NWA-PCUG Newsletter Article, November 2007
Fake Check Scams on the Internet Explode
By Ira Wilsker, APCUG Director;
Columnist, The Examiner, Beaumont, TX; Radio & TV Show Host

(click to email author)


You may remember the recent case of a local woman who responded to a “work at home” opportunity where she would accept payments from the customers of a business, deposit the checks, deduct her generous commissions, and then wire the balance elsewhere. Recently, in my High Tech Crime Consortium (HTCC) listserv, an investigator posted the following inquiry (redacted): “Is anyone working a case involving a fraudulent check from XXX Bank on the account of YYY Financial Trust Company, a supposed winner of a drawing scam. My victim received this letter and check, deposited it and XXX BANK told her it was good so they put the money in her account. Turns out it was not. She of course was told to wire “taxes” in the amount of $4425.00 to a subject XXXXX in Houston, Texas, but the money gram was picked up in XXXXX.”

Recently, (October 3), the Reuters news service ran a story “Spam-scam crackdown nets $2 billion in fake checks”. The story goes on to explain, “An international crackdown on Internet financial scams this year has yielded more than $2.1 billion in seized fake checks and 77 arrests in the Netherlands, Nigeria and Canada, U.S. and other authorities said on Wednesday. The scammers, often West African organized crime groups, use ploys such as "spam" e-mail offering to pay recipients "processing fees" for depositing checks, which later turn out to be phony, and sending the ostensible proceeds to the scammer, authorities said.” Demonstrating how prevalent this scam is, the Reuters article goes on to say, “Two-thirds of Americans said they received at least one potential scam contact per week, and 18 percent said they or a family member had fallen for one, in a survey conducted for an alliance of banks, consumer groups and the U.S. Postal Service. Grant said complaints to her group about fake checks have risen 60 percent this year, and the average victim loses about $3,000 to $4,000.”

In a parallel news story at FoxNews.com (October 3), “Postal Service Declares War on Nigerian Scam”, in discussing the same seizure writes, “So far this year, an average of more than 800 people a month have filed complaints about such scams. Hoping to stem the losses, the U.S. Postal Inspection Service announced an international crackdown Wednesday in which more than 540,000 fake checks with a face value of $2.1 billion have been seized.” The financial and emotional impact of being a victim can be disabling, “Retired people have lost their nest eggs and young families have been defrauded of their savings for a home.”

If 800 people a month report losses to the Postal Inspector, one may wonder how many other victims are too ashamed or embarrassed to report the crime which victimized them. You may have noticed some TV commercials warning about these scams, another indication of the degree of the threat. The commercials are promoting a consumer education website fakechecks.org, a creation of the National Consumers League, and sponsored by groups such as the American Bankers Association, American Express, Capital One, JP Morgan Chase, Visa, Western Union, and the United States Postal Inspection Service. The meat of the website is a curt warning that says, “There is no legitimate reason why anyone would give you a check or money order and ask you to wire money in return.”

The major types of scams that use these methods are foreign business offers, rental schemes, love losses, sudden riches, overpayment, and work at home scams. The common thread in all of these is that in response to an email, phone call, or letter, the victim received certified or cashiers’ checks, or money orders, and was directed to deposit them in their personal bank accounts. Immediately after depositing the instruments, the victim was directed to deduct his commission or fee, and then wire the proffered balance (often via Western Union) to the crook. The checks and money orders would bounce as they were typically counterfeit, forged, or otherwise phony, leaving the victim with the financial loss for the amounts wired to the crook. The proceeds of the wired funds are often picked up overseas, and not at the address stated in the original offer.

Many of us have received the ubiquitous Nigerian 419 scam from the relative of some oil minister who was killed in a plane crash, and the widow needs help in investing the money. In the original scam, still circulating by the millions, the victim is to wire money to Nigeria or some “barrister” in London in order to pay the taxes and fees to release the funds, for which the victim is to receive a generous commission. In a new iteration of the scheme, the victim receives an email or letter that alleges that the crook claims to have a check which can be used to pay the taxes and fees, and in exchange for depositing the check and wiring the net proceeds to a third party, the victim can withhold a generous commission. Of course, the check is worthless.

In another version, also distributed in the millions, the victim receives an email, letter, or fax claiming that they have won an international lottery. In the past, the victim had to come up with the taxes and fees on his own, and wire the money to the crook in order to collect the winnings. Now the scheme sends the victim an authentic looking check which is to be used to pay the foreign taxes and fees on the prize winnings. The victim deposits the check, which may also include a small percentage of his winnings, and wires the taxes and fees to a third party. The check bounces, and the victim is out the proceeds, often in the $3000 to $4000 range. I have actually had students who advertised their cars online, and received a call or email from a barrister in London representing a client who wanted to buy the car for the full asking price. They would then overnight a certified check to the seller for more than the selling price of the car, and ask the seller to wire the balance back to London, sometimes after deducting a generous fee or bonus. A bonded courier will be by to pick up the car. Of course there is no courier, and the check is no good, leaving the seller with his car plus a several thousand dollar loss.

Another student recently brought me an email where she could make hundreds of dollars a week by accepting checks and money orders from a seller that needed an American presence, asking her to deduct her 20% commission, and then wiring the proceeds to some distant place. The scam is obvious.

Greed and gullibility can affect all races and religions. The website fakechecks.org may provide a valuable warning to those who might fall victim. If the Postal Service can seize 540,000 fake checks worth $2.1 billion, one may wonder how many were not seized, and made it to the victims. One can only wonder how much more was lost by the victims, often those who can least afford it.

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