End of the year review

I would like to thank our friends at the National White Collar Crime Center (NW3C) for their post yesterday.

Education Remains the Best Defense Against Internet Fraud

2009 is turning out be a banner year for the Internet Crime Complaint Center (IC3). Experts predict the Center will end the year with close to 350,000 complaints. That’s a heck of a lot more than last year in which a record 275,284 complaints were received. 2010 will probably set another record.

While there is no doubt IC3 has become one of the most recognized vehicles for reporting online fraud today, the numbers have to date, only scratched the surface. Many experts believe the number of people who fall prey to credit card fraud, online auction fraud, phishing scams and the like, is actually far greater than the complaint numbers would indicate and cyber thieves aren’t letting up. If anything, they’re increasing their efforts to separate you and I from our money.

Consumers need to educate themselves to prepare for the coming decade and the wave of sophisticated scams that are sure to follow. There are a host of Web sites available that can help including:

http://www.lookstoogoodtobetrue.com

www.scamvictimsunited.com

http://www.scambusters.org

If you do fall victim to online fraud, contact your local police right away and file a complaint with IC3 at http://www.ic3.gov. It only takes a couple of minutes and the information can help law enforcement bring the perpetrators to justice.

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Scam fighting – 2010

As 2009 comes to a close and we enter into 2010 I wanted to share the New Year’s Resolution that we have at Scam Victims United . . . to bring scam education and awareness to people across the country.

One of the ways that we plan to do this is with events called Scam Jam. These events are the brainchild of Chuck Whitlock an investigative reporter, author and speaker. If you have ever been to a Home and Garden Show or Wedding Expo, imagine that same experience and setting focusing on scams and fraud. There are presentations, workshops and speakers on various topics such as

ID Theft
Internet Scams
Investment Fraud
Health Care Scams
Bank Fraud
Elder Fraud
Charity Scams
Mortgage Fraud
Phishing Scams
Credit Card and Check Schemes
Contractor Fraud
Food/Supplement Fraud
Mail Fraud

Presenters include local media personalities sharing their best investigative reporting stories that expose scams, law enforcement groups, lawyers and legal experts, and even former scam victims sharing their story of victimization to recovery. Beyond the workshops and presentations, people attending a Scam Jam can interact with Consumer Protection groups in the Exhibitors Room. These professionals can assist them with their scam and fraud related questions, and offer then resources to assist them recovery efforts. You may even be able to purchase one of Chuck Whitlock’s investigative books that exposes scams or books by other presenters.

Scam Jam is a one stop shop for education and resources on scams, fraud and consumer protection.

We are currently scheduling dates for Scam Jam events for 2010. If your school, business or company would like to host a Scam Jam at your facility, or if you are a professional in the area of scam fighting and consumer protection that would like to be a part of a Scam Jam in your area, please contact us.

Shawn Mosch
Co-Founder of ScamVictimsUnited.com
There is strength in numbers!

Find us on Twitter, Facebook and more through
http://www.retaggr.com/page/ShawnMosch

Support Scam Victims United by shopping at
http://shopittous.blogspot.com/

Nigerian man attempts bombing

This week I blogged about the Nigerian man who attempted to blow up an airplane on Christmas. http://scamvictimsunited.blogspot.com/2009/12/nigerian-national-charged-with.html

This event brings up something that I have not really talked about for 6 years, because I did not want people to think that I was trying to start some conspiracy theory . . . where is all of the money from these internet scams going, and could some of them be going to fund terrorism? I have read that Umar Farouk Abdulmutallab, the Nigerian man who attempted this bombing, is the son of a rich Nigerian banker, so he comes from a wealthy family and that is most likely how he had the money to fund his bombing attempt . . . but he also said that there were other like him, training to do the same thing that he did . . . how are those “others” getting the money to fund their training and the attempts that they may make? Every person that Umar knows that is training to learn to bomb the United States cannot be from a wealthy family . . . they have to be getting their funds from someplace. Isn’t it possible that the Internet Scam that we talk about on ScamVictimsUnited.com and this blog could be the resource for the money to fund these attacks? (We KNOW it is not going to pay for further education of the scammers on proper English, otherwise their emails would have gotten better by now.)

