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Advance fee fraud is a confidence trick in which the target is persuaded to advance relatively small sums of money in the hope of realizing a much larger gain. The most visible form is the Nigerian Letter or 419 fraud, named after the section of the Nigerian criminal code that it violates. Originally sent by mail, and later by fax, the Nigerian Letter is now sent almost exclusively by e-mail. A typical letter claims to come from a person needing to transfer large sums of money out of the country. As the Nigerian letter variation of the fraud has become well known, the gangs operating the scams have developed variations. The target is often told that they are the beneficiary of an inheritance or invited to impersonate a beneficiary of an unclaimed estate. In an old variation of the fraud known as "The Spanish Prisoner" the target is told that a wealthy individual is being held hostage and will reward those who help transfer of the ransom money. Another common gambit is a fake lottery in which the target is told that they have 'won' a large prize but must pay an administrative fee before they receive it. In one development of the scheme, the perpetrators use a counterfeit cashier's check to buy an expensive item such as a car or boat from people advertising goods in online classifieds. The target is given a fake check for an amount greater than the value of the item, and asked to return the difference. The most recent scheme is to ask individuals to deposit a check into their account then to forward a percentage (80%-90%) to a company that supposedly is owed the amount. Of course the check is counterfeit and by the time the depositor's bank finds that out, the funds have been transferred. This scheme appears to be perpetrated by Nigerians living outside their country. 419 Fraud These scams have come to be associated by the western media with Nigeria due to the massive proliferation of such confidence tricks from that country since the early 1990s, as well as the reputation of the country for corruption. However, these scams typically are carried out in other countries that have either experienced economic turmoil, corruption and dictatorship such as Togo, Congo, the Ivory Coast, Liberia, and Sierra Leone or countries that have a large population of well-educated but unemployed university graduates such as Ghana and Benin or increasingly from cities with large West African immigrant populations, notably London, Amsterdam, Johannesburg and Madrid, and lately also Dubai (United Arab Emirates) and Canadian cities. Originally the schemers contacted mainly heads of companies and church officials. However, the use of e-mail spam and instant messaging for the initial contacts has led to many private citizens also being targeted, as the cost to the scammers to make contact is much lower. Another recent variation involves the use of fake cashier's checks to pay for high-value items in Internet auctions. The scammer sends a check for more than the purchase price asking that part of the money be forwarded to a 'shipper' or 'freight forwarder' after the funds have cleared. This will usually happen quickly as banking practice assumes that banks are liquid at all times and that there is no credit risk. The vendor will only discover that the check was fraudulent and the transaction has been voided a few days later, by which time the intermediary will in most cases have been paid. Warnings issued by United States government The United States Federal Trade Commission has issued a consumer alert about the Nigerian scam. It says: "If you receive an offer via email from someone claiming to need your help getting money out of Nigeria — or any other country, for that matter — forward it to the FTC at spam@uce.gov." The United States Department of the Treasury maintains an account for the public to send 419 related documents: "You may also email the 419er documents, especially any banking data they may have given you, marked as described above, to Task Force Main in DC 419.fcd@usss.treas.gov; that is also acceptable." History The 419 scam originated in the early 1990s as the oil-based economy of Nigeria went downhill. Several unemployed university students first used this scam as a means of manipulating business visitors interested in shady deals in the Nigerian oil sector before targeting greedy businessmen in the west, and later the wider population. Early variants were often sent via letter, fax, or even Telex. The spread of email and easy access to email-harvesting software made the cost of sending scam letters through the internet extremely cheap. While various figures have wildly claimed that the 419 scam employs as many as 250,000 people in Nigeria, in reality it has often been linked to small organized gangs often working in concert in western cities and in Nigeria. In recent years, the 419 scam has spurred imitations in various trouble spots in Africa and Eastern Europe. In fact the advance fee fraud is a much older scam than that, dating back to 1588 where letters were written claiming to be from a prisoner trapped in a Spanish castle. The fictitous prisoner would promise to share a treasure with a person who would send them money to bribe their guards. Implementation The 'investors' are contacted, typically with an offer of the type "A rich person from the needy country needs to discreetly move money abroad, would it be possible to use your account?". The sums involved are usually in the millions of dollars, and the investor is promised a large share, often forty percent. The proposed deal is often presented as a "harmless" white-collar crime, in order to