Still think Internet fraud only happens to other people? Naive or greedy people who live far away? Guess again. It’s here, and it’s big. In the past 16 months, several millions of dollars worth of counterfeit State Bank of Kimball cashier’s checks have passed through the Kimball bank. The smallest checks are for thousands of dollars; the largest was $10 million. These checks have been submitted to banks throughout the United States and around the world. When they call the Kimball bank to verify the account, however, they learn they’re fake. “Neither the bank nor its customers have lost a penny,” said Keith Markwardt, President of the State Bank of Kimball. He added, though, that it’s impossible to know how much others may have lost to this fraud. The counterfeit checks are used to pay for items on eBay and other Internet sites. Naturally, the checks are worthless. But here’s where the scam gets bigger. The winning “bidder” sends a cashier’s check for much more than the final bid. With an explanation that they made a mistake or that they want you to use some of the overage to pay shipping, they ask the seller to wire the extra money back to them. The seller’s problem is that the cashier’s check is counterfeit. The seller’s bank may cash it, but banks are catching on to the scam. Criminals in West African countries seem to be mostly involved in this bank scam explained Markwardt. “Nigeria seems to be the center [of activity],” he said. Markwardt explained that any financial instrument can be counterfeited. Cashier’s checks were likely chosen because of their perceived safety. The Kimball connection The tie to the Kimball bank is through its St. Augusta branch. Markwardt said they’ll never know exactly how it started, but they suspect an international traveler brought a cashier’s check from St. Augusta to Africa. The account numbers and signature have been reproduced on dozens of fraudulent checks now being passed around the world. When a counterfeit Kimball check is deposited at another bank, they forward it to the Kimball bank which then has 24 hours to reject it. If it’s counterfeit, it’s turned over to FinCEN (Financial Crimes Enforcement Network) along with a stack of paperwork the bank has to fill out. Some days, two Kimball bank employees spend the whole day taking phone calls and exchanging faxes related to counterfeit checks. On the worst day in Markwardt’s memory there were 15 calls, from 7:30 a.m. to 7:30 p.m. The first tell-tale sign the checks are counterfeit is the account number: the account was closed as soon as the counterfeits were discovered. Other things that make checks suspicious are the dollar amounts, and the use of big-sounding overseas banks and companies like Delta Airlines or Bank of Switzerland instead of an individual. In most cases, the “buyers” never claim the item they bid on. They don’t want any traceable assets, explained Markwardt. Once they get cash wired back to them, they’re already working on snagging their next victims. If they don’t get the money, they’re working even harder on their next scam. Kimball is far from alone in this scam. At least 75 American banks, and perhaps hundreds of other financial institutions, have been victims of the check fraud said Markwardt. Perhaps because it’s a small-town bank, or perhaps because they are extra-vigilant about scams, the State Bank of Kimball hasn’t lost any money with all these counterfeit checks – only a good deal of administrative time and some file space. Lots of other scams This particular scam is only one of many out there. Here are a few of the others: o Criminals use “phishing e-mails” telling you that your e-mail or eBay account will be closed if you don’t immediately log on and update your information. If you click on the links provided in the e-mail, you are directed to a false site that looks legitimate. You’ve just given them your user name, password, and access to your credit information. Now they can use your good account to perpetrate more crimes. o Using stolen eBay accounts, criminals offer for sale any number of enticing, expensive items – often at unusally low starting bids. The items are often counterfeit or stolen, if they exist at all. If you ask the seller a question, you get a “form letter” type of response that usually doesn’t address you or your questions. o E-mails are sent announcing that the recipient has won a sweepstakes or lottery, often overseas. All the “winner” has to do is pay a fee (usually by giving up their bank account or credit card numbers). Don’t fall for this. Legitimate sweepstakes will never ask you to pay a fee to claim winnings. Besides, like they say, you can’t win if you don’t play. If you didn’t submit an entry, don’t expect those “winnings” to be real. o People who use on-line job registration services are targeted for a money-laundering scam. They are offered an unbelievable management job with an international company wanting a presence in the United States. Then they are expected to use their personal bank account to buy equipment, for example in return for a keeping