This is why I have felt for years that one of the ways that we could fight terrorism is to change the way we handle counterfeit cashier’s checks. If we make it harder for them to get the money to fund these attacks, then we will decrease the number of them that they can fund and go forward with.

Shawn Mosch
Co-Founder of ScamVictimsUnited.com
There is strength in numbers!

Find us on Twitter, Facebook and more through
http://www.retaggr.com/page/ShawnMosch

Support Scam Victims United by shopping at
http://shopittous.blogspot.com/

Nigerian National Charged with Attempting to Destroy Northwest Airlines Aircraft

http://detroit.fbi.gov/dojpressrel/pressrel09/de122609.htm

WASHINGTON—A 23-year-old Nigerian man was charged in a federal criminal complaint today with attempting to destroy a Northwest Airlines aircraft on its final approach to Detroit Metropolitan Airport on Christmas Day and with placing a destructive device on the aircraft.

According to an affidavit filed in support of the criminal complaint, Umar Farouk Abdulmutallab, 23, a Nigerian national, boarded Northwest Flight 253 in Amsterdam, Netherlands on December 24, 2009 and had a device attached to his body. As the flight was approaching Detroit Metropolitan Airport, Abdulmutallab set off the device, which resulted in a fire and what appears to have been an explosion. Abdulmutallab was then subdued and restrained by the passengers and flight crew. The airplane landed shortly thereafter, and he was taken into custody by Customs and Border Patrol officers.

A preliminary FBI analysis found that the device contained PETN, also known as pentaerythritol, a high explosive. Further analysis is ongoing. In addition, FBI agents recovered what appear to be the remnants of the syringe from the vicinity of Abdulmutallab’s seat, believed to have been part of the device.

“This alleged attack on a U.S. airplane on Christmas Day shows that we must remain vigilant in the fight against terrorism at all times,” Attorney General Eric Holder said. “Had this alleged plot to destroy an airplane been successful, scores of innocent people would have been killed or injured. We will continue to investigate this matter vigorously, and we will use all measures available to our government to ensure that anyone responsible for this attempted attack is brought to justice

Abdulmutallab required medical treatment and was transported to the University of Michigan Medical Center after the plane landed. He will make his initial court appearance later today.

Interviews of all of the passengers and crew of Flight 253 revealed that prior to the incident, Abdulmutallab went to the bathroom for approximately 20 minutes, according to the affidavit. Upon returning to his seat, Abdulmutallab stated that his stomach was upset, and he pulled a blanket over himself. Passengers then heard popping noises similar to firecrackers, smelled an odor, and some observed Abdulmutallab’s pants leg and the wall of the airplane on fire. Passengers and crew then subdued Abdulmutallab and used blankets and fire extinguishers to put out the flames. Passengers reported that Abdulmutallab was calm and lucid throughout. One flight attendant asked him what he had had in his pocket, and he replied “explosive device.”

These prosecutions are being handled by the U.S. Attorney’s Office for the Eastern District of Michigan, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.

The investigation is being conducted by the Federal Bureau of Investigation, U.S. Customs and Border Protection, and the Joint Terrorism Task Force. The public is reminded that criminal complaints contain mere allegations, and a defendant is presumed innocent until proven guilty.

Free trial scams

The Federal Trade Commission has joined an effort to warn consumers about deceptive online marketing related to free trial offers that require people to cancel or opt-out of a recurring charge for future products or services.

The Director of the FTC’s Bureau of Consumer Protection, David C. Vladeck, along with officials from Visa and the Better Business Bureau (BBB) are cautioning consumers about the free trial feature, known as a “negative option.” In a negative option feature, a company takes a consumer’s failure to cancel a free trial offer as permission to begin charging for the service.

The FTC says many businesses use this billing process appropriately, others pre-check consent boxes, bury details of the offers in fine print, terms and conditions, and make cancellations or returns difficult, landing people in a cycle of recurring charges for products and services they do not want.

