US Law Firms Targeted By Cyberscams 121
Hugh Pickens writes "The San Francisco Chronicle reports that last year a Long Beach law firm received an e-mail from a Hong Kong businessman seeking help collecting debts from American customers. After a month of signing paperwork and exchanging telephone calls, the attorney received word that one debtor had sent a $200,000 cashier's check to pay off his balance. The attorney deposited it in his firm's account, subtracted his $10,000 fee and wired the remaining $190,000 to his Hong Kong client. Then the attorney's bank called and told him the $200,000 check had bounced. 'They send me a nice, big, worthless check,' says the attorney. In this case, the bank was able to prevent the wire transfer from reaching its destination, but attorneys say they are on the receiving end of sophisticated scams with increasing frequency that include attacks to steal client data that can be sold or used to learn the details of future litigation."
Also been a problem for regular people (Score:5, Informative)
Classic scam:
1, Scammer pretends to be a buyer for some fairly expensive product, e.g. a car
2. Scammer sends false cashier's check to client
3. Scammer asks to cancel the deal because of some crisis, offers to cover any expenses he's had and a compensation for wasting their time
4. Many people will have compassion for their situation and agree to undo the sale
5. They wire the reminder - maybe 90% of the purchase price - back
6. The check sent in #2 bounces, the money returned in #5 gone and they're out a ton of money
7. Profit, for the scammer. No ??? here.
Re:How About ... (Score:5, Informative)
The first time I get payment from a client I always wait to see if it clears before moving forward on a project.
You should know then that checks never clear. They just fail to bounce. That may not seem like much of a distinction but it is precisely the reason many of these frauds work. In the US the law specifies a maximum hold time on deposits before the bank must make funds available to you. So, as long as the check fails to bounce during that period of time the fraudster usually gets away with their scam. But eventually it does bounce, and that's when the bank comes back to the person who made the deposit and they take their money back - if there isn't enough cash in his account, they sue him for the difference.
I know a guy who was scammed out of an exotic car - the 'buyer' gave him a bogus cashiers check. His bank took nearly three weeks before notifying him that they were "having difficulties" processing the check. By then, the car was half way across the country and had already been resold to a used-car dealer. FWIW, his car insurance eventually paid out because the car was essentially stolen, albeit through fraud rather than the more common ways.
Re:Obvious answer... (Score:5, Informative)
And so you too would have gotten taken by this scam. They received a cashier's check (aka bank cheque) and their bank accepted it. They, like you, believed that an accepted bank cheque was as good as cash so they wired the refund (which, FYI, is the same as cash, since you can't take it back) and got stuck.
Re:How About ... (Score:5, Informative)
He did wait. His bank reported it as valid, and only after that did he send along the $190,000 to his client. Then the first check was bounced, _after_ his bank reported it valid. That's the root of a whole set of fiscal scams going on right now, the fact that banks report checks as "valid" that can still be voided by a malicisious check user after that point.
Re:So, why expose yourself like that? (Score:3, Informative)
Instant wire transfers aren't really instant. Like in the example above. The lawyers sent a wire transfer, the check then bounced and the bank was still able to stop the wired money from reaching the scammers.
I bet the wire transfer showed up in the scammers account instantly, however the money lags that information in much the same way cashing a check works.
Re:Lawyer is stupid (Score:3, Informative)
Doesn't help in US and maybe in some other countries - in most countries it would then be the banks problem / loss but I digress. I have had the transactions reversed after 3-4 weeks in US banks because they (the clearing house - what a joke!) failed in process! One reason not to use the US banks for small transactions - big / enterprise / government transactions are handled differently. $200K is not big, by the way.
Late news and less salacious (Score:5, Informative)
A more compelling version of the scam, to me, is overpayment of retainer fees as a new client. Fortunately, only idiot California firms are vulnerable as the ABA has warned about this variation as well. [abajournal.com] Interestingly, though, the tab appears to have been $500K in that one.
Re:How About ... (Score:4, Informative)
Hmm, the solution to this problems seems obvious.
Once a bank tells you that a check you deposited is valid, the bank is now liable for that deposit. If the check ends up being fraudulent in this case, the bank is out the $200,000, not the customer who deposited it.
If we change the law so this is the case, banks will be a lot more thorough about checking the validity of deposited checks. Trust me. :)
Except the bank probably only released the funds; they didn't say the check was good. Many US banks will release funds before the check is eventually discovered to be good; people unfortunately think the check is good and that's the root of the scam.
Re:WTF is "cashier's check" ?? (Score:4, Informative)
A cashier's check is a check issued by a bank.
