The Basic Know-How for Fraud and Scam Part III

Cashier Checks are Scammer´s Best Friends

 

The cashier's check has long been an Internet criminal's best friend. Consumers seem to think cashier's checks, which come emblazoned with bank logos, are as good as cash. Once a check clears and funds are made available, people think the check must be legit.

But that's not true. It can take weeks for banks to identify fraudulent checks. That means it might be a month or more before they take the money out of your account.

For years, online con artists have exploited this misunderstanding. But the United States Postal Inspector's office is launching a new campaign aimed at clearing things up. On Wednesday, the agency announced the arrest of 77 criminals worldwide involved in bank check frauds, and unveiled a new public education TV campaign and Web site named FakeChecks.org.

With a bit of wry humor, the site exposes six common cashier's check scams: online seductions, overpayments, renter schemes, fake lotteries, work-at-home scams, and foreign business partnerships.

You might think you're too clever to fall for any of these cons, but they still work. The Postal Inspectors also announced the seizure of fake checks worth more than $2 billion from January to August of this year.

The National Consumers League released data on Wednesday showing that most consumers are confused about who picks up the tab for check fraud. Only one-third of those surveyed realized that they are responsible if a check they cash turns out to be fraudulent, said Susan Grant, vice president of the National Consumers League.

'I Chop Your Dollar'

The postal service announcement at the National Press Club, included officials from Nigeria, the Netherlands, the United Kingdom, and Canada, and stressed the international nature of the crime.

International cooperation has helped U.S. authorities put "boots on the ground," in Nigeria, said Greg Campbell of the U.S. Postal Inspection Service. In many fake check scams, criminals are overseas but victims are in the U.S., so it's important to convince international authorities to "protect our (U.S.) citizens and go after their criminals," he said.

Johan van Hartskamp, commissioner of the Amsterdam Police, said his agency recently raided a party at a cafe where a large group of West Africans were celebrating their successful cons against U.S. victims. About 100 illegal immigrants were arrested, and 67 were charged with some form of fake check fraud. At the party was a famous Nigerian comedian, there to perform a sarcastic song titled "I Chop Your Dollar," in which a Nigerian con artist describes how easy it is to scam Americans.

The scams vary wildly, but the basic premise is always the same: A criminal sends a consumer a fake check, which the victim deposits into their bank account. Because bank laws require that funds be made available within a few days, the money appears in the victim's account quickly. And that point, many consumers believe the bank has blessed the check and the money cannot be removed. Then, the con artists ask for some of the money to be returned, usually via an irreversible and untraceable wire transfer. Since the victims think the original check has been validated, they comply.

Cashier's and corporate checks, however, are just as likely to be fraudulent as personal checks. For 30 days or more, the bank that deposits the check can reach back into the consumer's account and take the money -- leaving the consumer with a large debt.

Convicing schemes

Among the more convincing ruses is an apartment rental scam. A criminal posing as a college student will answer an online advertisement for an apartment by saying they live overseas, and will happily send a security deposit and first month's rent without seeing the apartment. The landlord cashes the fake check. Then, a few weeks later, the prospective renter writes to say that something has gone wrong with the college admissions office and asks for a partial refund of the deposit.

A landlord who tries to be fair and returns the money loses it.

FakeCheck.org includes funny "Candid Camera" style videos of an actor getting members of the public to fall for fake check scams, and videos of real victims sharing their stories.

One thing that isn't on the site: Any mention of changing consumer protection law to make it harder for banks to take back funds they've already deposited into consumers' accounts.

Grant said some banks have begun training tellers to offer more detailed instructions about check-cashing liabilities and that such education efforts have worked. At one bank, fake check fraud plummeted 85 percent after tellers were trained to warn consumers about cashing any check for more than $1,000. Her agency is pushing for new banking laws that would require such notification.

Still, one British law enforcement official, who asked not to be identified, said better banking procedures in the U.K. are one reason British citizens suffer almost no fake check fraud.

"The tellers would look at a check like that and just say, 'I'm not cashing this,' and throw it away," he said.

