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Fraud Awareness

Overview

Students will learn the basics about how advance fee and fake check frauds are conducted by scammers.

 

Student Learning Objective(s)

  • Identify the warning signs of fraud.
  • Discuss the reasons individuals are attracted to schemes.

 

 

Fraud Awareness Pre-Quiz

The 411 on 419

Any person with an email account, which is pretty much everybody these days, has been propositioned by a scam artist. Don’t believe it? Have you ever received a message from a Nigerian dignitary requesting your urgent assistance with a lucrative investment deal? Have you received an email from your “bank” asking you to confirm your account information because of a system failure? Or have you been notified that you are a grand prize winner in a contest that you don’t remember entering? These messages are all examples of fraud perpetrated by online scam artists. Scams that flood your Inbox are quickly becoming the most prevalent of all cons.

 

Email isn’t the only tool that scammers use. Con artists can try and take advantage of you through your social networking accounts such as Facebook, Myspace, and Twitter. It is easy to create a fake email account along with a fake Facebook page, and, from there, messages can simply and quickly be sent to a huge group of “friends.”

 

However, this is not an invitation to panic about con artists sliding into our virtual space. These scammers leave tell-tale warning signs – learn them, and avoid the scams.

 

Fake Check Scam

The most common of all scams, the “Fake Check Scam” can be instigated by the scammer in several ways. They might offer to buy an item you are selling online, or tell you that you’ve “won” a grand prize in a contest and then send you payment. The scammer will probably claim that it is too complicated to use an online escrow service and they must send you a check. Here’s where the big scam happens: the check you receive will be written for more than the amount you are owed, and the scammer will ask you to return some of the money. After you have cashed the check and returned the money, you will find out that the check bounced. Some tips to avoid this scam are:

 

  • Ask for payment in the exact amount when you sell something through an online auction. Use an escrow service, like Paypal, whenever possible. There is no legitimate reason a buyer would send you too much money and then need some of it back.
  • You will be held accountable for cashing a fake check. Be cautious and inspect the checks before depositing or cashing them.

 

The 419 Scam

 

An advanced-fee scam such as the so-called “419 Scam” or the “Nigerian Advanced Fee Scam” is characterized by a claim that the scammer can gain access to a large sum of money, but only with the financial assistance of their victim or “target.” The stereotypical version involves a supposed Nigerian dignitary who offers a healthy percentage of the funds as a reward or fee. The scammer claims they need to get the money out of their home country. Other variations on this scam involve a long-lost deceased relative, a real estate venture, or a bogus check that will eventually bounce. The target is asked to cash the check and return a portion of it to the scammer, but the common denominator is that the check is no good, you will be out the money you send the scammer, and you will probably pay fees to your financial institution for depositing a bad check. The primary warning signs for this type of fraud are:

 

  • A promise of great wealth – you are usually asked to share a large sum of money in return for your participation
  • Correspondence is sent as “highly confidential” or “urgent”
  • The scammer cannot produce reliable credentials
  • A requirement for you to advance money “up front” in order to participate
  • The scammer requests non-pertinent personal information, like a bank account number
  • The scammer claims that you were personally selected or recommended to help by a “friend.”

 

Phishing

 

“Phishing” scams are fraudulent messages sent from scammers posing as financial institutions, social Web sites, or auction and shopping sites. They intend to trick people into surrendering personal information such as usernames, passwords or protected account information. Many of these scams will include links leading to Web sites that spoof a real company’s homepage, but are in fact just fake look-alikes. Tips for recognizing a “phishing” site:

 

  • Phishing URLs may be extremely close to the legitimate site but contain common misspellings; i.e., the number “1” in place of the letter “l.”
  • Instead of beginning with “https,” like all legitimate, secure sites, the phishing site may have only “http” in the URL. (Note that this is not always true, as scammers can develop secure Web sites, too.)
  • You are prompted with a pop-up that requests account information after clicking on a link in an email message.
  • Many secure Web sites feature sign-in seals such as a picture or code that appears when you enter secure account information. Security measures will be conspicuously absent on a phishing site.

 

It’s simple to avoid being scammed online. Approach offers you receive with skepticism. Remember, if it sounds too good to be true, it probably is.

Fraud Awareness Game

FAQs

1.  What countries originate the most Internet fraud? Data released in 2007 from the Internet Crime Complaint Center may surprise you:

1.         63.2%  United States

2.         15.3 % United Kingdom

3.         5.7%    Nigeria

4.         5.6%    Canada

5.         1.5%    Romania

6.         1.3%    Italy

7.         .09%    Spain

8.         .09%    South Africa

9.         .08%    Russia

10.       .07%   Ghana

 

 

2.  I suspect that a check I received is counterfeit. Is there a way to verify that the bank listed on the check really exists?

 

This is hard. According to the Federal Trade Commission, scammers use high quality printers and scanners to make checks look real. Some of the checks contain authentic-looking watermarks. These counterfeit checks are often printed with the names and addresses of legitimate financial institutions. And even though the bank, account number, and routing number listed on a counterfeit check may be real, the check still can be a fake. You can look up the bank online by visiting its Web site or check the Federal Deposit Insurance Corporation Bank Find Web site at:  www2.fdic.gov/idasp/main_bankfind.asp. The bottom line is, don’t spend the money until you are absolutely positive the check has cleared.

 

 

3.  How do scammers find their victims?

 

According to the National Consumers League fake-check scammers use a variety of methods to find their victims. They scan newspaper and online advertisements for people listing items for sale, they check online postings from job-seekers, they place their own ads with phone numbers or email addresses for people to contact them, and they call or send emails or faxes to people randomly, knowing that some will take the bait.

 

 

4.  Why will my bank give me money before it is sure the check or money order I deposit is valid?

 

Federal law requires banks to give you access to money from checks or money orders within one to five days after you deposit them. This does NOT mean the check or money order is good; it may actually take much longer for the check to clear.

 

 

5.  What is an urban legend?

 

Urban legends are stories that are either funny or contain alarming content that may or may not be true. They spread quickly, and often have many different versions. Most urban legends are false. Email urban legends and email hoaxes often ask you to forward the email to everyone you know. This type of fraud can lead to identity theft.

Fraud Awareness Post-Quiz