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Internet
Fraud Tough To Prosecute
by Andrew Leckey
Like
most Americans who use the Internet, I have good friends in Nigeria.
Friends seeking to
make me rich beyond my wildest dreams.
I've lately received
e-mails from a Nigerian "colonel" offering me a 20
percent cut of his late brother's $30.5 million hidden treasure
trove; a petroleum firm "CEO" handing me a 30 percent
share of an oil contract worth $38.5 million; and a "district
bank manager" with an unclaimed $65 million account in need
of an American beneficiary.
So that my newfound
wealth can be transferred quickly and efficiently, my bank account
information must be provided to these benefactors. And, oh yes,
I might also have to make a financial contribution to get the
ball rolling.
This scam that's lived
on for decades via mail and fax has gained new life on the Internet.
It would be laughable if it weren't that some people fall for
it, forking over bank information and contributions. The average
loss of a trusting soul taken in by it is $29,000, according
to the Internet Fraud Watch of the National Consumer League.
Some lost as much as $500,000 by following instructions.
Those crooked e-mail
senders really are based in Nigeria. Since they won't come to
the United States for fear of being arrested, they sometimes
lure victims to Africa or other countries, where there have been
instances of robbery and murder.
"The thing about
the Internet is that if even 0.0001 percent of the people you
contact with a scam fall for it, you're liable to make money,"
observed Marc Beauchamp, executive director of the North American
Securities Administrators Association (www.nasaa.org), Washington,
D.C. "I get at least one of those Nigerian e-mails each
week."
Prosecuting cross-border
fraud is a challenge to law enforcement, since there must be
cooperation between authorities in both countries involved. In
this country, that problem is the purview of the U.S. Secret
Service. Crooks in other countries besides Nigeria actively target
Americans.
"While there's
increasing cooperation between Nigeria and U.S. law enforcement,
it has a long way to go," acknowledged Susan Grant, director
of Internet Fraud Watch (www.fraud.org), Washington, D.C. "Because
of corruption and other problems, even when you find someone
in a country willing to help, you may encounter other roadblocks."
This money scam is
indicative of many running rampant on the Internet.
Red flags should be
raised by unsolicited e-mail offers, refusal to give physical
location of the sender, requests for bank account or other financial
information and outrageous investment claims. Crooks frequently
tout deals in Internet chat rooms, too.
Here are the most popular
2003 Internet scams:
The "pump and
dump." This infamous scheme utilizes message boards and
e-mails to tout a stock the con artists own in a small, thinly
traded company. The stock price rises as people begin purchasing.
Once it peaks, the crooks sell, stop all the touting and the
price inevitably tumbles.
"Prime bank notes."
These vehicles promising high returns don't exist, but have been
pitched for years by fraudulent companies assuring people that
Saudi princes and the Rockefellers invest in them regularly.
Another offering, the promissory note, isn't necessarily fraudulent,
but nonetheless highly risky and sometimes fraudulent.
"Risk-free"
investments. Volatile commodities and offshore investments are
often touted as sure things, overlooking their volatility and
giving no information as to the reputation of the company offering
them.
Bogus credit cards.
These unsolicited e-mail messages often target people with credit
problems. They ask for an up-front fee and may keep it without
ever providing a card.
Prizes and sweepstakes.
It's illegal for a company to require that you buy something
or pay a fee to claim a prize. No legitimate sweepstakes company
asks for your credit card, Social Security or bank account numbers.
Legitimate sweepstakes companies tell you exactly how a contest
works and your odds of winning.
Work-at-home offers.
The company may not actually be offering to employ you, but rather
to sell you training and materials or to have you find customers.
Get all details, find out whether there's really a market for
the work-at-home job in question and make a point to know the
refund policy.
To illustrate how easily
individuals are lured by a pretty Web site, the Securities and
Exchange Commission recently launched a fake site of its own
called www.growthventure.com/grdi for a non-existing company
called Guaranteed Returns Diversified Inc.
If you give it a look,
you'll see that it offers the "opportunity" to invest
$25,000 in a hedge fund, far less than the typical initial minimum
required for these volatile vehicles.
"Without doing
any promotion, we had 50,000 hits on the site right away and
many, many inquiries to the e-mail address on the site,"
said Susan Wyderko, director of the SEC Office of Investor Education
and Assistance, Washington, D.C. "We hope that people who
hear about our `fake' scam learn something about real scams in
the process."
Finally, never underestimate
the resourcefulness of high-tech criminals. "The Internet
is a tremendous tool not only for investors, but for con artists
as well," concluded Beauchamp. "You must still beware
of anyone offering you something too good to be true."
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