Craigslist Overpay Scam: How to smell an online wolf!

 

By Glenn Fleishman
Special to The Seattle Times

CONSUMER ALERT!

Education is best way to fight scams

You didn't pick up the National Inquirer by accident: Nigerian scammers tried to con my father!

The incident involved memorial plots that my father's late parents never used. There's a happy ending, even though a cemetery is involved.

My grandparents were cremated, not buried, and their plots were part of their estate.

My father listed them for sale in mid-2005 on a Web site that specializes in those arrangements. Having received no offers, he let the listing lapse.


Then, this July, he received correspondence in broken English from someone who wanted to purchase the plots, perhaps to bury a relative. My dad went back and forth on the price, and although he thought it strange, it wasn't until a final e-mail that he recognized the scam.


The putative buyer wanted to pay $2,500 above the plot's value, and the check would come from a third party, "a client of my gran-ma who owes her ... before her demise."

The e-mail went on, "However, on the receipt of this cashier's check/Money Order, cash it at your bank, deduct yours and wire the balance via money gram/Western Union to the charity home/organization whose address will be forwarded to you later. This is my gran's opinion concerning the cash owed before her death. You know you have to respect the late."

These ne'er-do-wells were engaged in one of the newer and most popular con games, the check-overpay scam. Had my father been more credulous, he would have found that the "check/Money Order" that he'd received, deposited and had the funds released from was fraudulent. He would have wired the money off with no hope of recovery, and his bank would have stuck him with the missing $2,500.


How the scam works?

The general outlines of this scam rely on listing an item for sale in, say, classified ads, the Auto Trader, craigslist.org, or eBay. Generally, any listing that can be read over the Internet is vulnerable.

You are contacted by an interested party who wants you to accept payment in excess of the amount asked because they need to have some money transferred to them or another party.


Craig Newmark, founder of craigslist, described an example.


"You're selling a car for a thousand; they'll send you a cashier's check for $3,000, and then they ask you to wire back the remaining two."

They want you to act as the intermediary. In my dad's case, they claimed a third party owes them money and will be paying you directly.

In other cases, they say it's cheaper for you to handle a wire transfer because they're outside the U.S.

They might instead claim that because of shipping or other fees — typically with a car sale — that they will send you excess money to cover shipping, and they want you to send that money to a shipping firm they've contracted.

You receive a check that looks legitimate. You deposit the check, and, within one to five days, the funds are cleared and available in your account. You think you're in the clear, and wire the money to where the buyer has asked you to.

Variations on this scam might involve an unknown legal settlement or a claim that you won a foreign lottery you never entered. Fees are needed to collect your lottery winnings. (A red flag as big as not entering? "You cannot legally play a foreign lottery in the U.S.," said Kristen Alexander, a spokeswoman for the Washington state Attorney General's Office.)


A few days or even weeks later, you get a call from the bank.

- That check? Counterfeit.
- Those funds? Your responsibility.
- That wired money? Gone for good.


Why the scam works?

This overpay scam, and some related wire-transfer scams, work partly because of a float in the banking system. The scammers take advantage of the gap between the time banks are required by federal law to release funds to you and how quickly counterfeit or forged checks are discovered with the federal check-clearing system.


The amounts in these frauds — when reported — are often in the thousands. "Rarely do we see one above $10,000," said Wallace Shields of the Secret Service's Seattle field office.

John Snodgrass, security-risk manager for BECU, said that a bad check's round-trip journey through the Federal Reserve check-clearing system could take 10 days.

"Usually, you'll get it back within that time period, but you're not guaranteed that," he said.

Forged company checks with legitimate account numbers could take much longer than a counterfeit bank cashier's check, he noted, because the company may not discover the fraud immediately. He said months could pass, and the defrauded party could still get its funds back from you via the banking system.


"What the fraudsters are depending on is that you will go ahead and cash that check and send them the overpayment before you realize that check is not good," Shields said.

The overpay scam seems to have spread because it makes the victim feel trusted, given that the other party is giving them often substantial sums of money in trust over the price of the item or service being paid for.

The overpay scam's wire-transfer component makes the fraud seem more credible. A check is sent to cover the fees associated with collecting lottery winnings or other money, and you merely deposit that check and wire the funds to get the full sum, apparently never risking your own money.


Beat the scam

Experts and officials agree on a handful of rules that would prevent most frauds.

• Avoid overpayment. If anyone offers to pay you more than the value of what you're selling or a service you're offering, and have you send the difference to them or someone else — it's a scam. "We've never heard of a legitimate case," said Newmark of craigslist.

• Wire transfers. Along with overpayment, wire transfers are a red flag. "Never, ever, ever wire money to somebody you don't know," said Alexander, the attorney general office's spokeswoman. Money sent via Western Union or other services can be picked up with a code at any service location. Fraudsters will often claim the wire needs to go to a specific branch — making it seem like they would be easier to track down — but that's a dodge.


Sellers should never have a reason to transfer money. And buyers would be better off using a well-known escrow service — not one recommended by a seller — that holds the money for a fee until both parties agree the transaction is complete.

• Traveling to deliver money. The Secret Service's Shields warned that you should never travel outside the U.S. to deliver money as part of a sale; this is sometimes suggested as an alternative to wire transfers, typically when large sums are involved. At least one person has been killed overseas as a result of the so-called 419 scam, in which a victim is promised millions in exchange for handling tens of millions.