“Free trial marketing can be convenient for consumers-if the terms are clearly spelled out beforehand,” Vladeck said. “Legitimate marketers don’t hide critical information about costs or cancellation policies to get their customers to agree to future charges.”

The FTC, Visa and the BBB offer the following tips to online shoppers on how to spot misleading free trial offers and how to deal with unauthorized charges:

Take time to read and understand all terms and conditions, so a free trial doesn’t turn into a costly purchase you didn’t intend to make.
Pay particular attention to any pre-checked boxes before you submit your payment card information for an order. Failing to un-check the boxes may bind you to terms and conditions you don’t want.
Review credit card statements when you get them for any unauthorized charges, and notify the card issuer promptly of any unusual activity or unauthorized charges.
Try to resolve the situation with the merchant. If you’re unsuccessful, contact the card issuer immediately to dispute the charge.
Consumers who think they have been victims of deceptive marketing and who have not been able to resolve the issue with the merchant should call their credit card company to dispute the charge. Consumers can also file a complaint with the FTC or their local BBB.

Detecting counterfeit checks

In my searching around on the internet for information on scams, stories of scams in the news I came across a story at http://www.americanbanker.com/btn_issues/22_3/-374033-1.html written by Mike Fenton of Parascript. In the article he says

Automatic systems for signature verification can successfully rely on a shared image archive and improve customer service and satisfaction by enabling banks and retailers to proactively inform customers of potential fraud. Similarly, check stock verification software can be used in a shared image archive environment to protect financial institutions against the fastest-growing source of fraudulent activity surrounding checks today, responsible for 28 percent of all check-related losses in banks – counterfeit checks.

What I want to know is if this works just for personal checks, or if this system also works for counterfeit cashier’s checks.

Here is some information from their site.

http://www.parascript.com/newsroom2/press_full.cfm?ObjectID=587
Parascript Expands Fraud Detection Capabilities with Check Stock Verification Software
Boulder, CO – May 18, 2004– Parascript, LLC, an industry leader in recognition software, announced today the release of CheckStockXpert™, an anti-fraud software used to detect counterfeit checks. This new software complements Parascript’s check recognition and signature verification products to give banks and financial institutions a powerful defense against multiple types of fraud.

The American Bankers Association reports that attempted check fraud in banks nationwide surpassed $4.3 billion in 2002, and continues to be a major concern as criminals gain access to more sophisticated equipment and develop new tactics to attack institutions with weak defenses. This newest addition to Parascript’s anti-fraud product suite will help banks and financial institutions automatically detect suspect checks passing through the system. The full suite of products will address altered and counterfeit checks as well as random and skilled forgery.

“Parascript is committed to applying our advanced pattern recognition technology to all facets of the growing problem of check fraud,” said Mike Fenton, Parascript’s vice president of Total Recognition Solutions. “First with CheckPlus® andSignatureXpert®, and now with CheckStockXpert, Parascript is setting the pace for enhancing and streamlining fraud detection. As we have in the past, we will continue to advance our technology to combat any and all fraudulent activity against financial institutions, retailers and their customers.”

CheckStockXpert uses advanced pattern recognition to verify the full image of a check as well as preprinted objects on a check including headers of check number, date, payee, dollar amount, dollar sign, memo, payor block and payor bank field. This software scrutinizes the placement of each item and its relative distances between pairs of blocks, allowing banks to immediately identify even the slightest variations of a check. Multiplemethods of verification—including quantitative analysis, pattern recognition, analytical and geometrical analysis and neural networks—further increase accuracy. Asa result, banks and financial institutions can automatically detect copies or imitations of checks passing through the system.

Parascript’s three-pronged defense puts a stop to even the most sophisticated check-writing criminals.

CheckPlus, Parascript’s hallmark check recognition software, already used by leading financial institutions captures multiple fields on a check, including payee line, check number, dollar amount and date. Having this key information helps enhance positive pay or other fraud detection applications. Parascript’s signature verification software, SignatureXpert, uses the most advanced pattern recognition technology to detect random and skilled signature forgery. These two software products combined with CheckStockXpert help banks and financial institutions build a solid defense against all types of fraud.

