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Lawyer Sues Citibank For Not Stopping Him From Losing Money In Nigerian Scam

from the blame-goes-around dept

A lawyer in Houston is suing Citibank after he got scammed in a variation on the classic Nigerian email scam. There are a few interesting tidbits here that are worth discussing. First, the details: the lawyer, who does collections work, was contacted via email by a company that claimed to be a Japanese company that was trying to collect money from four clients in the US -- offering a contingency fee to the lawyer for help in getting the customers to pay up. Soon after that, the "Japanese company" claimed that one client had agreed to pay some of what it owed -- and it sent the law firm a check for $367,500. Citibank said the check cleared, and the law firm wired $182,500 to the company. Of course, it later turned out that the check was fraudulent, and the law firm was out the $182,500.

This is a variation on a popular version of the Nigerian email scam. The way it usually works is that the scammer buys something that's for sale... and then sends a check that's for significantly more than the purchase price using some sort of excuse. Once the check "clears," the seller is asked to wire back the excess money. This version is interesting in that it's slightly more sophisticated -- carefully going after law firms that do collections. Rather than being a totally "out of the blue" situation, they worked hard to make it seem like business as usual until the scam is done. Sneaky.

While it's easy to mock the lawyer for getting tricked, the basic version of the scam and this more sophisticated version both rely on a very unclear part concerning check processing. Most people assume that once a check "clears" it's confirmed as valid. That's not true. Banks clear the check before it's actually validated, and the scammers exploit both the time between these two events and the fact that most people assume (or are told) that once a check clears, the money is definitely theirs. There are a few ways to solve this that banks could take. They could not clear the check until it's absolutely declared valid. Or, they could make it much clearer that, while the money is available, the check has not been validated and the money could be pulled. Since most banks do neither, the guy's lawsuit against Citibank is at least somewhat understandable -- though, it's unlikely a court will agree with him.

Filed Under: 419, advance fee, law firm, nigeria, scams
Companies: citibank


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  1. identicon
    Anonymous Coward, 29 Jan 2009 @ 11:22am

    Re: What?

    If you were running a business and somebody owed you money, who would be the scumbag? You for trying to collect or the customer for running out on your tab? I highly recommend you work retail as a living for at least a year and get some real world experience under your belt. If you stop paying on your credit card and try to skimp out on what you owe, I would say you are the scumbag, not the agency for trying to collect. I'm glad the IRS is now imposing a $500 limit to the write offs on collection agencies. If they write off more than that, it's claimed as income on your return. Knock yourself out. Write of $60,000 of $80,000 and let's see that $60,000 boost on your income return, because you earned that money.

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