dissuade participants from later contacting the authorities. Similarly, the money is often said to be the embezzled funds of a recently deposed or killed dictator. The operation is professionally organized in Nigeria, with offices, working fax numbers, and often contacts at government offices. The investor who attempts to research the background of the offer will often find that all pieces fit perfectly together. If they then agree to the deal, the other side will first send several documents bearing official government stamps, seals etc., and then introduce delays, such as "in order to transmit the money, we need to bribe a bank official. Could you help us with a loan?" or "In order for you to be allowed to be a party to the transaction, you need to have holdings at a Nigerian bank of $100,000 or more" or similar. More delays and more additional costs are added, always keeping the promise of an imminent large transfer alive. Sometimes psychological pressure is added by claiming that the Nigerian side, in order to pay certain fees, had to sell all belongings and borrow money on their house. In any case, the promised money transfer never happens. The money or gold does not exist. Such spam is often sent from Internet cafes equipped with satellite Internet. Recipient addresses and email content are copied and pasted into a webmail interface using a standalone storage medium, such as a memory card. Some London-based gangs have been known to use spamware on laptops which they surreptitiously connect to the cafe's network, but even this software is notably out-of-date. While this method is significantly more labour-intensive per mail sent than others, it offers near-total anonymity and allows them to very quickly and easily relocate. The often very professional layout of web pages and so on used in the scams suggests that they do not lack technical sophistication. Suspicious signs in emails As well as the email subject or contents, there are often some clear signs that 419 scam emails contain which should alert a recipient to be suspicious: Invitation to visit the country Sometimes, victims are invited to a country to meet real or fake government officials. Some victims who so travel are instead held for ransom. In some rumoured cases they are smuggled into the country without a visa and then threatened into giving up more money, as the penalties for being in a foreign country without a visa are severe. In the most extreme cases the victim has even been murdered.• Credit card use through IP Relay In another variation of the scam, the scammer places calls through IP Relay, a US federally funded internet telerelay service for deaf/hard of hearing/speech-disabled individuals. The scammer calls various businesses, attempting to purchase items with stolen or fraudulent credit cards. Oftentimes, individuals are targeted as well, most of whom have advertised a product or service online. Typically, in an IP-Relay scam call, the scammer will place several calls using a Relay Operator. Calling to businesses or private parties, the scammer will inquire about merchandise/services offered, and then immediately and with few questions asked, attempt to purchase the merchandise. The scammer (who refer to eachother as "guyman") then proceeds to ask the potential victim (known in Nigeria as a "Mugu"; a Lagos pidgin word for "fool") for an e-mail address, by which he can contact the victim to proceed with the closing of the fraudulent transaction. The scammer proceeds to send the victim a counterfeit cheque or money order, with instructions requiring that it be cashed, and that excess funds be sent back to the scammer (advance fee fraud). When it is determined by the authorities that the money order is counterfeit, the victim is usually arrested and charged with various offenses relating to Credit-card fraud is not the only kind of fraud reported through IP Relay. A relay scammer typically will use IP Relay for all fraudulent-related transactions/telephone calls within the United States. Often a scammer will browse through online classified ads (such as craigslist.org) and will use the IP Relay service to contact sellers to make inquiries about the item listed in the ad. Most commonly the scammers target persons whose ads advertise live animals (i.e. puppies), automobiles, high-dollar electronic devices, etc. In this scenario, the scammer sends the seller a cheque for the advertised item with an overpayment- The victim is given instructions to cash the cheque or moneyorder and to wire the remaining balance via Western Union or Moneygram. The victim is at a loss in this situation when the authorities discover the cheque/money order is not legitimate. Because of current FCC regulations and confidentiality laws, operators are required to relay every call verbatim and must adhere to a strict code of confidentiality and ethics. Thus no relay operator is permitted to make judgements about the legality and/or legitimacy of any relay call and must relay the call without interference. As such, the relay operator cannot warn victims even when they suspect that the call is a scam; Some sources claim that up to half of all IP relay calls are scams. Romance angle A recent variant is the romance scam which is a money-for-romance angle. The male or female "victim" is approached on an Online dating service and becomes interested in a "lady" or "man" who has attractive pictures posted, generally stolen from online portfolios of modeling agencies. The offending party claims to be interested in coming to visit the victim, but needs some cash up front in order to book the plane, hotel room, and other expenses. In other cases he or she may have just travelled to Nigeria (for tourism or business) and has been arrested by corrupt officials, or become ill from eating the local food, and needs an emergency wire transfer to bail or bribe his/her way out. As with other variants, money always seems to travel to Africa mainly via Western Union, and the "lady" or "man" always seems to come up with additional reasons for requesting more funds. This version of the scam is, at its core, identical to the classic Spanish Prisoner con, which dates back to the Renaissance. This type of scam also frequently originates in Russia or Ukraine as well as Nigeria. Auction overpayment, fake check