Parascript’s suite of anti-fraud products is immediately available. More information is available at http://www.parascript.com.

About Parascript, LLC

Parascript’s Total Recognition® technology converts paper-based information into computer-usable data. It is the first complete technology that recognizes all character types — cursive, handprint and machine print — on all forms. Its unique capabilities allow organizations using forms to capture customer information to dramatically reduce their data entry expenses. With Total Recognition technology, companies can turn handwritten and print data, including legacy data, into electronic information that can be used to power web-based offerings and other marketing initiatives. Total Recognition technology is available via a number of channels: as software development kits, through Parascript’s on-line services, through onsite custom solutions, and from Parascript’s partners.

Great article on counterfeit cashier’s checks

I wanted to share an article I found on the dangers of counterfeit cashier’s checks with you. Not only does this article contain a lot of great information, but it mentions our site, Scam Victims United.

http://katherinerlewis.blogspot.com/2009/12/cash-check-maybe-go-to-jail.html

This article was originally published by MSN Money, on Friday, Dec. 11, 2009.

Did you get conned into joining a check-cashing scam? Even if authorities decide you’re an innocent victim, you could find yourself owing a bank thousands of dollars.

By Katherine Reynolds Lewis

Cash a check, go to jail. Or at the very least, empty your own savings account and ruin your credit.

It’s happened to hundreds of thousands of Americans who believed that banks don’t make funds available unless the checks they’ve deposited are genuine.

It happened to Calvin Barnett, who could face 11 years in prison for doing what he said he thought was his work-at-home job.

As unemployment reaches its worst levels in generations, scammers are finding a growing pool of victims all too willing to deposit strangers’ checks, then return part of the money by wire transfers.

“There’s a knowledge gap that these scammers are clearly taking advantage of,” said Susan Grant, the director of consumer protection for the Consumer Federation of America. “Under federal law here in the U.S., financial institutions have to give consumers access to the money from checks and money orders they deposit pretty quickly, usually within one to five business days. It can take much longer for counterfeits to be discovered, by which time the consumer has already sent the money.”

“The problem is the con men are very persuasive,” said Nessa Feddis, a vice president and senior counsel at the American Bankers Association, which is working with the Consumer Federation to educate consumers about check fraud. “People are desperate. They want to work. They want a job.”

How the scams operate

Fake-check scams lurk under a number of disguises, but they share a common framework that depends on:

A U.S. law that requires banks to make funds available to depositors in five business days or less — more quickly than the bank typically can verify the check is genuine.
Willing victims.

A fake check — often drawn on a real account but printed in some scammer’s basement — may arrive as part of a work-at-home job offer or a sales transaction that feels like the answer to a desperate prayer. The scam artist will instruct you to cash the check, keep a percentage and wire the balance to a designated account.

A Consumer Federation study found that 1.3 million Americans have fallen for fake-check scams, losing an average of $3,000 to $4,000 per victim. Fake-check scams are the No. 1 fraud reported to the National Consumers League. The American Bankers Association estimates that bank losses from counterfeit checks totaled $307 million in 2008, up from $252 million in 2006. More than half of the banks surveyed this year expect losses due to phony checks to rise in the next 12 months, Feddis said.

Why you’re on the hook

When the counterfeit is discovered, you — the person who deposited it — are responsible for paying back the money. After all, the bank gave you the cash, and you chose to wire it to the scam artists. It’s illegal for the bank to deny you access to the funds, even if a teller suspects the check may be phony.

“It’s a balance between giving people access to their money and preventing fraud,” Feddis said. “The consumer is in the best position to know that they should be suspicious. . . . The bottom line is, why are they asking you to wire money when they’re sending you a check?”

In the Consumer Federation survey, 59% of people wrongly believed that the financial institution confirms a check is good before allowing you access to the money.

The most common consequences

If you fall for a check-fraud scam, when the bank discovers the counterfeit checks it will deduct that amount from your account or freeze your account if there aren’t sufficient funds.