a small percentage of the funds as a “commission”. They are unwittingly laundering money obtained from fraudulent cashier’s checks and other illegal activity. o An e-mail arrives imploring you to help transfer millions of dollars, in exchange for a percentage. The names and circumstances change, but the scam is the same. Sometimes the e-mail claims to come from the wife of a deposed president under house arrest. Sometimes the author claims to be a bank official representing the account of a now-deceased American or Canadian with no known heirs. The bait is a large percentage of multi-million dollar bank accounts. All you have to do is let them use your bank account for a short time – or so they would have you believe. There are no multi-million dollar accounts, no families cut off from funds they’re entitled to, and no pay-outs of thousands of dollars. Instead people are suckered into paying thousands and thousands of dollars for legal fees, customs documents, etc., for which they get nothing but aggravation. Nothing new These scams and others have been around for many years. They account for a very small percentage of Internet business transactions, but they happen every minute and are growing as Internet usage increases. The United States has its own, lower-tech version of the scam: “insiders” in average businesses like gas stations or restaurants are paid a fee for photocopies of checks passed through the business. Account numbers are stolen and fraudulent checks created. The dollar amounts involved tend to be much smaller, though, compared to the cashier’s check scams said Markwardt. The F.B.I. is responsible for investigating bank fraud. So is the F.D.I.C. (Federal Deposit Insurance Corporation) that insures money deposited in banks. But they are limited in what they can do, especially when the criminals are overseas. Some African nations do not have reciprocity with the United States, explained Markwardt. This means they won’t cooperate or assist in any investigation or prosecution of the criminals there. “The Federal Reserve could easily work with banks to create a software list of counterfeit instruments,” said Markwardt. Banks could check the list and catch fraudulent checks early, before paying them. Markwardt says there’s no interest on the part of the Federal Reserve to do that at this time. Banks receive bulletins listing the latest scams, but without a centralized list it’s impossible for a single bank to keep up on the information. “We can’t look through 200 bulletins every time [a cashier’s check is submitted to us],” said Markwardt. Protect yourself – don’t be a sucker If a deal seems too good to be true, it is. Your mother and grandmother have told you that all your life. That lesson has never been more relevant than with Internet fraud. Don’t ever give out personal information by e-mail – it’s simply not secure. If you receive an e-mail asking you to “confirm” any personal or financial information, check the company’s Web site on your own – don’t follow
any of the links in the suspect e-mail. Delete all “junk” e-mails. If you reply to have your name removed, or to send them a nasty warning, you’ve just moved up on their “sucker” list. They got you to do something, so your e-mail address can be re-sold at a higher price. Don’t enter any personal or financial information on a Web site you don’t know. Watch for the “https://” at the beginning of the URL (Web address) – that “s” means it’s secure. Deal with reputable companies. Anyone can create a legitimate-looking Web site. It’s easy to steal and include Better Business Bureau and other logos that lend credibility. If you have any doubts, just walk (or click) away. Here are a few other “red flags” to watch for: o E-mail addresses such as yahoo.com or hotmail.com. These are free and criminals can have dozens of them so it’s harder to trace them. o Conflicting or no addresses given; no telephone number; or only a P.O. box address listed. o Pressure words like “urgent” or “immediate” in communications, or demands to complete a transaction immediately. o Any kind of threat or harassment. o Insistence that you give them your social security, credit card or bank account numbers. You may be asked to only “verify” this information, but not by anyone legitimate. o Absence of some kind of written contract or documentation. This could be used to help track down the criminals. o Check sent on a weekend so the banks are closed. Wait until you can call the bank to verify the check before sending any goods. Get the phone number from the phone book or directory assistance (don’t rely on the check or the “buyer” for that information). Call the bank directly and verify the check number, amount of the check, and the name of the person to whom the check was issued. Don’t skip this essential step. Common sense is your best weapon against being victimized on the Internet. Trust your instincts. Don’t be greedy, don’t be a “sucker.” Ironic twist – help on the
Millions in counterfeit checks pass through Kimball
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