RED TAPE WRESTLING TIPS

· It's worth visiting Fakechecks.org just to watch the videos, they're that funny. But if you don't, you'll see some of them on local television soon anyway. The ads make the point that people do things online that they'd never do in real life, such as cash a check for a stranger. That’s a good question to ask yourself when conducting financial transactions online: Would I do this in person?

· Maybe you are too smart to fall for this, but don't assume your friends and relatives -- particularly older relatives -- are. Don't be shy; ask your parents if they know about check cashing laws and Nigerian scams.

· To review: According to U.S. law, you are responsible for verifying the authenticity of a check. Just because a check clears and the money is put into your account doesn't mean the check is legitimate and the money is yours. The truth is, there's no real way to verify a check is authentic. You can call the issuing bank and ask, and you can even visit the bank in person, but the answer you get might not be accurate. So never cash a check from a stranger if you can avoid it; and if you have to, never spend or refund even part of the money for at least a month, in case the check is fraudulent.

How to protect yourself from FRAUD

YOU may have heard the saying, “You can’t cheat an honest man.” Like many sayings, that one is untrue. Every day honest people are the victims of fraud; honesty alone doesn’t protect them.

Some of the cleverest minds in the world are devising and carrying out schemes to separate people from their money. More than a hundred years ago, one writer noted: “There are some frauds so well conducted, that it would be stupidity not to be deceived by them.”

Deception has a long history, dating back to the garden of Eden. (Genesis 3:1-5) Old schemes have many variations, and new schemes are being concocted all the time. So how can you defend yourself? You need not try to learn all the ways in which criminals defraud people. A few basic precautions will go a long way in protecting you from becoming a victim.

Safeguard Personal Information

If a person steals your checkbook or credit cards, he can buy things with them. If he steals your bank account information, he may be able to order and write checks in your name. If he obtains enough personal information, he may assume your identity. Once your identity has been stolen, a criminal can withdraw money from your bank accounts, charge things to your credit card accounts, and obtain loans in your name.* You may even find yourself arrested for a crime you did not commit!

To protect yourself from this type of fraud, be careful with all personal documents, including your bank statements and checkbooks, driver’s license, and Social Security card or national identity card. Refuse to provide personal or financial information to others unless there is a legitimate reason why they should have it. This is especially so for credit card numbers and bank account information. The only time you should give anyone your credit card number is when you want to buy something with it.

Swindlers known as dumpster divers root through garbage in search of such information. Instead of simply throwing out paperwork that contains personal data, you are wise to burn or shred it.

This includes used checks and bank and brokerage statements as well as old credit cards, driver’s licenses, and passports. It is also wise to destroy unsolicited credit card applications that you receive in the mail, since these contain information about you that someone else might misuse.

Use Common Sense

At the heart of many frauds is the promise of unrealistically high returns from investments. A common get-rich-quick scam is the pyramid scheme. Though there are many variations of this scam, the usual design is for investors to recruit other investors, for which the recruiters receive a commission.# Chain letters work in the same way by asking you to send money to people at the top of a list. The assurance is that you will receive thousands of dollars when your name reaches the top.

Pyramid schemes always collapse because it is impossible to keep on recruiting new members. Consider the math. If five people launch a pyramid and each one recruits five more, the number of new recruits becomes 25. If they, in turn, each recruit 5, that would mean 125 more. When recruitment reaches the ninth level, there will be close to two million people who would have to recruit more than nine million others!

Promoters of pyramid schemes well know that there is a saturation point. When they suspect that point is near, they take the money and run. You will probably lose your money, and those whom you have recruited will now be trying to recover their lost money from you. Remember, for you to make money in a pyramid scheme, someone else has to lose money.

Do Business Only With Reputable People

Do you believe that you can sense dishonesty in people? Be careful!

