Atlanta GA. July 4 2008
By: Rick McCann
Ntl. Assoc. Private Officers
www.privateofficer.com
By now, we all know the dangers of doing business or buying anything at all on the internet. We’ve heard of the scams and schemes and the dark side of web life.
We know to shop only on recognized retailers sites such as Sears or J.C. Penney’s or better yet, don’t shop on line at all. Still millions, maybe even billions of people still do it regularly. And like alligators hiding in wait for their next meal, without warning you can be a scammers next victim.
A few of the latest scams have been the tax refund scams where an email finds it’s way to your inbox giving you the great news that the IRS made a mistake on your refund and that you’re actually due more. Just click and fill in the boxes with all of your personal information and you’ll soon receive a bigger check. Of course there is no check and now they have all of your information and will soon sell it for big bucks.
Another scam that’s hot right now is the PayPal and bank alerts that tell you that your account has been suspended because of multiple computers trying to log on to your account. The email ask you to click on and refill in all of your information so that they can be sure you’re the right person.
The emails look legit and have all of the right markings and logos of the banks and Paypal. But look again at their email address. Often they will be service@paypal.service.com or service@paypal usa.us and the same with the bank email addresses.
These logos and identifiers have been cloned and the emaill addresses are fakes.
Other new and popular scams work with your internet cameras. Merchandise that you bid for on auction sites where the cameras show you pictures of the item. Everything looks great and you spend your hard earned money on the item only to find that the it was all scam. The items that you receive are not the same as the ones you viewed on the net.
In Nashville Tn., a 24 year old disabled war veteran who had been shot muliple times in Iraq thought that he was internet savvy.
Joe Strobino needed a good used car and saw one advertised on Craigslist for $5500.00. The 2003 Honda Accord fit his budget and looked and sounded perfect to him. He transacted the deal, sent the cash but never got the car.
Now $5,500 poorer and without a car to show for it, Strobino is one of hundreds of thousands of Americans who get taken by Internet and e-mail fraud scams every year. Online auction fraud is the most common, according to the Federal Bureau of Investigation. Last year, the agency received 206,884 complaints about crimes perpetrated over the Internet, amounting to a record of nearly $240 million in losses, a $40 million increase from the year before. It’s hardly a surprise that the Internet is proving to be a growing source of crime as it plays a larger role in commerce.
But the criminals themselves have become more sophisticated in recent years, according to law enforcement. Some are working in international gangs, many of which are in Eastern Europe, where access to affordable technology is combined with high unemployment and weak law enforcement, according to Scott Augenbaum, the supervisory special agent for the FBI’s cyber crime squad in Nashville and Memphis.
In Tennessee, 9,920 consumers told the Federal Trade Commission they were victims of fraud last year, a 44 percent increase from the previous year. Most of the fraud is conducted online.
Theft replaces disruption
“In the (1990s), people wanted to get into your computer so they can disrupt it,” Augenbaum said. “They don’t want to do that anymore.”
Instead, Internet fraud today often is about getting money or confidential information such as Social Security and bank account numbers, he said. The better criminals are getting people to click on Web sites that secretly install software to track your movements. That software, totally undetected by the user, can find out your bank account and passwords when you pay your bills online or handle other financial transactions.
A good protection against this is the purchase of Internet security software that roots out viruses and spyware, Augenbaum said.
“It used to be there were obvious misspellings or errors (in fraudulent e-mail),” said Jeff Hill, senior counsel for the consumer protection division of the Tennessee attorney general’s office. “That’s changed. Now they’re awfully good at it. It’s hard to tell the difference.”
Fake cashier’s checks or money orders are common. One landlord Augenbaum knows got a fake cashier’s check from someone online claiming to be a graduate student from England wanting to rent an apartment near Vanderbilt University. The fake renter managed to get the landlord to cash the cashier’s check and send some of the money to a fake furniture company. Once the bank cashed the check, it held the landlord accountable for the bad check.
Another common fraud is known as phishing, where the criminal will claim to be your bank or the U.S. government trying to get your personal information such as bank account or Social Security numbers. But those who are combating cyber crime make an obvious point: Your bank already has your personal information.
Payment site was fake
Strobino knew to stay away from e-mail scams. But when he decided to buy a car online, he thought he was protecting himself. The seller explained he was in the military and getting deployed to Iraq, making him motivated to sell in a hurry.
