The Check’s in the Mail: “419″ E-mail Schemes Change with the Times

Experts

Programs Director
Policy Counsel
Senior Director of Federal Policy and the Washington Office

By Robertson Barrett
Special to Consumer Reports WebWatch

“I am Mr. Simon Nelson, the auditor of ECOBANK BENIN,” began a recent e-mail to Consumer Reports WebWatch.

Nelson had quite an offer for us. It seemed he had stumbled upon a long-forgotten account in his West African bank and was willing to cut us in for a third of this fortune if we’d just help him with a little stateside paperwork.

“I want to transfer Forty Five million United States Dollars into a safe foreigner’s account abroad, but I don’t know any foreigner (sic),” he wrote. “I want to ask you to quietly look for a reliable and honest person who will be capable and fit to provide either an existing bank account or to set up a new bank account immediately to receive this money.”

Millions of people worldwide have received offers like this one over the last 20 years – by letter, fax, e-mail and, lately, via instant messages. Although our correspondent never answered our replies, other purveyors of such unsolicited schemes have lured gullible or greedy recipients into giving away their money without their ever receiving a dime of the promised windfall.

At some point, there’s always a last-minute snag in which the would-be recipient needs to pay an “advance fee,” “transfer tax” or other expense to make the transaction happen. It’s so much less than the promised millions that thousands of people have done so, whereupon – surprise – Nelson and his ilk are suddenly unreachable, and victims are out thousands of dollars. The Internet Fraud Complaint Center reports Nigerian fraud victims lost an average $3,864 in 2002, according to consumer complaints, making it the most lucrative scam on the Internet that year.

Old Idea, New Twists

The classic version of the scam is known as “Advance Fee Fraud” and “419,” after the relevant section of the Criminal Code of Nigeria, where most of these messages originate. [See sidebar: "Why Nigeria?"] The variations on the pitch are endless – it might be a large “bequest” in a will or an “overinvoiced” Nigerian oil contract – yet the e-mail messages have grown so common that many Internet users pay no attention.

But in the last year, and even the last few weeks, the old idea has taken on several new forms, and this fooled a growing number of people, says Keith Lourdeau, deputy assistant FBI director for cybercrime. In one variation that produced an FBI warning in November, victims receive a cashier’s check for thousands of dollars and deposit it into their bank. Cashier’s checks appear to clear instantly, and victims then wire their foreign email correspondent a large portion of the funds, as agreed. The next day, they’re informed the check is fraudulent and are held liable for the transfer amount.

For every version that wouldn’t fool many people, there’s another that might. For example, the cashier’s check scam popped up on the eve of war in Iraq last year, when West African scammers posed as frightened Iraqis trying to move assets out of their country before the U.S. invasion.

And just last month, the Nigerian newspaper ThisDay reported, a band of Nigerians masquerading as coalition troops stationed in Baghdad claimed in e-mail to have unearthed heaps of Saddam’s treasure: “The goods were captured here in Baghdad, abandoned in one of the Saddam Hussein’s Treasure House. … Please, note, this issue must be handled with utmost confidentiality as to avoid publicity!” They promised the e-mail recipients 25 percent of the value of the goods in cash, in return for using their bank account to facilitate payment of the shipment.

Annie McGuire, a fraud victim advocate from Long Beach, Calif., says public awareness and spam-blocking programs have forced scam artists to be more creative. They now prowl classified ad and auction sites like eBay, job sites like Monster.com, and instant messaging services like AOL’s to find victims, she says. “You can be online and get an ‘IM’’[instant messaging] saying, ‘Hi, I live in Romania, I sell items on eBay and I receive American checks I cannot process. Can you help me?’”

A lot of people appear to be falling for these pitches, at least at the outset. The U.S. Secret Service, which has primary responsibility for handling 419 cases, receives about 100 telephone calls and 300 to 500 letters or e-mail from victims each day. And although the Service believes many victims do not report their losses to authorities due to either fear or embarrassment, its Financial Crimes Division nonetheless estimates annual U.S. losses in the hundreds of millions of dollars.

But there’s good news, too: The FBI is seeing more 419 activity because Internet users are spotting it, not falling for it. “The output of the letters is growing just because they’re spamming them all over the world,” says Lourdeau. “The potential of the crime is growing. But we have not received an increase in individuals actually providing complaints that they have been taken in.”

Annie McGuire says the anecdotal evidence, and human nature, suggest otherwise. “The victims have been people who do no homework whatsoever,” she says. “These offers seem like magic, and people want magic to happen.”

419s: What to Do

SIDEBAR: Why Nigeria?

In November, the FBI’s Operation Cybersweep identified Ghana, Latvia and Romania as the most common sources of 419 fraud, after Nigeria. Why there? Keith Lourdeau, deputy assistant FBI director for cybercrime, says certain scam techniques become parts of the culture in certain countries, almost functioning as cottage industries. “Historically, they could do it in those countries and get away with it. There wasn’t any law enforcement addressing it.”

Until recently, he says, U.S. law enforcement officials were frustrated when trying to pursue Internet criminals inside their own borders, but that situation is changing. In 2002, after years of foreign perceptions that it condoned the fraud because it boosted the Nigerian economy, the Nigerian legislature created the Economic and Financial Crimes Commission (http://www.efccnigeria.org), which laid down the first substantive Nigerian laws against white-collar crime.

“We’re receiving very good cooperation now from Nigeria and nearby Ghana,” says Lourdeau. “We had agents over there two months ago working on the scams. We can identify some through the government’s cooperation, and we’re now receiving some prosecutions.”