Advance fee fraud

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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.

Currently the most visible form of the fraud is the Nigerian Letter or 419 fraud named after the section of the Nigerian criminal code that it violates. Originally sent by fax machine the Nigerian Letter is now sent almost exclusively by email. The typical Nigerian letter claims to come from a person needing to transfer large sums of money ($20-$35 million) out of the country.

As the Nigerian letter variation of the fraud has become well known, the gangs operating the scams have developed numerous variations. The target is often told that they are the beneficiary of an inheritance or invited to impersonate a beneficiary of a large unclaimed estate.

In the 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 a recent development of the scheme, the perpetrators use a counterfeit cashiers check to buy an expensive item such as a car or boat from people advertising goods in online classifieds. The target is then asked to forward part of the money to pay for shipping as soon as the check clears. Because banks in the USA are required by law to honor a check within 1-5 working days (even before a check has cleared), they will report the proceeds as available for withdrawal before the check is presented to the issuing bank for clearance and the fraud is discovered.

Contents

419 Fraud

These scams have come to be associated in the public mind with Nigeria due to the massive proliferation of such confidence tricks from that country since the mid-eighties, although they are often also carried out in other African nations, including Togo, Côte d'Ivoire, Ghana, Benin, Liberia, Sierra Leone and South Africa, and increasingly from European cities with large West African populations, notably London, Amsterdam and Madrid, and lately also Dubai (United Arab Emirates) and Canada.

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 initial contact is much lower.

Another recent variation of the scheme 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."[FTC consumer alert]

The United States Department of the Treasury advises:

"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 origin of the 419 scam is currently debated. Many critics believe that the scam slowly began in Nigeria, possibly developing from earlier forms of fraud practised by Nigerian petroleum companies, criminal gangs, and government agencies in the 1970s or 1980s. The modern 419 scam well predated the widespread use of e-mail, and earlier variants were often sent via letter, fax, or even Telex. Others believe that the scam was a combination of different frauds in the Igboland region, some hundreds of years old. The first scams involved lucrative oil contracts and other related frauds. The scam did not employ a significant number of people until the rise of the Internet. After the turn of the millennium, the scam proliferated rapidly and began to employ many more people than it did in the 1990s. Today, it may employ as many as 250,000 people. Until about 2001, the scammers were located primarily in Lagos, Aba, Owerri, and Port Harcourt, Nigeria.

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 usually 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.

Variants

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 (www.ip-relay.com), a 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 then proceeds to ask 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 money order, with instructions requiring that it be cashed, and that excess funds be sent back to the scammer (advanced fee fraud). When it is determined that the money order is counterfeit, the victim is usually arrested by the authorities for playing a role in the scam.

It is worth noting that 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. This includes the "love bug" scam, as detailed below.

The relay operators are well aware of these scams, but can do absolutely nothing to stop it. Operators are never allowed to make judgements about the legality and/or legitimacy of any relay call. Warning or trying to tip off a potential victim can result in the operator getting fired and being escorted out of the building with threats of lawsuits from the relay company. Calls are randomly monitored in live time, and the operator never knows about it until after the call. Operators are in a very difficult position. If you would like to learn more about the operators and their feelings on the matter, visit their forum at http://relayscams.aimoo.com/

Romance angle

A recent variant 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.

Auction overpayment, fake check

In another updated scam, the scammer offers to buy some expensive item (e.g., jewelry or a car, that the prospective victim advertised on eBay, for example, or a legitimate classified-ads website such as craigslist) by official, certified, bank or cashier's check. The check will have an "accidentally" or mutually agreed higher value than the price of the item, so the scammer asks the victim to wire the extra money to some third party as soon as the check clears. The check typically clears after one or two days, but the fact that it is counterfeit is not detected until several days or weeks later, by which time the victim has sent the item and the "additional money" to the scammer and his representative. Most banks will hold the victim accountable for the value of the counterfeit check.

A variation on the eBay scam involves sending a request for payment for an item that the alleged seller does not own but claims to have sent. Since actual eBay item numbers are used this has been a nuisance for legitimate sellers.

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. However, 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. (see also P-P-P-Powerbook)

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.

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. Unfortunately, the cheque clearing process can take weeks, after which the bank will claim the whole sum back because the cheque is fake. http://www.loot.com/rs6/homepage.asp?action=q&t=/general/help/help_sections/selling/overpayment_scams

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.

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.

Consequences

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. http://www.globetechnology.com/servlet/story/RTGAM.20051205.gtemail05/BNStory/Technology/

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

Some victims have hired private investigators in Nigeria or have personally travelled to Nigeria, without ever retrieving their money. There are cases of victims being unable to cope with the losses and committing suicide.

One American was murdered in Nigeria in June 1995 after being lured by a 419 scam.

In February 2003, a scam victim from the Czech Republic shot and killed Michael Lekara Wayid, an official at the Nigerian embassy in Prague.

A Greek man was murdered in South Africa after responding to a 419 scam. http://www.news24.com/News24/South_Africa/News/0,,2-7-1442_1641875,00.html

Kjetil Moe, a norwegian businessman, was reported missing and ultimately killed after a trade with Nigerian scammers in Johannesburg, South Africa (September 1999). [link]

Arrests

In 2004, fifty-two suspects were arrested in Amsterdam after an extensive raid. An Internet service provider had noticed the increased email traffic. Out of these fifty-two none has been jailed or fined to date, 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.

Terms

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.

References

External links

[US Secret Service Public Awareness Advisory] A brief overview about advance fee fraud.
[419 Coalition] Provides advise how to react if targeted by such schemes and mantains a directory of anti-419 related websites.
[Economic and Financial Crimes Commission (EFCC)] The Nigerian financial authority mandated to investigate against advance fee frauds.
[419legal.org] Run by the Commercial Branch of the South African Police and especially focused on 419 scams. Approaches to connect law enforcement with informants from the scambaiting scene.
[Snopes 419 webpage]
[Daily Independent Article on 419 scammers]
[Site fighting Nigerian scams.] Run by people who are dedicated to eradicate Nigerian 419 scam.
[CIAC Hoaxbusters web site with examples].
[Scambuster419] A collection of "scambusts" by Gilbert Murray of Gypping in the Marsh, serving to waste the scammers time and money whilst providing the reader with entertainment at the scammers' expense.
[The Scambaiter] Fighting scammers worldwide for fun and justice.
[Nigerian scammer got scammed!]
[The Top 10 Internet/Email Scams]

Databases

[urgentmessage.org] The website collects and analyzes 419 opening emails and allows users to view the tangled relations between scam schemes and authors via clickable graphs.
[Artists Against 419.] Provides a database of faked bank websites. These websites are used in 419 scams to convince a victim that the promised monies are real.
[Scamdex] A Searchable, Indexed database of email scams, phishing, lotteries and Advance Fee Fraud (419) scams.

This article is part of the Spamming series.
E-mail spam	DNSBL \| Spamhaus \| Stopping e-mail abuse \| Spambot Address munging \| \| Directory Harvest Attack
Spamdexing & Search engine optimization>S.E.O.	Google bomb \| Keyword stuffing \| Cloaking \| Link farm \| Web ring Referer spam \| Blog spam \| Spam blogs \| Sping \| Scraper site
Telemarketing	Autodialer \| Mobile phone spam \| VoIP spam
Scams	Phishing \| Advance fee fraud \| Lottery scam \| Make money fast
Misc.	Messaging spam \| Newsgroup spam \| Flyposting History of spamming

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