(Continued from last week)
Examples of Advance Fee Scams (part 2)
Here is an actual example of such scam as reported on 914Legal.org.
“Last month, hundreds of internet users from places right across the US were done in by a scam perpetrated by a company calling itself The Fairway Lending Group. The company gave a false address and claimed to be operating out of 1699, Wall St., Mt. Prospect. It was careful to leave out local residents. The scam would have blown apart if any of the locals had found out that it was not occupying the said premises.
The company was especially targeting those with a poor credit rating. It offered a loan that was actually a scam molded on the advance fee type of scams.
The scam started when people responded to mails from the company that promised them easy loans. They were then asked for their bank account details presumably for processing of the loan request. The victims were next asked to make a payment as collateral for the loan. They were asked to make the payments through Western Union money transfer. The amount people paid ranged from $900 to $5000.
Users should have been warned when asked to pay any amount upfront before receiving a loan. Such loan schemes are actually banned in the US and in Canada. Any such loan offer would be illegal if offered in the first place.
Apart from money lost, the victims in this case, might also be exposed to identity theft, having revealed their bank account details to the fraudsters. The thing for them to do would be to either close the account or to give instruction to the bank if possible to temporarily suspend it.
As of now, there is no trace of the company. Local authorities claim to have no clue about their whereabouts. Being an Internet based scam, the fraudsters found it easy to hoodwink the police by covering their tracks.
Seeing an increase in scams, the Federal Deposit Insurance Corporation provides warning signs that may indicate a loan offer is not legitimate:
The loan approval is "guaranteed." Lenders do not typically guarantee loans before analyzing the applicant's financial condition, credit history and ability to repay.
The loan applicant is required to pay upfront fees to a third party or individual. Loan fees are normally paid to a business after the loan has been approved.
The lender or loan processor may be located outside of the United States.
Fees are requested using a retail wire transfer system. A password is sometimes used by the overseas receiver to pick up the funds in an attempt to hide the true identity of the criminals and make funds more difficult to trace.
Occasionally you have no idea you are paying anything. Ads may include phone numbers that generate telephone fees added to your phone bill. Some online sites require downloads that include a virus. It switches your Internet Service provider from what you are using to theirs, usually located overseas with huge fees.
Growing in popularity are death threat reports. Someone has hired a “hit” on you and the person who accepted the contract will not follow through if you pay him.
People outside the United States have to be aware of scams stating that the company can get people into this country. They provide employment offers in the US, targeted to people specifically living in India, although other places may be involved. These jobs have come from a variety of sources, but are usually traced or linked to a company based in the United States, that are information technology consultants, contractors or simply a specialist employment agency. These companies have clearly stated that they will "assist" or even outright claimed that they will "obtain" the necessary working permit visas on behalf of the proposed employee. Of cause, upfront fees are needed.
In some cases, the scammers ask that the person come to the foreign country directly to handle the transaction in person. The US Department of States warns: Over the past 3 years, 15 foreign businessmen (one American) have been murdered in Nigeria in AFF scams. Since September 1995, at least eight Americans have been held against their will by these criminals in Lagos that have come to the attention of the U.S. Embassy. In 1996 the U.S. Embassy helped repatriate ten Americans who came to Lagos looking for their “pot of gold.”
Tuesday, May 26, 2009
Saturday, May 9, 2009
Consumer Safety & Awareness Part 19
Examples of Advance Fee Scams
In order to recognize the many varieties and ever changing advance fee scams, one needs to study many examples. Con artists spend considerable time creating new, innovative schemes to trick us. They mask their techniques and hide their intent carefully.
In the previous section we looked at the typical Nigerian 419 scams that included promising something for a fee paid in advance, an inheritance, found money, stolen goods, ATM cards, and traveler checks. Other 419 scams, all requiring you to pay for something in advance and usually involve a wealthy investor who wants to invest in a large sum of money in a foreign country, but can't attend to the business personally. Wouldn't you care to do them the favor of overseeing the investment?
A fortunate person has gotten a large quantity of a commodity, oil, gold, or diamonds for example, but cannot move them from their storage facility without the help of a foreign investor. If you would only pay some fee, bribes, or other expense, he will let you keep a very generous percentage of the commodities' market value once they have been sold.
A business places a relatively small legitimate order from your company, usually under $1,000 worth of goods. Thereafter, another order is placed, for a slightly larger amount, again, paid in full. Suddenly, an urgent order and much larger is placed, but this one needs to be air freighted on the double! Your trade partner has just received a lucrative contract, and if this shipment arrives on time, it means many more large orders in the near future. Don't worry about waiting until the bank draft clears, after all, the order is from a trustworthy company that has always made payments before.
You receive an e-mail from a U.S. Special Forces commando who has found millions in drug money while conducting a covert mission against the Taliban. The "commando" says he has stashed the cash in luggage, but wants to keep it in someone else's bank account "for safekeeping."