To Strobino, a military man himself, the scenario seemed plausible. Although the price seemed like a deal, it wasn’t an outrageous one. The buyer said WorldPay, a legitimate third-party payment Web site owned by the Royal Bank of Scotland Group, would handle the payment.
Strobino checked it out. The company was real. Once Strobino wired his money to WorldPay, the payment company would hold onto his money until the car was delivered. He would get to see the car and decide whether he wanted it. The safety of the transaction seemed assured.
After he and his fiancée wired the money in April from her Bank of America account, Strobino never got the car.
The Web site was a fake, designed to look like the real WorldPay, according to Strobino. There was even a disclaimer at the bottom of his confirmation e-mail from the fake company warning him how to avoid Internet fraud. (A representative of Craigslist did not return messages. A WorldPay spokeswoman said she couldn’t comment on the matter).
The Craigslist Web site actually warns against purchasing merchandise from out-of-town buyers, the source of 99 percent of the Web site’s fraud.
Strobino has since taken out a $5,500 loan out on a credit card so he could pay his fiancée back. Bank of America would not give her the money back. A spokeswoman declined to comment, saying the bank wouldn’t discuss individual accounts.
Strobino is going to junkyards to piece together parts for a beat-up Volkswagen so he can have some transportation.
“I’m broke,” he said. “It really stinks.”
But for him, there was a happy ending when Darrel Waltrip, the race car driver who also owns a car dealership in Franklin Tennessee gave Strobino a car after hearing about his misfortune.
Three types of fraud on the FBI list that are hot;
• ESCROW SERVICES FRAUD: To persuade a wary Internet auction participant, a perpetrator will propose the use of a third-party escrow service to facilitate the exchange of money and merchandise. The victim is unaware the perpetrator has compromised a true escrow site and created one that resembles a legitimate escrow service. The victim sends payment to the phony escrow and receives nothing in return. Or, the victim sends merchandise to the subject and waits for his/her payment through the escrow site, which is never received because it is not a legitimate service.
• COUNTERFEIT CASHIER’S CHECKS: The counterfeit cashier’s check scheme targets individuals that use Internet classified advertisements to sell merchandise. Typically, an interested party outside the United States contacts a seller. The seller is told that the buyer has an associate in the United States that owes him money. As such, he will have the associate send the seller a cashier’s check for the amount owed to the buyer. The amount of the cashier’s check will be thousands of dollars more than the price of the merchandise and the seller is told the excess amount will be used to pay the shipping costs associated with getting the merchandise to his location. The seller is instructed to deposit the check, and as soon as it clears, to wire the excess funds back to the buyer or to another associate identified as a shipping agent. In most instances, the money is sent to locations in West Africa (Nigeria). Because a cashier’s check is used, a bank will typically release the funds immediately, or after a one- or two-day hold. Falsely believing that the check has cleared, the seller wires the money as instructed. Shortly thereafter, the victim’s bank notifies him that the check was fraudulent, and the bank is holding the victim responsible.
• WORK-AT-HOME OPPORTUNITIES: Employment/business opportunity schemes have surfaced where bogus foreign-based companies are recruiting citizens in the United States on several employment-search Web sites for work-at-home employment opportunities.
These positions often involve reselling or reshipping merchandise to destinations outside the United States. Prospective employees are required to provide personal information, as well as copies of their identification, such as a driver’s license, birth certificate, or Social Security card. Those employees that are “hired” by these companies are then told that their salary will be paid by check from a United States company reported to be a creditor of the employer.
This is done under the pretense that the employer does not have any banking set up in the United States.
The amount of the check is significantly more than the employee is owed for salary and expenses, and the employee is instructed to deposit the check into their own account, and then wire the overpayment back to the employer’s bank, usually located in Eastern Europe.
The checks are later found to be fraudulent, often after the wire transfer has taken place.In a similar scam, some Web-based international companies are advertising for affiliate opportunities, offering individuals the chance to sell high-end electronic items, such as plasma television sets and home theater systems, at significantly reduced prices.
The affiliates are instructed to offer the merchandise on well-known Internet auction sites. The affiliates will accept the payments, and pay the company, typically by means of wire transfer. The company is then supposed to drop-ship the merchandise directly to the buyer, thus eliminating the need for the affiliate to stock or warehouse merchandise.
The merchandise never ships, which often prompts the buyers to take legal action against the affiliates, who in essence are victims themselves.
