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It doesn't matter whether it's as close as Windsor or as far as Hong Kong or Zimbabwe, the Michigan District Export Council has someone who's been there and done that.  We encourage you to give us a try.

Internet Fraud

Michigan firm victimized in classic fraud scheme

Click here to read a Detroit Free Press story about a recent $2.3 Million Dollar scam.  Our thanks to David Ashenfelter, Reporter with the Detroit Free Press for his permission to use the article.

The rest of the story

U.S. companies must be aware of international business scams and illegitimate trade deals.  One of the most common scams in international business is based primarily in West Africa in countries such as Nigeria, Ghana, Benin, Togo, the Democratic Republic of the Congo, and Sierra Leone. While there are many legitimate West African companies that do business in the United States and with U.S. exporters, there are also, unfortunately, many organized crime rings as well as renegade individuals that take advantage of unsuspecting people. The following article gives specific information about some of these illegitimate business deals, how to help companies identify if they are the targets of a scam, and where to report possible scams. 

Where do these scams originate?

Many of these scams originate in West African countries. While Nigeria has been the primary originating location, scam artists are aware that “Nigeria” has become synonymous with “scam” and have begun to branch out into other countries. There is a spectrum of sophistication in executing and perpetrating these campaigns, which includes organized rings on the one end and unemployed teenagers in cyber cafes on the other end.

How do these scams work? 

The scam essentially is a confidence scheme with a hook that takes numerous and bogus forms. According to the U.S. Secret Service Financial Crimes Division, “Nigerian nationals, purporting to be officials of their government or banking institutions, will fax, mail, or e-mail letters to individuals and businesses in the United States and other countries. The correspondence will inform the recipient that a reputable foreign company or individual is needed for the deposit of an overpayment on a procurement contract. The letter will claim that the Nigerian government overpaid anywhere from $10 to $60 million on these contracts.” Such fraud is called 4-1-9 fraud, after the section of the Nigerian penal code
that addresses fraud schemes.

Recently, scams have also taken the form of bogus sales contracts. An African firm or government official requesting a rather large export sale will contact the targeted individual or company. The sale will often ask for samples (e.g., cellular phones and equipment) to be sent in advance of the sales negotiation. 

Other schemes may involve a religious-based contribution, inheritance, an ex-dictator or relative of ex-dictator trying to get money out of the country before going to jail, and people purporting to want to invest in your company. All of these act as bait. The scammers then try to get the victims 100 percent convinced that they will get the payoff. It is at this time that “fees” are demanded.

Learn more about the various types of so called "advance fee frauds."

How do I know these correspondences are scams and not legitimate business deals?

There is often a perception that no one would enter such an obviously suspicious relationship. However, many victims have been led to believe they can share in such windfall profits. Individuals are asked to provide funds to cover various fees and for personal identifiers such as Social Security numbers, bank account numbers, and related data. The correspondence will usually ask the individual to pay a fee in order to transfer assets from a Nigerian bank account to another account. These scams are called advanced fee fraud, because of the demand for upfront fee payments.

Are there certain specific details in these correspondences that would help me to determine if they are scams? 

Requests to send money, bank drafts, bank account numbers, or personal information are red flags. Also, the correspondence typically refers to the confidentiality of these deals, urging the addressee not to speak to anyone about the transaction. Some correspondences will be addressed to a “Dear Sir” while others may come addressed to a specific individual.  Urgency of response is another typical sign.

If you or your company has never done business in Africa before and/or do not know how the correspondents could have received your personal information, you should be suspicious.  Most persons doing business in Africa are familiar with their industry and can trace new professional contacts to a specific source.

What is being done to stop these scams? 

The U.S. Secret Service Financial Crimes Division established Operation 4-1-9 to target Nigerian advanced fee fraud on an international basis. According to the Financial Crimes Division, “the agents on temporary assignment to the American Embassy in Lagos, Nigeria, in conjunction with the Regional Security Office, supplied information in the form of investigative leads to the Federal Investigation and Intelligence Bureau (FIIB) of the Nigerian National Police. Officials of the FIIB and Secret Service have made a round of arrests in Lagos. Evidence seized included telephones and facsimile machines, government and Central Bank of Nigeria letterhead, international business directories, scam letters, and
addressed envelopes, and files containing correspondence from victims throughout the world.” 