Fake escrow Another method is after winning a bid on items on the online auction site eBay (especially laptops or other consumer electronics), to suggest to use an escrow service. The escrow service is fake and part of the scam. The victim will send the laptop or camera to the escrow service, never to hear from the scammer or escrow service again. The website of the escrow service will typically go offline after the victim has sent his goods. Some scammers send e-mails masquerading as official e-mails from PayPal to convince the victim that the escrow method is perfectly normal procedure; some of the e-mails contain spelling errors. A variation of this scam is to adopt a more personal approach. The “buyer” bids for and wins the item on sale, only to then claim that it is actually to be a gift for a relative in Nigeria and asks for it to be sent direct there, even if the seller has specified that they will ship only within their own country. In order to facilitate the scam, the fake buyer will often create a brand new legitimate eBay user account complete with an fake address that is apparently in the seller’s home country, but which will not pass any kind of real inspection as they will often get the spelling, geography or postal code formats wrong. As with escrow scams, the eBay ID will disappear as soon as the victim has sent the goods, and the scammers tend to target inexperienced first time, private sellers • Western Union scam This scam involves eBay and the appeal of high priced goods, usually electronics, for a bargain price. A seller will advertize an item, (camera, laptop, plasma tv) at low cost. The body of the ad instructs buyers to contact the seller directly outside of eBay at a yahoo or hotmail type account. When contact is made, the seller gives a long story about his problems receiving payment by Paypal - eBay's payment arm. The seller insists that the buyer send money by Western Union. The allure is that the product is a huge bargain; (eg. $2000 item for $700) Of course, if money is sent, it is gone forever and no product is ever delivered. The phoney seller usually has a list of prepared e-mails to respond quickly to questions from buyers; he'll go on about how his integrity is important, how he wouldn't risk his family's name, he's legit, check 'his' feedback etc. The phoney seller makes the listing look credible by using a real eBay id to list the item. The real id has been stolen from a legitimate seller with good feedback, usually by means of e-mail phishing. Ebay has a warning on its help site about this increasingly popular scam. Lottery scam Lottery scam involves fake notices of lottery wins. The winner will usually be asked to send sensitive information to a free email account. This is a form of advance fee fraud as money in advance is often required and is also similar to phishing. A variant of the scam will appear to be sent by a lawyer representing the estate of some long-lost relative the victim never knows he or she had (the victim's surname will be inserted into the e-mail message) who perished along with his or her family in a car or airplane accident last April. The scammer will claim to have gone to a lot of trouble to find the victim in order to give him or her a share of the millions of dollars available if the victim will forward his or her bank account information to the scammer. Much like the Auction overpayment fraud detailed above, a new variant of the lottery scam involves fake or stolen checks being sent to the 'winner' of the lottery (these checks representing a part payment of the winnings). The winner will then be more likely to assume that the win is legitimate and subsequently more likely to send the advance fee. The check, and associated funds, will then be flagged by the bank when the fraud is discovered and recovered from the depositers account. Classified advertisement scams In a classified advertisement scam, scammers respond to an advertisement for anything that is being advertised at a reasonably high price (for example a car, a computer or a snowboard). There are various variants of this scam; typically, scammers, after an initial phase of feigned interest, agree to buy the item and offer to pay for it with a cheque with a much higher value than the agreed price, using various excuses. The scammer will ask to have most of the difference paid back in cash at time of collection, supposedly leaving the rest to the victim as a reward for their flexibility and inconvenience. The collection will be arranged soon after the money will be made available in the victim's bank account. The victim will not realise that having the funds available is different from having the cheque cleared, and therefore will happily agree to the terms. The cheque clearing process can take weeks, after which the bank will claim the whole sum back because the cheque is fake. This is also used over the IP Relay. There is a case where the scammer requests a Driver's License or International Passport be faxed over as he represents a close friend