Advance Fee Scams Are Based On Greed, So Their New Favorite Target? Lawyers!

from the first-thing,-we... dept

While the “classic” Nigerian 419 “advance fee” scam was based on telling someone they had been awarded/won millions of dollars, which is just held up by bureaucratic problems, a popular variation that’s been around for years is buying something online with a bogus check written for significantly more than the amount sold. This scam hit eBay users pretty hard for a while. Basically, it relies on a fundamental misunderstanding of how check processing works. As an example, a check for $10,000 is sent on an item that only costs $2,000, with the buyer asking the seller to send back a check for the difference along with the product. The seller deposits the check and a few days later the bank says that the check “cleared.” Banks have to clear the checks in a short period of time. Then the buyer sends off the product and the excess money… only to find out a few days (usually about a week or so) later, that the check is a forgery and the money is gone (along with the product and the legitimate “difference” check that was sent out).

The real issue here is that banks say the check “cleared” which people assume means that the check is legit. But it’s not. Fix this problem and this particular scam would disappear overnight.

Of course, most of these scams are based on playing on someone’s greed. To brush aside anyone’s concerns on these types of deals, sometimes the buyer will ask for only some of the difference back, making the seller think they actually got away with making more money.

But, if you’re going to base on a scam on greed, why prey just on small-fry eBay sellers? Why not go after the bigger dogs… like lawyers? You might assume that lawyers would be more sophisticated and not as quick to fall for this sort of thing, but at least with some (and, no, I’m not painting all lawyers with this brush), you’d be wrong. Earlier this year, we wrote about a lawyer who fell for exactly this trick… and then (of course) sued Citibank for letting him make this mistake — which cost his firm nearly $200,000. Not bad for a simple scam… and thus, it appears that more lawyers are being targeted with just such a scam, even to the point that local bar associations are warning lawyers to watch out for it.

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Comments on “Advance Fee Scams Are Based On Greed, So Their New Favorite Target? Lawyers!”

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scote (profile) says:

“The real issue here is that banks say the check “cleared” which people assume means that the check is legit. But it’s not. Fix this problem and this particular scam would disappear overnight. “

This can’t be emphasized enough. The only reason advanced fee check cashing scams work is because our banking system is broken, and there is no reason, no excuse now that the banks have succsesfully gotten the Check 21 Act passed, legislation that means that banks process checks electronically and not by sending physical paper checks to one another to reconcile.

Meanwhile, if a customer does try and check out a check with the bank ahead of time to make sure it is legit the banks may have the customer–the intended victim–arrested, as Bank of America did to Matthew Shinnick:

“San Francisco resident Matthew Shinnick tried to sell a pair of mountain bikes on Craigslist late last year. He attracted a buyer, received a check in the mail — and ended up handcuffed by police in a downtown Bank of America branch and jailed for almost 12 hours.”

Banks can fix this problem and should, but they don’t because it would mean changing the status quo and taking responsibility for their own actions. If you want to talk about how advanced fee scams exist because of greed, start with the people who have the power to stop the schemes in their tracks and refuse to do so: the banks.

interval says:

Re: You know what they say

“…some apparently have Law Degrees.”

My first inclination is to agree with you; lawyers and all, but I have to say, when a bank says a check is good, and me, not being privy to the wiles of the banking industry, would tend to believe the bank. This crap is really on the banks. There’s no reason to think that a lawyer would have any more inside knowledge on how banks operate than anyone else. That said, it refreshing to see rats feeding on other rats for a change.

nraddin (profile) says:

if the banks didn't lie....

Really this comes down to banks lying to there customers. They have taken this law that requires them to clear checks quickly and instead of following it they just redefined what ‘cleared’ means. It’s crap and they should be sued for it. You shouldn’t be allowed to re-define what are word means just to get around a law.

