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by Annie McGuire
March 4, 2003
Source: FraudAid.com
The Sale
You have something to sell - a guitar, a car, a house. Maybe you own a manufacturing company, maybe you're just looking to get rid of some things in your attic or garage.
You place an ad in the classifieds - online or in your local newspaper - and pretty soon you receive an email or a phone call from an interested party. The interested party may be in your country, but is usually overseas. A price is agreed upon, and the interested party agrees to buy the item and pay for shipping. So far, so good.
The Money
The buyer informs you that he or she has a debt owed them from one of your countrymen. The debt is greater than the cost of what you are selling. Maybe greater by a few thousand dollars. The buyer asks you if you would mind receiving a check from the debtor, deposit it into your checking account, keep the amount owed for what you are selling and send him the balance.
You figure you want your money and what's the big deal with helping the buyer out if it means a quick sale? You agree to the proposal.
In due course, you receive the check as stated and run down to your bank to deposit it so that you can get your money. Your bank accepts the check and allows you to withdraw the excess funds, which you send off to the buyer. Sounds fairly straightforward, doesn't it?
The Shock
Well it isn't. You have been set up for a major scam, one that will land you in a lot of trouble with your bank. One that will mean you will have to come up with the whole amount of that check out of your own pocket. Why? Because the check is a forgery.
In a week or two that check is going to come bouncing back to your account. It doesn't matter whether it's a Cashier's Check, a corporate check, or a check from a charitable organization. It's no good. All eyes are now on you.
How can this happen? How can you be held liable for the check? Isn't it the bank's responsibility to make sure the check is good before letting you have the money?
No, it's not.
The real world
According to the legal department at the U.S. Federal Reserve, when a depositor endorses a check he is making warranties as to the validity of that check. In other words, it is the responsibility of the depositor to ensure he is providing a legal document to his bank. If the check comes back as an illegal document, the depositor must bear the brunt of the blame.
The Federal Reserve went on to state that while it is true that many banks do not accept 3rd party checks, the depositor's history of a good relationship with his bank may sway the bank to deposit the check and release the funds right away.
They further stated that the only way to ensure an unfamiliar check is good is to ask your bank to process it on a collection basis. That means that your bank will not release any money from the check until it has been completely cleared, validated, and the funds have been released by the check's bank.
Where does this scam come from?
As with so many scams these days, it originated in West Africa and is a version of the Nigerian Scam Letter.
Nigerian Scam Letters have been around for years, but with so much attention being drawn to them lately, the scam rings are being forced to use their creativity to develop new swindles. The scam discussed in this article is but one example of their recent innovations.
And don't think that the offer is safe just because the buyer is not from West Africa. I have seen these coming out of England, Amsterdam, and Canada. Ones from Asia should start appearing within the next 6 months or so.
The moral of the story is - don't trust anyone you don't know, and know well.
© Copyright 2003 Annie McGuire
Follow Up:
If you have been involved in this kind of scam and wish to take measures, report it to the Internet Fraud Complaint Center (IFCC).
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