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."
Re:How About ... (Score:1, Interesting)
"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..."
Then what is a bank for if not to validate a money transfer? If they tell you "Yes, the cheque has cleared. Yes it's your money. Yes, it isn't fraudulent", and then they come back several weeks later and say "Uh, actually, we were wrong", then why aren't *they* on the hook at that point for mistakenly validating a cheque that was bogus? Isn't it their job to do these things? At some point it has to become *their* mistake, so when is that? Weeks? Months?
They should always make the distinction between "money available" and "transfer validated" clear to their customer.
Re:Also been a problem for regular people (Score:3, Interesting)
A check? Really? On first buy? WTF? If someone new buys from me, he pays 100% upfront, or he can GTFO.
Which they also warn you against, because people take the money and disappear never to deliver. Nothing is really secure unless you have an escrow service that makes sure both the funds and the goods are transferred as intended, otherwise somebody has to trust somebody. In fact that's how professional second hand ebayers essentially make their business, they have the reputation that people feel comfortable selling to them knowing they'll get their cash and the reputation to feel comfortable buying from them knowing they'll get their product. I would never send 100% up front to a first time seller, but I guess some people are more risk-taking than me as it seems first time buyers and sellers do it all the time.
Or simply a better money transfer system (Score:3, Interesting)
Checks are outdated, and because of their age combined with the new technology of today, scammers are able to effectively use them for scams like this. However, people don't have a lot of choice but to use checks. For the individual, there's not really any way to effectively and cheaply transfer money.
We need a new money transfer system for individuals, something along the line of the ACH that businesses use (if you auto pay bills, that's how they are transferred). Something where when the transfer is authorized there's a secure system for checking that the money is available and will be sent, and verifies the identities on both ends.
The problem you could end up with simply making banks responsible is that it would just slow things down a whole lot. So you tell the bank "You are responsible for any bad checks." The bank says "Ok, no problem." Then, you deposit a rent check from your roommate. It doesn't show up in your account the next day, nor the next week, nor the week after. You call and ask what is going on and they tell you that they are waiting on the transaction to finalize. More or less they'd have to take the check, clear it internally, send it back to the originating bank, wait for the funds to clear through the fed wire, and then perhaps hold them if there was additional time the originating bank could cancel.
We just need a better system. All the technology exists, the problem is just costs/availability. We need a system that is available individuals, but that doesn't cost too much. Something like PayPal works for individuals but costs too much. You aren't going to accept a 3% cut out of rent each month. ACH works well and doesn't cost much, but isn't available to individuals, just for large batch type transactions. We need something where I can specify you will get money, you can verify this is legit and the transfer is going through, and the cost per transaction is very low.
Re:How About ... (Score:3, Interesting)
Even if thr check is good, there are other scams involving money laundering, et al. The money is confirmed one day as an ACH transfer, but later reversed by the authorities or frozen.
Re:Well... (Score:3, Interesting)
I don't know if you understand how checks work, but they do take a little time to clear (i.e. for the money to be transferred from the issuer's bank to the receiver's bank). It's a hell of a lot faster than it used to be, but it still takes time.
If the check was generated in the same city then it will only take a few seconds to a few minutes to clear. Checks generated outside your region might take an hour or two, but it can take up to several days for these checks to clear. International checks and cashier's checks can take up to a month to clear. Do you realize the economic impact there would be if banks withheld cash for a month waiting for a check to clear? It would be insane, the damage done to the economy would be far worse than the damage done by fraudsters. Your response is a typical over-reaction to fraud. Because of the way checks work, if a check bounces the bank has the right to pull that money back - that way the fraudster screwed you over, not the bank.
In this case I'm guessing it only took a day or two at most, because the wire transfer was still in-progress to his Hong-Kong bank when the check bounced.
Go rent the movie "Catch Me If You Can", it's a very entertaining movie based on the life story of Frank Abignali - one of the most famous check fraudsters of all time. They do a very good job explaining how checks work and how a guy can run off with loads of cash if his fake check passes initial muster.
Re:Well... (Score:4, Interesting)
There is still a substantial impact from banks being allowed to unwind a transaction at their leisure. In the day and age when people can download a newly released movie from halfway around the world and have it on a DVD before it hits the store shelves (and occasionally before it even hits a public theater screen), there is no good excuse for not being able to say once and for all if a check is good or not within 24 hours.
There is no reason to accommodate the long gone need to send checks to the main branch via stagecoach and hear back a week or two later in the modern age. Banks should be required to verify and reserve the funds within a very short time and should at that point be unable to pull it back. If they are unwilling to join us here in the 21st century, let them assume the risks. So far, the only 19th century trappings they have cast off is their air of respectability and their drive to avoid any behavior that even looks like it might be improper. By charging more and more for less and less, they are becoming a big drag on the economy (which they have recently wrecked with little consequence to themselves).