The National Fraud Information Center reports a scam artist who used dating websites, including sites for gays. She pretended to be the daughter of a slain African gold mine executive seeking a long-term relationship with a special someone. Phony Web sites, which look quite realistic, may contain plenty of investor information, often copied from the sites of legitimate regulators. The sites are one of the many ploys used in advance fee scams that try to get investors to send money in advance of any service rendered. These fake sites often use "cookies" to track visitors and gather information.
Taking advantage of recent health scares, one advance fee ploy involves the discovery of a vaccine or other preventatives that can not only save millions of lives but will also generate considerable money. The inventor needs financial support to distribute, market, or manufacture his cure. A twist on this one is the sale of stock in such a company. Stock is not sold by e-mail. If you are actively advertising real estate for sale, you may receive an offer to purchase your property from a foreign concern. The catch: You are required to pay up-front fees to a “special broker.” Once paid, you cannot locate this special broker to consummate the purchase.
Almost all of these schemes have five common features – something of great value exists, there is a pressing time issue, it comes from out of the country, assistance is needed, you can not tell anyone else, and advanced payment is required to free up the item of value. Until 2007, more than 50% of these originated in Nigeria, but now they can come from anywhere. In many cases similar versions even have local, United States or Canada, origins.
Many domestic advance fee scams are financial in nature and prey on people with poor credit history or current money flow problems such as late payment of mortgages or loans. They promise low cost loans, debt consolidation, improved credit scores, or other solutions to financial problems. All of them require a fee for processing, credit evaluation, good faith, or other improbable reason.
Occasionally, yet growing more common, the scammers do not ask for any money at all, but need information to verify your credibility. These are identity theft scams. Never send anyone your bank or investment numbers, or even let others know where you invest. Your social security number must be sacred – only medical and valid insurance people need this. If you have an investment that produces dividends or interest, the company needs your social security number for their IRS reports, but deal only with such institutions in person.
(To be continued next week)
In order to recognize the many varieties and ever changing advance fee scams, one needs to study many examples. Con artists spend considerable time creating new, innovative schemes to trick us. They mask their techniques and hide their intent carefully.
In the previous section we looked at the typical Nigerian 419 scams that included promising something for a fee paid in advance, an inheritance, found money, stolen goods, ATM cards, and traveler checks. Other 419 scams, all requiring you to pay for something in advance and usually involve a wealthy investor who wants to invest in a large sum of money in a foreign country, but can't attend to the business personally. Wouldn't you care to do them the favor of overseeing the investment?
A fortunate person has gotten a large quantity of a commodity, oil, gold, or diamonds for example, but cannot move them from their storage facility without the help of a foreign investor. If you would only pay some fee, bribes, or other expense, he will let you keep a very generous percentage of the commodities' market value once they have been sold.
A business places a relatively small legitimate order from your company, usually under $1,000 worth of goods. Thereafter, another order is placed, for a slightly larger amount, again, paid in full. Suddenly, an urgent order and much larger is placed, but this one needs to be air freighted on the double! Your trade partner has just received a lucrative contract, and if this shipment arrives on time, it means many more large orders in the near future. Don't worry about waiting until the bank draft clears, after all, the order is from a trustworthy company that has always made payments before.
You receive an e-mail from a U.S. Special Forces commando who has found millions in drug money while conducting a covert mission against the Taliban. The "commando" says he has stashed the cash in luggage, but wants to keep it in someone else's bank account "for safekeeping."
The National Fraud Information Center reports a scam artist who used dating websites, including sites for gays. She pretended to be the daughter of a slain African gold mine executive seeking a long-term relationship with a special someone. Phony Web sites, which look quite realistic, may contain plenty of investor information, often copied from the sites of legitimate regulators. The sites are one of the many ploys used in advance fee scams that try to get investors to send money in advance of any service rendered. These fake sites often use "cookies" to track visitors and gather information.
Taking advantage of recent health scares, one advance fee ploy involves the discovery of a vaccine or other preventatives that can not only save millions of lives but will also generate considerable money. The inventor needs financial support to distribute, market, or manufacture his cure. A twist on this one is the sale of stock in such a company. Stock is not sold by e-mail. If you are actively advertising real estate for sale, you may receive an offer to purchase your property from a foreign concern. The catch: You are required to pay up-front fees to a “special broker.” Once paid, you cannot locate this special broker to consummate the purchase.
Almost all of these schemes have five common features – something of great value exists, there is a pressing time issue, it comes from out of the country, assistance is needed, you can not tell anyone else, and advanced payment is required to free up the item of value. Until 2007, more than 50% of these originated in Nigeria, but now they can come from anywhere. In many cases similar versions even have local, United States or Canada, origins.
Many domestic advance fee scams are financial in nature and prey on people with poor credit history or current money flow problems such as late payment of mortgages or loans. They promise low cost loans, debt consolidation, improved credit scores, or other solutions to financial problems. All of them require a fee for processing, credit evaluation, good faith, or other improbable reason.
