Klein's Business Consulting

Taking Businesses And Organizations To The Next Level

Minneapolis, MN. December 1, 2003—American citizens are being ripped off in their own homes for millions of dollars by foreign con men, and the Federal Government is powerless to stop it.

• It’s a new twist to an old scam, and it’s getting worse because now it’s capable of invading any home or office.
• It’s outside the jurisdiction of our legal system because it originates outside of our country’s borders.
• And its only vulnerability is the media’s ability to educate the public.

The Previous Invasion

A number of years ago, some of his clients started receiving unsolicited business proposals through the mail. Business consultant Bill Klein first researched the proposals and linked them to the con game known as the “Nigerian Scam,” (named for the country of origin), or the up-front fee scam.

Here’s How The Original Nigerian Scam Works

Someone asks you to help them get millions of dollars out of a war-torn country, offering you a percentage of the money for your trouble. If you agree, you’re asked to fill out some official looking papers. Then they tell you that some official needs to be bribed, or a small legal fee needs to be paid. Of course, since all of their millions are tied up in this transfer, you must pay the price, usually a few thousand dollars. You agree because the fee is small compared to the millions you stand to gain. The scam continues with more fees and bribes, and of course, there’s no end because there’s really no fortune being sent out of the country—only your money being sent in. Eventually most victims stop sending money.

It seems transparent; still every year, otherwise intelligent Americans are swindled out of millions of dollars. And this isn’t new. It’s been going on for decades. The best estimate is that the total cost to victims now runs into billions of dollars. And once your money is outside the country, the US government cannot help you. There is no jurisdiction, no authority that can stop these predators.

The New Attack

Now there’s a new twist to this confidence game. When his clients started getting unusual holiday orders from war-torn Nigeria, Klein got suspicious and started investigating again. What he found should make everyone more than a little bit nervous. In the past, such email proposals were usually sent to business people. They are now also going to non-business people—those advertising anything large for sale, like a car, an RV, or a boat. Anyone is likely to get a phone call or find one of these proposals in their email before long.

Here's what happens in this new variation of the Nigerian Scam If the target is a business person, a small purchase is made from someone overseas with a valid credit card. The merchant processes the order, ships the merchandise, and everyone is happy. Then the overseas customer requests a larger purchase. Nothing seems wrong.

If the target is not a business person, but is just someone selling a large item, the con man offers to buy it at the asking price. Nothing seems wrong.

In either case, the con offers to pay by certified check or money order, either sending payment through the mail or delivered in person by a friend or relative. Nothing seems wrong.

Here’s the Catch

The amount of the certified check or money order is for more than the purchase, usually several times more than the purchase, and of course, the buyer needs “change.” For example, if someone is selling a $5,000 car, the con-men might try to pay for it with a check for $17,500, requiring $12,500 in change. It seems like an unusual request, but the seller decides that since it’s a certified check or money order, there is no risk. And if the seller does think the transaction seems strange and balks at giving that much change, the con artist will negotiate until the seller relents, offering to pay the seller a high premium for the service. Perhaps an additional $500 or $1,000. The merchandise is delivered either directly to the friend or relative, or it’s shipped overseas, and the “change” goes with the merchandise.

Then, days or weeks later, the bank notifies the seller that the certified check or money order is fake. Computer copies are easy to make these days. The seller’s account is charged for the amount of the bad check. The seller is out the merchandise and the change delivered.

What Can You Do?

If you are a victim of this scam, the best you can do at this point is swallow your pride and report the fraud to local authorities. Even then, only individuals still in this country are subject to arrest, and only if they can found. All the others involved, as well as your merchandise and your money, are outside the country, and outside US jurisdiction.

The age old caveat remains valid. If it sounds too good to be true, it probably is. Protect yourself by educating yourself about this and other common scams. For more information, please check out the following web sites.

http://crimes-of-persuasion.com
The Crimes of Persuasion Web Site details numerous schemes, scams, and frauds, explaining how con artists try to steal your money through telemarketing fraud, investment schemes, and other consumer scams.

http://groups.yahoo.com/group/constoppers
"An announcement list warning people about the latest frauds being perpetrated on small businesses. Businesses are not protected by the same consumer laws as individuals, so the only way to be safe is to know what scams are out there."

http://scambusters.org
A free monthly e-zine with "updates on the most important new scams, the latest urban legends, tips for dealing with real viruses and virus hoaxes, strategies to avoid credit card fraud, advice on what to do if you've been scammed, excellent scam-busting resources, and much, much more!"

http://www.stopecg.org
A web site dedicated to stopping the City Guide fraud (specifically, the European version, but great information, none-the-less). Have you ever updated what you thought was a free listing of your business or your web site, only to find out you should have read the fine print?

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