That’s what happened to Harry Smith, 25, of Union City, N.J. Smith answered a Craigslist ad for a paper company purportedly based in England that claimed to need a U.S.-based worker to expedite order processing. He cashed three checks totaling $6,000, kept 10% and wired the balance to the “production managers.”

“I figured if whatever check I did have wasn’t good, it wouldn’t go through at the bank,” Smith said. “I had constant communication with this other person, so I felt there wasn’t anything wrong.”

But when he called the return phone number on the FedEx package containing the checks, the person who answered had no knowledge of Smith’s supposed employer. He went to the bank and had to wait more than a week to confirm they were counterfeits. If he didn’t repay the bank the $6,000, he would be reported to ChexSystems and wouldn’t be able to open a U.S. bank account for at least five years.

“Luckily I opened another one before it got reported,” he said. Now the $6,000 has been turned over to a collection agency, and “I pay about $250 a month for two years to pay it off.”

When you become a criminal

Cashing a fake check becomes a criminal act when you are aware of the counterfeit. Typically, banks won’t press charges unless it’s clear you knew about the scam, Feddis said.

But just because you know you’re innocent doesn’t mean that law enforcement will see it the same way.

Earl Walls of Huntington, W.Va., 68, had never been in trouble with the law before he deposited phony checks and wired $3,000 to scam artists. After his arrest, the bank froze his account; he couldn’t even pay a retainer to a lawyer. According to county rules, his income from Social Security was high enough that he didn’t qualify for a public defender, but the bank wouldn’t let him withdraw from his account.

“I had no money,” said Walls, retired from a job as a supervisor in a corrugated-box factory. “I had to get out and borrow money from friends and relations to make a house payment.”

Fortunately, his neighbor contacted the West Virginia Attorney General’s Office, which recognized that Walls was a victim rather than a criminal, said Derek Walker, the chief investigator for the attorney general.

“He received instructions from this ’employer,’ and he followed the instructions to the letter,” Walker said. “His story checked out.”

After state officials talked to the county prosecutors, Walls received a pro bono public defender, and all charges were dropped. But to this day he feels anxious when he sees a police car or even a FedEx truck — like the one that brought the counterfeit checks to his door — in his neighborhood.

Innocent or guilty?

Calvin Barnett wasn’t as lucky. For two years he’s been awaiting trial for cashing a $3,000 counterfeit check he received after answering a Craigslist ad for a payment processor job.

“I haven’t told my family,” said Barnett, 30, who had moved to New York City from Alabama in 2007 to seek work. “I was just embarrassed that I could be so stupid.”

The police were suspicious because he received the check at a post office box and cashed it at a bank where he wasn’t a customer, said his attorney, Damien Brown. A spokeswoman for the New York District Attorney’s Office declined to comment on Barnett’s case.

Barnett is free on bail but has had trouble finding work due to the criminal indictment against him. “My life is in abeyance,” he said.

How to spot the scam

The best way to avoid being scammed is never to wire money to someone you haven’t known for a long time, Walker said. Even then, confirm that the person you’re sending money to actually is the relative or friend you want to help.

One West Virginia resident received an urgent call asking “Grandma” for help. She blurted out her grandson’s name, and the caller said, yes, that was him. But after she wired the money, it turned out that her grandson was fine. She’d just been scammed, Walker said. (See “Beware fake grandkids calling for cash.”)

Other tips include:
Never pay money in order to claim a prize. No legitimate lottery or sweepstakes will ask you to send money in advance before receiving your winnings. If you were actually a winner, you’d pay any taxes directly to the government after getting your prize.
Never pay for grants from foundations or the government. Genuine grants — which mostly go to organizations — don’t charge for money and have lengthy application processes.
Never send money to anyone who asks you to cash a check or money order, whether in connection with the sale of an item, a work-from-home job or an Internet romance.
Never wire money to someone unless you have met him or her in person and have known each other for a long time.
To learn more about scams, contact the Consumer Federation of America, the Federal Trade Commission, Fraud.org and FakeChecks.org of the National Consumers League, Scam Victims United and Fraud Aid