The US Department of Commerce Office of Security has received frequent inquiries from Departmental employees who have received emails, letters or faxes involving what is commonly known as the "the Nigerian Advance Fee Fraud" scheme. The perpetrators of "Advance Fee Fraud", known internationally as "4-1-9" fraud after the section of the Nigerian penal code which addresses fraud schemes, are often very creative and innovative. In these schemes, someone pretending to be a government official or business-person asks ordinary individuals and companies to help move millions of dollars out of Nigeria or another third world country in exchange for high, hassle-free profits.

These "scam artists" solicit investors through mass mailings, faxes, phone calls, and e-mails.  The U.S. Secret Service has set up a task force to address these "Advance Fee Fraud" schemes. If you receive or have received such a solicitation, and have not participated or have not lost any money, please send the information by email to 419.fcd@usss.treas.gov  or by fax to 202-406-6930 or 202-406-5031.

If you have participated and have lost money in one of these scams, the Office of the Chief Counsel for International Commerce advises that you consult your attorney. Clients who have indicated that they may have participated and lost money in such schemes should also be advised to consult with an attorney. The Secret Service, as a law enforcement agency, has instructed persons who have participated and have lost money in one of these scams, to call 202-406-5850 or email the information to 419.fcd@usss.treas.gov. DOC employees are able to forward received emails to the Secret Service using the Fax capability in Lotus Notes by placing USSS419@9-406-5031@fax in the "To" line of the e-mail.

Those who would like additional information on the "Advance Fee Fraud" Scheme, can obtain it by visiting the U.S. Secret Service website at: http://www.treas.gov/usss/alert419.shtml.

What should I do if I receive a scam letter?

First, it is important that you do not correspond AT ALL with the persons named in the scam letters. Any contact with the perpetrators puts you at risk of being scammed. Do not reply to their letters, emails, or call them by telephone. If the correspondence is electronic, you can forward the e-mail to the Financial Crimes Division of the U.S. Secret Service at 419.fcd@usss.treas.gov  or fax a copy of the letter to (202) 406-5031. If you have been victimized and lost money due to such scams, you should contact your local Secret Service office. Contact information can be found under the U.S. Government section of your local white pages.

For further information, please contact:

• The Trade Information Center’s Africa Team at 1-800-USA-TRAD(E) or http://www.export.gov/tic.
• The U.S. Secret Service Financial Crimes Division at http://www.ustreas.gov/usss.

Identity Theft

In light of all the internet fraud activity, it can only be assumed that at some point a fraudulent foreign company will attempt to engage in Identity Theft.  To learn more about what can be done to either prevent identity theft and what can be done to restore your identity, please visit: http://www.identityrestore.com/ 

Read On

BISNIS, a part of the US Department of Commerce is alerting U.S. companies about cross-border transactional fraud involving bogus, allegedly Scandinavia-based companies, with delivery addresses in Belarus or elsewhere in the NIS region. Recently, a phantom "Finnish" company defrauded a Florida-based IT vendor of memory chips and CPUs out of a large sum. The bogus company issued checks over the Internet (through the Qchx system) against valid bank accounts of U.S. companies to show available funds. It turned out that the checks were fraudulent and the funds were not available.

Taking some simple precautions will minimize the risk of loss in international transactions involving deliveries to Belarus and the other NIS countries. It is important to have your bank not only check the references and balances of companies seeking to buy your computer parts, but also wait at least 10 days or more and to make sure to check has actually cleared and the money is in your bank account before shipping anything out the door. The best way to avoid cross-border transactional fraud is to require a wire transfer payment before processing the order.

Kuwait

Another recent series of scams has originated in Kuwait.  The State Economic office has alerted our offices to an issue that may negatively affect U.S. businesses. 

