was cancelled immediately but it took two weeks to end, during which time the company had to be paid for the calls.

City centre manager Soozie Campbell said: "If you don't know the people, ask for their credentials or phone the company. These people can be so convincing."

According to the FSB, one recent scam involved three firms claiming to regulate health and safety legislation and sending out a raft of official-looking letters demanding registration payments of up to £249.

Using the titles Health and Safety Enforcement Agency, Health and Safety Registration Enforcement Division and Health and Safety Compliance Agency, they have threatened thousands of unsuspecting businesses with fines or imprisonment for non-payment.

The Health and Safety Executive (HSE) confirmed it never writes indiscriminately to firms and emphasised there was no legal need for anyone to buy registration or compliance packs from any of these companies.

FSB health and safety chairman Mary Boughton said: "Ever-increasing health and safety requirements and the threat of strong penalties for non-compliance mean small employers are aware of the need to follow the law and may be easy prey for such scams.

"We advise members to ignore the approaches of these fraudulent companies and refer the matter to the HSE."

The FSB, trading standards or the chamber of commerce were able to advise.