Swindlers are called con, or confidence, artists because they know how to win the confidence of others. They are skilled at making their victims trust them. Sellers, both honest and dishonest, know that before you can sell a product, you have to sell yourself. Of course, this does not mean that you should mistrust everyone, but a healthy degree of suspicion is important in defending yourself from fraud. Rather than try to discern a person’s integrity by trusting your instincts, watch for two telltale signs that characterize many frauds:

First, does an offer appear too good to be true, and second, is the seller trying to rush you into making a decision?

Too-good-to-be-true offers abound on the Internet. Though the Internet offers much of value, it also enables criminals to defraud victims quickly and anonymously. Do you have an E-mail account? If so, you may find yourself on the receiving end of spam—unsolicited commercial E-mail. Though spam offers an endless array of goods and services, many of these are fraudulent. If you respond to an unsolicited E-mail by sending money for some product or service, you will probably receive nothing in return. If you do receive something, it will almost certainly not be worth the money you have invested in it. The best advice is, Never buy anything from a spammer.

"If an offer appears too good to be true, it usually is"

This applies equally to those who phone to sell you something. Although many telephone sales calls are made by legitimate businesses, telemarketing scams cheat people out of billions of dollars every year. There is no way to know whether a sales pitch is legitimate if you simply talk with someone who calls you on the phone. A swindler may even pose as a representative of a bank or a credit card protection agency. You have good reason to be suspicious if someone calls you claiming to be from a bank or a company with whom you have an account and asks for information that they should already have. If that happens, you might ask for the person’s phone number. Then call back after verifying that the number really is that of the bank or agency.

A good policy is not to give your credit card number or any other personal information to a stranger who calls you. If someone calls to sell you something that you do not want, you can politely say, “Sorry, I do not do business over the phone with people I do not know.” Then hang up. There is no reason for you to engage in an unwanted conversation with a stranger who may be trying to defraud you.

Deal only with reputable businesses and people. There are many legitimate companies with whom you can safely do business over the phone or on the Internet. If possible, check out the salesperson, the company, and the investment through some independent agency. Ask for information about the investment, and read it carefully to make sure that it is legitimate. Do not be rushed or pressured into making a quick decision.

Advice for Victims of Fraud

Fraud victims typically feel overwhelmed by shame, guilt, embarrassment, and self-directed anger.

Don’t blame yourself. You are the victim; the blame rests on the person who conned you. If you have made a mistake, admit that to yourself, and then move on with your life. Do not conclude that you are stupid. Remember that swindlers successfully defraud highly intelligent people—heads of State, bank managers, executives, finance managers, attorneys, and others.

Fraud victims are robbed not only of money or possessions but also of self-confidence and self-esteem. When defrauded by a “friend,” there is a betrayal of trust. It hurts to be swindled. Allow yourself time to grieve. It is often helpful to talk about the matter with someone you can confide in. Prayer too can bring much comfort. (Philippians 4:6-8) Recognize, though, that at some point you need to put the matter behind you. Why prolong the misery? Set positive goals, and work to achieve them.

Be wary of recovery scams. Swindlers will call a person who has been defrauded to offer help in recovering lost money. Their aim is to defraud the person again.

Put It in Writing

Not all fraud starts out as fraud. An honest business can go sour. When that happens, those running it may panic and resort to fraudulent measures to recover their losses. Doubtless you have heard stories of business executives who lied about revenue and profits and then when the business collapsed ran away with what was left of the money.

To protect yourself from both fraud and misunderstandings, you should get the details in writing before making any major investment. Any contract that you sign should document all the terms of the investment and the promises made. Recognize, too, that no matter how sound an investment may appear, no one can guarantee that things will go as planned. (Ecclesiastes 9:11) After all, there is really no such thing as a risk-free investment. Thus, an agreement should specify in writing what the duties and responsibilities of each person will be should the business fail.

By being aware of and applying the basic principles we have briefly considered, you make yourself less vulnerable to being a victim of fraud.

An ancient Bible proverb provides valuable advice. It states: “Anyone inexperienced puts faith in every word, but the shrewd one considers his steps.” (Proverbs 14:15) A swindler chooses easy targets, those inclined to believe his every word. Sadly, there are many people who take no precautions against fraud.

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