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Fraud Analysis


Students will identify and deconstruct common advance fee and 419 frauds.


Student Learning Objectives

            Identify the warning signs of fraud.

            Examine and deconstruct typical fraudulent schemes.

Analyze fraudulent Internet spam.



Fraud Analysis Pre-Quiz

Scam Baiters

As educated consumers we are always on the lookout for dishonest business practices because we want the best value for our time and money. The Federal Trade Commission, the Better Business Bureau, and your mom agree on at least one thing: always make sure that you know what you’re getting yourself into before you commit. There is one group of consumer activists, however, who have taken an interesting approach to tackling Internet scammers – they beat them at their own game. The people in this grassroots movement are called Scam-Baiters, and they form an online community devoted to purposefully responding to known scammers. They respond to guymen, knowing all along that it is fraud, for the sole purpose of giving the con artists a taste of their own medicine.


The reasoning behind Scam-Baiting is simple; by manipulating the scammers into thinking that they have fallen for their tricks, they reduce the time and energy a scammer has to cheat someone else. Perhaps more importantly, they are messing with people who richly deserved to be messed with. Scam-Baiters generally deal with con artists perpetrating 419 scams or advance-fee fraud. (Advance-fee fraud is a con in which the scammer requests an initial sum of money as a fee and promises that the victim will in return receive a great deal of money.)


The most effective Scam-Baiters are able to string along the criminals for months at a time. At every turn, when the scammer asks for bank account information or a check, Scam-Baiters return with fictitious account numbers or forged documents that the scammer will not be able to use. One particularly inventive Scam-Baiter even composed a phony Western Union “Security Questionnaire.” He convinced the scammer that the transaction could not be completed until the Scam-Baiter received the completed form. The questionnaire included about 25 mostly innocuous questions, with notable exceptions such as, “Have you ever committed, or are you committing at this very moment, Internet fraud?” and, “Please spell the word ‘Kleptomaniac.’” Amazingly, the scammer filled out the entire form, oblivious to the prank, and returned it to the Scam-Baiter.


Another notable Scam-Baiter convinced his scammer that although he was unable to pay the advance fee in cash, he could pay with valuable computer equipment that the scammer could sell. The fee the scammer was requesting would be covered by the sale of the equipment. The catch was the Scam-Baiter insisted that he would need help with the shipping costs. In the end, the scammer paid hundreds of dollars to have an inoperable oven and clothes dryer, as well as a box of junk computer parts, delivered to Nigeria.


It seems that Scam-Baiters are able to succeed for many of the same reasons that 419 scammers are successful. They reverse the scheme and trick the mugu out of their money. Once the scammer believes that they have hooked a target, and that target (the Scam-Baiter) convinces the con artist that they believe the claims of lucrative profits are true, they both stop looking for reasons to prove their assumptions false. After all, even con artists don’t want to believe that they are being scammed.

Fraud Analysis Game


Types of Fake Check Scams:


  • Charitable organization scam – request for donation to a charity that does not exist or that only exists to be a source of income for the scam artist


  • Disaster scam – request to wire money to help a friend in need. The scammer tells you that someone you know is injured or needs help with legal fees


  • Dream job – Scammers claim that, for a fee, they will assist you in obtaining employment


  • Grants – Scam that offers to process paperwork for Federal or other grants for a fee


  • Inheritance scam (or will scam) – A con artist claims that a distant relative has left you a large sum of money, and, for a fee (or the “taxes” on the inheritance), the con artist offers to process the inheritance


  • Lost pet – A scammer follows up on an ad or flyer the victim has posted regarding a lost pet. The con artist falsifies veterinary bills and/or transportation costs and urges the victim to pay so the pet can be returned. In reality, the con artist does not have the pet


  • Lottery scam – Scammer writes that you have won the lottery, but you must pay taxes and fees to collect


  • Love scam – You meet someone online who falls in love with you, but needs help with bills or travel costs to come and see you


  • Mystery shopper – Scam in which the mystery shopper usually receives a check for shopping, but must return part of the money to the scammer. The check is fraudulent


  • Online auction scam – Scammer sends a fake check to purchase an auction item. Victim sends the item after depositing the fake check


  • Recovery 419 scam – A re-load scam in which the scammer takes the victim’s money in a con and then contacts the victim a second time with a scheme to purportedly help them recover the money they lost


  • Rental scam – Scammer advertises an apartment and “rents” it to the victim, taking first and last month’s rent and/or deposits. The con artist does not actually have any connection to the rental property


  • Social network scam – Hacker enters a victim’s social networking site and sends an email that tells the victim’s friends the victim is stranded, sick or detained in a distant location. The friends are asked to send money


  • Transfer funds – Scammer asks for assistance to move money out of their country into a U.S. or other country’s bank account. The victim is told he or she can keep a portion of the money for assisting


  • Work-at-home scam – Scammer advertises a home-based job or work in an industry for which the victim must buy supplies or pay fees to be employed

Fraud Analysis Post-Quiz