There have been several recent instances of U.S. companies being scammed by individuals purporting to represent Kuwaiti government agencies or the Central Bank of Kuwait. Some of these deals include arrangement for payment via offices in Madrid, Spain. We advise firms doing business with Kuwait to examine closely the veracity of any deals with the Kuwaiti Government and/or the Central Bank of Kuwait. Suspicions should be heightened if any of the transactions include a Madrid-based organization called the "Overseas Credit Commission" or an individual named Hassan Ah Almoweid (also seen as Hassan Almoweld or Hassan Al-Wallid).

The Central Bank of Kuwait's website (http://www.cbk.gov.kw) includes a "Scams and Frauds" page with information on how to verify the bona fides of individuals purporting to act for the Bank. We encourage businesses to review this material. If questions persist, businesses are invited to contact the Commercial Office for assistance.

How to Protect Yourself

Other precautions involving the internet include:

• Examine the email address on the purchase order. If the order came through a free email service provider, such as hotmail.corn, juno.corn or europe.com, consider declining the order. Experts agree that a high rate of credit card fraud occurs through these anonymous, untraceable email addresses. A convenient way to determine if an order comes from a free email service is to substitute "www" in front of the domain portion of the address and look up the provider's website. Another way to check for free email services is to browse a list maintained by Antifraud.com (www.antifraud.com/redflag.htm), an Internet-based service that helps companies protect themselves against online credit card fraud.

• Request the name and phone number of the bank that issued the credit card, including the exact name of the cardholder and the exact billing address.

• Get the transaction approval code from your merchant account vendor. Then, call the customer's credit card bank to verify the credit card data.

• Call the cardholder to reconfirm the purchase order. Often, the telephone number on the otherwise authentic-looking purchase order will be bogus.

• Pay extra attention to large orders with multiple credit card numbers and different "bill to" and "ship to" addresses.

• Insure the shipment with a freight forwarder or an independent insurance company and do not under-declare the invoice or shipment value. In a December 1999 incident, for example, a Texas-based computer parts vendor shipped $50,000 worth of memory cards to Kazakhstan and was talked into declaring the shipment value at $1,000, When the credit card fraud was discovered, the goods were already en route. "1 have learned a very valuable lesson," said the vendor, whose insurance covered only the declared shipment value.

• Stay informed. A number of Internet-based resources are available to help merchants spot credit card fraud. A short listing of sites follows:

You should also see our previous articles:

• How Well do You Know Your Customer?

If you think that you have been ripped off or have a strange sales inquiry calling for immediate delivery to somewhere you don’t normally do business, CHECK IT OUT!   Feel free to call any office of the US Commercial Service for guidance.

Please take a look at examples appearing on this website - Proposals such as these have fleeced US Companies, Churches and Individuals of Millions of Dollars with one well known cosmetic company loosing $5 Million in a single transaction.  Special reports have been undertaken by ABC's "20/20", CBS's "Sixty Minutes" and NBC's "Nightline".   Online schemes operating out of Nigeria that have defrauded victims out of tens of millions of dollars have become so pervasive that the U.S. government has given the West African country until November to take steps to decrease such crimes or face sanctions.

If you have been victimized by one of these schemes, please forward appropriate written documentation to the United States Secret Service, Financial Crimes Division, 950 H Street, NW, Washington, D.C. 20001, or telephone (202) 406-5850, or contact by e-mail.

If you have received a letter, but have not lost any monies to this scheme, please fax a copy of that letter to (202) 406-5031.

We give up!

For the past year, ExportMichigan has published the various "offers" that we've received either direct to the webmaster or through clients.  We are now averaging 50-100 emails daily and are experiencing a rapid spread to countries other than Nigeria.  We will no longer publish "offers" in the form that they are received.  We will be maintaining a log of the first 1000 which will be posted here.

Scams.xls

Additional Guidance

• Types of 419 Fraud
• Dept of State Publication on 419 Fraud

Examples

• 809 Scam
• Advance Fee Fraud
• Internet Fraud - Example #1
• Internet Fraud - Example #2
• Internet Fraud - Example #3
• Internet Fraud - Example #4
• Internet Fraud - Example #5
• Law Firm Out $2.1 Million in African Fraud

Remember, if it sound's too good to be true, it's fraud.

Date Updated: March 27, 2007