The term " Internet fraud " generally refers to any type of fraud scheme that uses one or more online services to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions, or to transmit the proceeds of fraud to financial institutions or to others connected with the scheme. Internet fraud can take place on computer programs such as chat rooms, e-mail, message boards, or Web sites.
Purchase scams
Direct solicitations
The most straightforward type of purchase scam is a buyer in another country approaching many merchants through spamming them and directly asking them if they can ship to them using credit cards to pay.
An example of such email is as follows:
From: XXXXXX XXXXXX Sent: Saturday, October 1, 2005 11:35 AM Subject: International order enquiry
Goodday Sales, This is XXXXXX XXXXXXX and I will like to place an order for some products in your store, But before I proceed with listing my requirements, I will like to know if you accept credit card and can ship internationally to Lagos, Nigeria. Could you get back to me with your website so as to forward you the list of my requirements as soon as possible. Regards, XXXXXX XXXXXX, XXXXXXXX Inc. 9999 XXXXX street, Mushin, Lagos 23401, Nigeria Telephone: 234-1-99999999, Fax: 234-1-9999999, Email: XXXXXXXXX@hotmail.com
Most likely, a few weeks or months after the merchant ships and charges the Nigerian credit card, he/she will be hit with a chargeback from the credit card processor and lose all the money.
Counterfeit Postal Money Orders
According to the FBI and postal inspectors, there has been a significant surge in the use of Counterfeit Postal Money Orders since October 2004. More than 3,700 counterfeit postal money orders (CPMOs) were intercepted by authorities from October to December 2004, and according to the USPS, the "quality" of the counterfeits is so good that ordinary consumers can easily be fooled.
On March 9, 2005, the FDIC issued an alert stating that it had learned that counterfeit U.S. Postal Money Orders had been presented for payment at financial institutions.
On April 26, 2005, Tom Zeller Jr. wrote an article in The New York Times regarding a surge in the quantity and quality of the forging of U.S. Postal Money Orders, and its use to commit online fraud. The article shows a picture of a man that had been corresponding with a woman in Nigeria through a dating site, and received several fake postal money orders after the woman asked him to buy a computer and mail it to her.
Who has received Counterfeit Postal Money Orders (CPMOs):
- Small Internet retailers.
- Classified advertisers.
- Individuals that have been contacted through email or chat rooms by fraudsters posing as prospective social interests or business partners, and convinced to help the fraudsters unknowingly.
The penalty for making or using counterfeit postal money orders is up to ten years in jail and a US$25,000 fine.
Online automotive fraud
There are two basic schemes in online automotive fraud:
- A fraudster posts a vehicle for sale on an online site, generally for luxury or sports cars advertised for thousands less than market value. The details of the vehicle, including photos and description, are typically lifted from sites such as ebay motors or Autoscout24 and re-posted elsewhere. An interested buyer, hopeful for a bargain, emails the seller, who responds saying the car is still available but is located overseas. He then instructs the buyer to send a deposit via wire transfer to initiate the "shipping" process. The unwitting buyer wires the funds, and does not discover until days or weeks later that they were scammed.
- A fraudster feigns interest in an actual vehicle for sale on the Internet. The "buyer" explains that a client of his is interested in the car, but due to an earlier sale that fell through has a certified check for thousands more than the asking price and requests the seller to send the balance via wire transfer. If the seller agrees to the transaction, the buyer sends the certified check via express courier (typically from Nigeria). The seller takes the check to their bank, which makes the funds available immediately. Thinking the bank has cleared the check, the seller follows through on the transaction by wiring the balance to the buyer. Days later, the check bounces and the seller realizes they have been scammed. But the money has long since been picked up and is not recoverable.
In another type of fraud, a fraudster contacts the seller of an automobile, asking for the vehicle identification number (VIN), putatively to check the accident record of the vehicle. However, the supposed buyer actually uses the VIN to make fake papers for a stolen car that is then sold.
COUNTERFEIT CASHIERS CHEQUE SCAM: This recent scam has been reported in Atlanta and Minneapolis. Real estate property owners placing advertisements on Craigslist or rent.com receive an e-mail response from a "24 year old in the U.K. on a research program in the United States". Addresses include john.yearwood__@yahoo.co.uk and kevin_taylor@excite.com.
The first inquiry seems legitimate. The second usually comes with request for more information, and a bogus attachment from JAPAN TOBACCO INC (who has posted information about this scam on its site) indicated the "student" has won a part time scholarship from the JT UK office. The scam comes with the third e-mail, a request for name and address so that the counterfeit cashiers cheque can be sent. The amount supposedly includes the rent and fees plus an overage for the "student's" travel.
The owner is instructed to cash the cheque and wire the difference back to the student so that they can travel to the U.S. The photos often include a young man in graduation uniform from his college. (Note: U.K. colleges are the equivalent to high schools, not universities. One photo includes a rather dumpy, depressed looking girlfriend who must be aware of the scam.) Because of the lag between the cashing and clearing of the cheque, the owner does not realize he/she has been had until their account is debited the counterfeit cost and the wired sum. Greedy owners may even decide to keep some of the cheque, only to be had themselves later. It is best not to respond to this type of e-mail and requiring background checks before cashing first rent payments.
Cash the check system
In some cases, fraudsters approach merchants and ask for large orders: $50,000 to $200,000, and agree to pay via wire transfer in advance. After brief negotiation, the buyers gives an excuse about the impossibility of sending a bank wire transfer. The buyer then offers to send a check, stating that the merchant can wait for the check to clear before shipping any goods. The check received, however, is a counterfeit of a check from a medium to large U.S. company. If asked, the buyer will claim that the check is money owed from the large company. The merchant deposits the check and it clears, so the goods are sent. Only later, when the larger company notices the check, will the merchant's account be debited.
In some cases, the fraudsters agree to the wire but ask the merchant for their bank's address. The fraudsters send the counterfeited check directly to the merchant's bank with a note asking to deposit it to the merchant's account. Unsuspecting bank officers deposit the check, and then the fraudster contacts the merchant stating that they made a direct deposit into the merchant's account.
In other cases, fraudsters approach merchants for smaller orders: $2000 to $10,000 offering to pay with a check. They send the check and the instructions state that the merchant has to deposit the check, wait for it a couple days to clear and send the "excess" funds vira Western Union money transfer to an account in another country. The fraudsters send fake checks but drawn on the real accounts of large U.S. companies, which will probably clear immediately.
Re-shippers
Re-shipping scams trick individuals or small businesses into shipping goods to countries with weak legal systems. The goods are generally paid for with stolen or fake credit cards.
Nigerian version
In the Nigerian version, the fraudsters have armies of people actively recruiting single women from western countries through chat and matchmaking sites. At some point, the criminal promises to marry the lady and come to their home country in the near future. Using some excuse the criminal asks permission of his "future wife" to ship some goods he is going to buy before he comes. As soon as the woman accepts the fraudster uses several credit cards to buy at different Internet sites simultaneously. In many cases the correct billing address of the cardholder is used, but the shipping address is the home of the unsuspecting "future wife". Around the time when the packages arrive, the criminal invents an excuse for not coming and tells his "bride" that he urgently needs to pick up most or all the packages. Since the woman has not spent any money, she sees nothing wrong and agrees. Soon after, she receives a package delivery company package with pre-printed labels that she has agreed to apply to the boxes that she already has at home. The next day, all boxes are picked up by the package delivery company and shipped to the criminal's real address (in Nigeria or elsewhere). After that day the unsuspecting victim stops receiving communications from the "future husband"
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