Personally I think that banks should have to eat the costs of ever check they call cleared that isn’t. They shouldn’t tell you it is if it isn’t. And don’t tell me that it’s a problem with technology, otherwise the Ukrops around the corner wouldn’t be able to clear the money from my checking (Using a physical check) while I was standing in line and then give me the voided check back before I leave the store.

Casey (profile) says:

Re: if the banks didn't lie....

The problem with telling a customer that a cheque has cleared at another bank is exactly that – the cheque is drawn on another bank. In Canada, there are privacy laws that prohibit banks from divulging too much information to third parties – there are numerous banks that refuse to tell other financial institutions whether funds suffice to clear a cheque or whether or not a cheque has cleared. That is why hold procedures are in place to give cheques plenty of time to clear – local cheques often clear overnight while foreign cheques may take up to 2 weeks to clear, sometimes longer – but again, that is why there are hold procedures. Had the bank in question followed its own hold procedures, this never would have happened.

anymouse (profile) says:

Sounds like time for a little 'gaming the system' as payback

So just report the bank CEO/Manager as being suspected of being in possession of child pornography and possible sexual misconduct in the workplace and let the police deal with it..

What? The charges weren’t validated after the police hauled him out of the bank in handcuffs, confiscated his personal and work computers, and conducted extensive interviews with all of his business associates.

Oops, must have been a mistake, good thing there are no repercussions for reporting a ‘suspected crime’. Too bad it may have ruined someone’s life, but at least we are following the rules, right?

On another note Reynolds Wrap brand foil makes the best tinfoil hats ever. Disclosure: I once received a free box of Reynolds Warp foil from the company, so my views may be a little biased.

Anonymous Coward says:

Re: Sounds like time for a little 'gaming the system' as payback

So just report the bank CEO/Manager as being suspected of being in possession of child pornography and possible sexual misconduct in the workplace and let the police deal with it..

It doesn’t work that way. The name of the game is “selective enforcement”.

max.elliott (profile) says:

It's kinda amazing

What’s happening here is that the banks are communicating with each other. The messages go like this;
Bank A:
“Hey I got a check #, routing #, and account. It’s for $1.99. That account have the money in it?”
Bank B:
“Yeah, it’s O.K. to send that check. The money is here.”

Then that night the accounting is done and funds are ‘transfered’. That’s called ‘clearing’ and it’s always held that meaning. All transactions happen like this. It’s a paradigm of trust that allows banking to work at all the way most people like it to. Without this trust electronic banking cannot happen, no debit cards, no credit cards, and checks would take days to clear with Check21 and weeks without it. The entire banking system would collapse and people would all go back to cash.

Now HERE’S where the scam comes in…. The account holder reviews the check record and reports the check as a fraud. The accounting is reversed and the money is transfered back. Check21 and electronic banking is a soft patch that allows this abuse of trust, this fraud, to get detected faster for the larger accounts-holders, reducing it’s impact by getting a fraud return processed in just a day. The scam isn’t in a clearing time error, but in the difference between clearing and detecting a fraud.

You want a real screaming nightmare, investigate how banks “generate wealth”. It’s two guys passing a dollar back and forth and every time they do, a dime falls unto the floor. Where does the dime come from? They IMAGINE it into being real.

Matt Henley (profile) says:


A while back, someone went through my trash and dug up enough data to create counterfeit checks. They then took them to every Dillards Store in and around Houston and purchased ~$200 per check.

I was very lucky in that I was watching the account due to a large check I had outstanding and immediately noticed the strange check #’s that showed up. In the subsequent weeks of dealing with the fraud department of BofA, I was flabbergasted in the archaic way that banks handle things.. I had to call the credit agencies (Experian and equifax come to mind) and argue with them, trying to tell the idiots that the account was closed and DO NOT TAKE MY CHECKS… (user link) says:



International Journal of Computer Applications

The best place to publish nonsensical papers!!!

Papers published by IJCA have no recognition in most Universities!!

Blacklisted by several universities in Europe, US and Asia!!

International Journal of Computer Applications


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