of his who is dying. Escort scams In this variant of a classified advertisement scam, a scammer answers an online escort advertisement, typically posing as a wealthy businessman traveling from Nigeria or London to the escort's city of residence. The scammer contacts an escort claiming to be interested in a long-term companionship arrangement of days or even weeks in length, the total time involved totalling to a substantial sum of money. The scammer offers to pay in advance by cheque in excess of the net payment and asks for remittance of the balance. This version is especially popular as escorts in many cases cannot safely contact legal authorities for any reason and are unlikely to report successful or attempted fraud. A variant of the escort scam involves translators and interpreters who are asked to escort a businessman or his family for a few days. Black money scam Black money scam or wash wash: A "money cleaning" scam involving a huge amount of black papers (purportedly $100 USD bank notes covered by a black film to sneak them past the custom officers) that is shown to the victim, who is then requested to pay for “expensive chemicals” to cleanse the bills. Rental scam In this variant the scammer will answer a classified advertisement where the victim is looking to rent accommodation. The scammer will then offer a high-standard place for a low cost, even showing pictures of the said rooms. The victim is required to pay a deposit, but once the scammer has received the deposit he will disappear leaving the victim out of pocket. Monetary loss estimates Estimates of the total losses due to the scam vary widely. The Snopes website lists the following estimate: "The Nigerian scam is hugely successful. According to a 1997 newspaper article: "We have confirmed losses just in the United States of over $100 million in the last 15 months," said Special Agent James Caldwell, of the Secret Service financial crimes division. "And that's just the ones we know of. We figure a lot of people don't report them." • Although the "success rate" of the scam is hard to gauge, some experienced 419 scammers get one or two interested replies for every thousand messages. An experienced scammer can expect to make several thousand dollars per month. Ultrascan Advanced Global Investigations, a Netherlands-based firm which has been studying 419 matters since the mid-1990s, has prepared a table quantifying 419 operations by country for 2005. These stats are based on Ultrascan's in-house investigations and include, by nation: number of 419 rings; number of 419ers; income of the 419ers (the amount of losses by victims to the 419ers); and additional data. 419 Coalition view is that these stats present a reasonably conservative and realistic look at the extent and magnitude of 419 criminal operations worldwide. Since 1995, the United States Secret Service has been (somewhat) involved in combating these schemes, but they will not investigate unless the monetary loss is in excess of fifty thousand US Dollars. Very few arrests and prosecutions have been made due to the international aspect of this crime. Physical harm or death Arrests In 2004, fifty-two suspects were arrested in Amsterdam after an extensive raid. An Internet service provider had noticed the increased email traffic. None were jailed or fined, due to lack of evidence. They were released in the week of July 12, 2004. An entirely phony "Nigerian embassy" was also discovered in Amsterdam; another allegedly exists in Bangkok. Reduced Nigerian Internet access Legitimate Nigerian businesses find that their e-mails increasingly fail to reach their targets, due to people and companies setting their e-mail clients to automatically mark all mail containing the words 'Nigeria' and 'Nigerian' or coming from Nigerian IP addresses as spam, or even delete it out of hand. Proposed legislation As a result of the fraud, Nigeria is drafting legislation to make spamming a criminal offence punishable with a fine up to £2,000GBP and three years in jail. • Examples Here is one example of a Nigerian Scam: Dear, Here is another example of a Nigerian Scam:
Terms used by 419-scammers Akwukwo *, chekere, pepper: Fake check. Bill: The amount a scammer plans to extract from his victim. Ego, lalas, show: Money Fall mugu (to): To be fooled, to become victim of advance fee fraud. Flash of account: Cause the victim's bank account to temporarily show a large credit. This is intended to induce the victim to believe in the deal and send money. The credit gets reversed by the bank when it is discovered that the original check or electronic transfer was fraudulent. Format: The scheme or script of an advance fee fraud, e.g., the late dictator format (the scammer pretends to be a relative of a dictator, e.g. Miriam Abacha, "Wife" of Sani Abacha), the next of kin format, the lottery format. Guyman, guy: Scammer engaged in advance fee fraud. Maga, mugu, mugun, mahi, mahee, mayi, mayee: Victim of advance fee fraud. Oga: Boss Owner of the job, Catcher: Scammer who makes the first contact with a victim and then passes him on to another scammer who finishes the job. The latter shares the spoil with the former. Yahoo millionaires *, yahoo boys *: Scammers Scam baiting Scam baiting is the practice of pretending interest in a fraudulent scheme in order to manipulate a scammer. The purpose of scam baiting might be to waste the scammers' time, embarrass them, cause them to reveal information which can be passed on to legal authorities in the hope that they will be prosecuted, get them to spend money, or simply to amuse the baiter. See also Databases | |||||||||
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