Occasionally, yet growing more common, the scammers do not ask for any money at all, but need information to verify your credibility. These are identity theft scams. Never send anyone your bank or investment numbers, or even let others know where you invest. Your social security number must be sacred – only medical and valid insurance people need this. If you have an investment that produces dividends or interest, the company needs your social security number for their IRS reports, but deal only with such institutions in person.
(To be continued next week)
Friday, May 1, 2009
Consumer Safety & Awareness Part 18
How Advance Fee Scams Operate
Poor Nigeria. It seems that this country frequently gets blamed as being the center of Internet scams. That’s because the Advance Fee fraud originated, or at least was perfected there. In addition, the Nigerian government seems to protect fraudulent activities and does not prosecute scammers when they are discovered. Now-a-days these types of scams can originate anywhere, including the United States and Canada.
According to UltraScan, a global investigations group, the Nigerian Advance fee scam, also called the 419 scam, is the world’s must successful fraud, costing people worldwide over $32 billion. More than 300,000 people have fallen for this, with more buying in every day.
Since it is so widely publicized, why does it continue to be so successful? Because people want to believe, and because people are greedy. There are more than 100 variations on this scam, so they may be hard to spot at first, but all of them call for the mark to pay upfront before getting the thing of value.
NextWeb Security has a huge list of such scams – here is a sample:
In the original scam, of which new variations are generated daily, the 419 scammer has or can gain access to a large sum of money by some means and he needs the financial and personal help of the target, in return for a percentage of the funds, to get the necessary transactions processed and get monies out of the country. As in all advance fee frauds, the mark has to send money prior to obtaining any benefit. Once the funds are transferred, either you do not hear from the scammer again or he has excuses to ask for additional sums.
The ATM Card Payment Scam is used in conjunction with other scams, such as a fake Lottery Scam. The victim is promised an ATM card with which the victim can withdraw millions of dollars (up to a large limit per day) at any location that accepts ATM cards. However, the victim must pay a fee to receive the card. If it ever is received, it will not work. A "Replacement card" will then be offered, again for a fee.
In the Black Currency scam the 419er has a large amount of currency available to share with the target, but the currency has been defaced. However, the currency can be cleaned if the target will purchase enough of the correct cleaning solution. Guess who has it for sale?
In one of the original 419 frauds, the scammer has Cashier's Checks or money orders he needs cashed, and the target can keep a percentage of the check as his commission for cashing it and forwarding the remaining proceeds to the 419er. The original check or money order sent to the target eventually bounces. The target is out both the money advanced to the 419er and the amount owed to the bank. The target must also pay any overdrafts and any relevant fees. On occasion the victim lands up in jail for bank fraud.
Charities are not safe. The 419er approaches a charitable organization with a request for help, usually about getting a large sum of money transferred out of a country in which the charitable organization operates. A percentage of the proceeds are often offered to the charitable organization for their assistance. The 419er needs the charity’s money for fees in order to get the monies freed up.
In a job scam, the 419er "employs" the target to process financial transactions for a commission and has the target advance the net proceeds of these transactions to the scammer before the checks sent to the target bounce.
If you run a business, beware of the scam in which goods or services are ordered in advance, on credit. Then the scammer does not pay or pays with a bad check.
In the romance scam, the 419 meets the target online in a chat room or through a dating or instant messenger online service, befriends the target, and gets the target to advance him money for various reasons.
Greedy people often fall for the inheritance scam. Someone has died with no relatives to claim the large cash bequest left by the deceased. Often, the 419er says that if someone does not claim the money it will revert to the Government and no one will get it. The target is asked to "stand in" as a relative to claim the money, with the 419er taking care of all the details, and then they can split the proceeds. The scammer needs up-front money for fees to get the target declared the rightful inheritor.
In another action that can get the victim in legal trouble, the 419er will obtain stolen merchandise for personal use or to sell. Because many companies will not send merchandise to Nigeria or Eastern Europe due to warnings about stolen credit card purchases, the scammer must find an in-country person to receive then reship the goods.
Scammers all around the world use similar techniques. We frequently hear of “gypsy-type” contractors offering to do repairs on a home at low cost. They may be willing to resurface or blacktop your driveway for half the expected price. Once you agree, they unload some supplies from their truck, and then ask for advanced payment to get additional supplies. Since they have material set out, you agree, perhaps giving $120 for five buckets of blacktopping. They drive off to get it and you never see them again. You are left with useless garbage on your lawn.
This type of scam also applies to roofing, carpentry, and other odd jobs. Some contractors ask for money up front, then do a shoddy job, or start and never finish. It may take years and lots of legal fees to get back even part of what you paid them.
Online auctions use advance fee techniques, purchasing items and never paying for them or selling items and never sending them once they receive the money. In some cases you do get poor quality or out-of-date products.
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