In a new twist on a fraudulent money-laundering scheme, a growing number of people who sell goods online are falling victim to con artists who locate their victims through mass emailings. And the con artists are Nigerians.
So far, at least seven state attorney's general have warned about the new ruse, in which the perpetrators, often from Nigeria, use the counterfeit checks to purchase items for sale online, typically overpaying for the goods and asking for the difference to be sent back before the victim of the bank realizes that the check is fake.
It is a new version of an old scheme known as advance fee or 419 fraud, a reference to the Nigerian statute, that makes this type of activity illegal. While 419 fraud has often been perpetrated over the phone or by fax, mass email has in recent years been a preferred method of finding victims.
It is impossible to say how many people have lost money through this type of fraud. But one victim, Shawn Mosch of Bloomington, Minn., who with her husband started an advocacy group called Scam Victims United (scamvictimsunited.com), estimated that she had heard more than 500 cases since November. In March, the Federal Deposit Insurance Corporation warned banks about the use of counterfeit official checks to defraud online sellers.
Mrs. Mosch said that she and her husband, Jeff, had advertised a 1961 Buick for sale at several Web sites and were contacted in October by a man purporting to be a car dealer in Africa. Adebisi Julius. After agreeing on a price of $1,600, the buyer told the Mosches that a friend in the United States owed him $8,800 and that this friend would send them a cashier's check for that amount. They agreed to refund the difference to the buyer once the check cleared.
Although Mrs. Mosch said she was aware of other forms of Nigerian fraud and thought the terms of the transaction sounded suspicious, she deposited the check- seemingly issued by a Bank of America branch- and asked the teller when she would know it was good. He said, 'Twenty-four hours ma'am, no problem' Mrs Mosch recalled. She said she then waited 48 hours 'to be extra safe' before withdrawing $7,200 and wiring it to an address in Lagos, Nigeria.
'When he said Nigeria, yes, red flags went up,' Mrs. Mosch said, describing a phone conversation with the man who deceived her. 'But then we looked at the cash in our hands and said, well we have the cash, they said the cash had cleared.'
But the check had not cleared: the Mosches got a call about a week later from their bank informing them the cashier's check turned out to be counterfeit and that the bank was deducting $8,800 from their savings account. (The Mosches still have the Buick, in which the fraudulent buyer was evidently not interested, despite having promised to arrange shipment).
Mrs. Mosch said she and her husband disputed their liability for the money deducted from their account, ultimately reaching out-of-court settlement with the bank. The terms of the settlement prevent her from naming the amount or the bank, she said.
'The best way to stop the scam right now is to educate people about it, 'she said. Although a big part of that effort is alerting Internet sellers to be wary of buyers who overpay for an item and ask for the difference to be wired back - or those who, after sending a check, back out of the deal and ask for refund - another goal is to dispel some misconceptions about cashier's checks.
'The tellers are looking at that check as if it were a legitimate cashier's check and not even considering that it might be fraudulent,' Mrs. Mosch said. She argues that consumers and bank employees need to be educated about the difference between when funds from a cashier's check are available and when the check actually clears.
By law, banks are required to make funds available the next business day if an individual deposits a cashier's check into their own account, in person, dealing with an employee of the bank: if the bank later finds out the check is counterfeit, it can deduct the money from the depositor's account.
So, the burden is largely on Internet sellers to make sure that any check they accept is legitimate before spending the money or sending any merchandise.
Donna Gambrell, deputy director of the FDIC's division of supervision and consumer protection, said "One of the reasons why these scams can be so sucessful is because crooks know consumers trust these cashier's checks and money orders."
The FDIC advises Internet sellers to confirm a buyer's name, address and home phone number independently and insist that the check be drawn on a local bank or a bank that has a local branch. if that is not feasible, Ms. Gambrell said, the depositor should ask the bank if it will enquire about the check or directly contact the issuing bank to confirm that it is valid.
Beyond these measures, Ms Gambrell said, "Don't wire money or hand over any merchandise until you deposit the check and your bank confirms that it was paid- even if that takes days or even weeks.
At least seven states- Delaware, Idaho, Iowa, Maine, Missouri, New Mexico and Pennsylvania - have issued warnings to residents about the scheme. In April, the Internet Fraud Complaint Center, which refers victims to law enforcement agencies, noted the emergence of this variation on 419 fraud in its annual report, saying that based on the reports it received last year- a fraction of actual losses- 74 individuals lost $1.6 million to some form of 419 scam.
Although automobile sellers seem to have been the initial targets of the counterfeit check variation, there have reports of attempt to defraud people who are selling boats, furniture, horses, dogs and cats. Trading sites like americandreamcars.com, puppydogweb.com and equine.com have warned users about the scheme.
Mrs. Mosch said she had heard that people selling items on eBay had been targets of such ruses, Kevin Pursglove, an eBay spokesman, said he had not heard much about the trend and that eBay had not issued an advisory on that type of scheme.
Culled from the New York Times