• Mismatched names on a check. Many scams involve payment via forged or stolen checks, even for the exact amount owed. Scammers explain another party owes them money and they're arranging that party to pay you. That explanation always masks fraud, experts say.


However, you may be told — legitimately — that a check is drawn from another account the buyer uses. This is still a red flag but easy to sort out. Find the phone number of the party on the check via an online phone book or directory assistance. (Don't use the number on the check; it could be fabricated, too.) Call the check writer and ask if he or she wrote the check. If not, report the buyer on an online service, and notify law enforcement.


You can also call the issuing bank and ask for that bank to call its customer to ensure the check is valid. BECU's Snodgrass said the credit union's security department could make the call on a member's behalf, too.

Foreign interest. While buyers outside the U.S. are not automatically suspect, if you've listed something for sale for shipment only within America and are asked to ship it elsewhere, exercise extreme caution.


Many of these scams do originate in Nigeria. A lack of enforcement shields scammers who operate with impunity. The tale of my grandparents' graves does not end with my father kneeling in a cemetery in the pouring rain shaking his fists at the sky. Rather, the scammers tipped their hand before the transaction was finished, and my parents' finances and the plots remain intact.

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* Funds availability (very important to know)

The minimum time requires an in-person deposit with a teller. A deposit via a branch ATM or affiliated network typically adds one business day. Banks may release funds sooner than these maximum limits.

- Cashier's checks: Generally, next business day.

- Other checks (local to Washington banking district): Second business day after deposit.

- Other checks (outside region): Fifth business day after deposit.

- Total daily deposit of more than $5,000: First $5,000 within schedule above; remainder by ninth business day after deposit.

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Check twice: Selling items online leads to scamming in ‘overpay and refund’ scheme

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Melrose - Looking to sell an old futon on eBay? Putting a collection of knick-knacks on Craigslist? Proceed with caution, as overseas defrauders are preying on those with a penchant for honesty.

In three separate incidents over the last two weeks, Melrose residents have been targets of an Internet scam where online sellers receive an offer for their item. After agreeing to the sale, the sellers then receive a check for far more than the agreed upon sale price — and an email from the buyer, supposedly realizing their overpayment error, requesting that the seller deposit the check and wire the surplus amount back.


The problem is only apparent after the seller does as the buyer requests, and then receives word that the original check is no good. The scam works because the Federal Deposit Insurance Corp. (FDIC) requires banks to make check funds available within five days, and thus the money is released before the issuing bank has honored the check.


In Melrose, a woman put a collection of state police patches from all 50 states on Craigslist to sell, according to Melrose Det. Sgt. Barry Campbell. She received and accepted an offer for $350, but received a cashier’s check for $3,650. The buyer sent her an email saying the check was a mistake made by his secretary and asked for the surplus to be sent back via Western Union.


Timothy McGibbon, a deputy sheriff with the Middlesex Sheriff’s office, investigated this and tow other incidents in Melrose. He said that as more people use the Internet and popular Web sites such as eBay and Craigslist to sell their items, more fraud is reported.


“We see a lot of these,” he said. “They’re called Nigerian Internet scams. They work out of Nigeria or the Africa area … by the time [the victim] figures out the money’s gone, they’ve already sent out the good money order.”


McGibbon works with the North Eastern Massachusetts Law Enforcement Council’s (NEMLEC) Computer Crime Unit, based out of the Medford Police Department. NEMLEC serves 44 municipalities in northeastern Mass., including Melrose.


The NEMLEC computer unit finds out the IP (Internet Protocol) address of the defrauder, which allows them to identify where the emails originated. If the messages came from outside the U.S., the unit refers the case to the FBI and the National White Collar Crime Center, who cross-reference the case with their own open cases to see if they are targeting the same area.


“[The culprits] also use email ‘anonymizers’ that strip the actual data in the email and put in bogus data,” making it hard to be completely sure of where the emails are coming from or even recovering the stolen money, McGibbon said.


“The likelihood of loss recovery is slim because it’s a scam that’s conducted throughout the world. For the court systems in Mass. to chase down $2,000 in other countries, I don’t think that’s really going to be viable, unfortunately.”


Sellers beware

In the case of the Melrose victim who sold her collection of state police patches, an investigation by the NEMLEC unit determined that the e-mail came from Nigeria, while the check came from a bank in Texas and the defrauder asked the money to be wired to London.

The same scam victimized another Melrose resident to the tune of $3,100. Advertising the rental of a summer home in Maine, the seller received a response from a man who said he was from London and his company was sending him on vacation.


They agreed upon a price, but the seller received an email before the payment even arrived, saying the check accidentally included funds from the company meant to cover all the “buyer’s” travel expenses. The defrauder asked for the surplus the money back while telling the seller to keep $100 for his troubles.


A Melrose patrolman was also a target of such a scam, but quickly caught on and did not wire the money.

Campbell said online sellers should note warnings on the Western Union Web site.

“If you go to the Western Union Web site, there’s all kinds of warnings about being scammed, saying don’t send any money to anybody you don’t know,” he said.

“The best suggestion to victims is to make sure funds are received in your account, and if someone sends you more money than they’re supposed to, it’s most likely a scam,” McGibbon said. “We receive several cases, quite often, and you can pretty much tell right off the bat. We get the same scenario over and over again. Some of them fortunately do catch on.”

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