The party doing the paying is the bank, not you. For this reason, it's considered more secure than a personal check.
If you pay by cashier's check the money has already been debited from your account. There's no possibility that you'll give a check, receive merchandise, and then empty your account before the seller has a chance to deposit the check.
Other names for cashier's check are:
-bank draft
-demand draft
-banker's draft
Re:Or simply a better money transfer system (Score:3, Informative)
The problem is not exactly 'cost/availability'. It is more like 'greed/stupidity'. Such system exist and functions perfectly well in Europe, even in the somewhat more backward eastern parts. It is free or the costs are negligible for the typical consumer. All you need to do is know the IBAN of the other account and you can safely, quickly and cheaply transfer money. And this is not something that just happen. It has been in place for decades.
In the US banks want to charge you for any absurd thing that comes to their mind. As a results we are stuck with an incredibly slow, inefficient and insecure way to transfer money (writing numbers on paper). There is no way that check processing is cheaper that wire transfer. Here are two examples of how absurd wire transfers in the US can be:
1. I have accounts in banks A (checking) and B (brokerage). If I go to bank A and tell them to transfer money to bank B, they will charge me $15. If I go to bank B and tell them to transfer the money _from_ bank A it is free.
2. I want to transfer money to Europe. My bank will charge me $35 and send the money. The bank on the other side will withhold their own fee (because the US bank is not part of the IBAN system) and put the rest in the account. While I know the US bank fee there is no way to know the fee on the other side, even my bank claims there is know way the can find this out. As a result putting exact sum of money into a bank account which should be the simplest thing to do is absolutely impossible.
Re:Or simply a better money transfer system (Score:3, Informative)
Odds are, that $15 transfer charge is for a wire transfer, while the free transfer is via ACH. ACH transfers are almost always free; wire transfers are almost always pricey.
This scam has been tried on me for years. (Score:4, Informative)
It starts with an email from a potential "client." They say they want to book you from overseas. Offer to send you a check, send a check for more than your fees, and ask you to pay for the invitation printer (or whatever) for them.
On my end, more small potatoes then the case ITA, this scam is easy to spot. The people don't act like a real wedding client, they don't want to talk on the phone, they don't know how to discuss wedding packages, they make have bad grammar etc... You can spot this long before they get to the ask.
For a long time, as soon as I had two or more tale-tale signs, I would quit the conversation. Then I got a PO Box. Now, I drag it on as long as possible (unless I'm extra busy that week). I like to see the look of the fake checks, and I like to waste their time.
Re:Well... (Score:3, Informative)
Because retail banking is based on medieval rules. A check can bounce weeks after the fact: it's just a promise that X will pay $Y, not a real financial instrument that generically pays $Y.
The US has banking laws that require banks to make deposited funds available to you after N days, but that is NOT the same as you actually having completed the underlying transaction: unwinds happen, the money is removed from your account, and you are back at square one, possibly with a fee to boot.
Re:All The Time ! (Score:1, Informative)
The English is mostly believable -- there are errors but of the kind even educated non-native speakers make. Indeed, I've read materials written by non-native college grads which is much less clear than what I see in these scams. Anyway, for people who are interested, here's the text of one I received a few days ago (I probably get one or two a week that makes it past the spam filter):
Re:Well... (Score:3, Informative)
The solution is to receive payment via ACH debit. This means you initiate (with their written permission, make sure you have the signed docs for this) the withdrawal of funds from their account. Once you get the funds, you're in the clear... they cannot be recalled by the other party, and you did not need to give them your account details.
Are you serious???! An ACH transaction can be reversed up to 60 days after the next bank statement, if the customer reports it as an unauthorized electronic transfer. This is as it should be, since an account number is not a proof of identity. In theory, if you can show that the actual account holder did authorize the transaction, you're fine, but even in the best possible case the verification is all on you. Of course, in a case like the check case in the article where the business was transacted by mail, anyone can send you a bunch of phony authorization paperwork that isn't going to mean jack.
Re:How About ... (Score:3, Informative)
So how does a person determine that a check is _actually_ good, so they can avoid these problems?
The only way I know of is to present the check to the issuing bank to cash it and the bank / company have a positive pay agreement; even then I'm not sure if that fully protects you. Probably the best bet is to take the check to a bank manager and get their input on what to do to ensure you don't get stuck; of course too good to be true deals or ones that just don't feel right are a tip off as well. For example, if you get a check for too much offer to return it for correction; a fraudster would come up with reason why not to send it or simply drop you.