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
    CL, 15 May 2009 @ 3:21am

    Fraud

    You are all forgetting something basic. Even if the other persons bank has sent the money to my bank, the writing party has 60 days after recieving the bank statement to say wait I never wrote that check. If the check is proven not to be legit then the money must be refunded. It is not uncommon for large businesses or just some rich people to have lots of money in an account. Depending on how many people are involved with the account it can also take time for something like this to be caught. How would you feel if some duplicated your check (very easy to do-store clerk (travel agent) copies information places order with mail order company for checks)wrote a check knowing you are on vacation for a month. You come back open your statement and $XXX.XX is gone and the bank said to bad we cleared your check. Forgery is always fraud and parties who were defrauded get made whole. This lawyer has no case and missed his banking law class.

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