Counterfeit Visa Travelers Cheques in circulation!

Counterfeit financial instruments are circulated in a variety of Internet scams. The ploy is always to get someone to cash them and then wire the money back to the person behind the scam.

In the past couple of weeks, readers and other sources have brought to my attention that counterfeit Visa Travelers Cheques are in circulation.

Visa has provided resources to identify these instruments.

You can call them at 1-800-227-6811 to verify an item. This can also be done on-line, here.Visa also has a good interactive tool to identify the security features of the Visa Travelers Cheque, here.

The trick is to ALWAYS verify them before you negotiate them using your good name!

Some of the scams being used to trick people into cashing these items are known as work-at-home (job) scams, secret shopper, romance, lottery and auction scams.

A collective name for all of these scams that ask you to cash an item and send the money back to the scammer is called the advance fee (419) scam.

A lot of the sites dedicated to fighting scams are also seeing an alarming trend, which is that people are getting arrested for attempting to cash these items.

I recently had a conversation with the fine folks over at FraudAid about this trend.

A great (new) resource about all the counterfeit paper being circulated is FakeChecks.org.

People, who fall for these scams do so because they are lured with something that is too good to be true. The old saying is that if it is "too good to be true, it is NOT!"

Here are some other counterfeit instruments, I written about that are still in circulation:

Counterfeit MoneyGram Money Orders being passed via Internet Scams

Counterfeit Cashier's Checks Fuel Internet Crime

American Express Gift Cheques Being Circulated in Internet Scams

Counterfeit Postal Money Orders Showing Up in IScams Again

Here is a picture of counterfeit Visa Travelers Cheques that were sent to someone about a week ago. They were sent from the United Kingdom, however the scammer wanted the money wired to Nigeria.


(Photograph courtesy of Raleigh)

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Tools to verify those too good to be true financial instruments you got in the mail

(Counterfeit check picture courtesy of cknlomein at Flickr)

There are a record amount of counterfeit cashier's checks, official checks, money orders, travelers and gift cheques in circulation. This is an attempt to pass on information that the average person can use to tell IF the item is real or a counterfeit (fake).

As a disclaimer -- this is only a guide and if you deposit or cash items from people you don't know -- you do so at your own risk. The quality of these items is getting better all the time.

I’ve put together a list of the known counterfeit items in circulation, along with the current telephone numbers to verify them. You will probably receive these items after being lured with a (too good to be true) get rich quick scheme that doesn't make very much sense.

The best method to verify an item is to go to the maker, or issuer of the check (cheque). They probably will know if they issued it. The key here is to make sure you are speaking with the real issuer (maker) of the item.

Never trust a number provided on the instrument, fake telephone numbers are sometimes set up that will even verify in 411 (information).

Simply stated, as long as the communication companies think they are being paid, setting up a fake number is no problem. We are seeing fake numbers set up by scammers pretty frequently.

Since these numbers are often set up in 411 (information) rather easily, I recommend using Phonevalidator.com. This site provides a service that shows if a number belongs to a cell, or a land line. It also provides telephone directory and Google results for the number queried.

Quite often, fake numbers set-up to verify checks are cell phones.

The Internet is a good way to find the true issuer (maker) of an item. The key is to make sure you are visiting a legitimate site.

Fake websites (especially those pretending to be financial institutions) are a growing problem, also. An easy way to check if a site is legitimate is by using TrustWatch, which verifies whether a site is known (trusted) or not.

If you are interested in taking a look at some fake sites, claiming to be financial institutions the Artists Against 419 has some great examples of them on their site.

A common denominator in most of the scams is that there will be a request to send the proceeds, minus your paltry cut (normally via wire transfer) back to the person sending you the instruments. That is (unless) they are buying goods from you. In this case, your property is what they want you to send to them.

Some of these lures include, but aren't limited to (new lures surface frequently), secret shopper, romance, lottery, work-at-home and auction scams.

The National Consumers League recently set up a site (fakechecks.org), which is a great reference on Internet scams involving checks (complete with visual presentations), here.

So far as auction scams, eBay will no longer offer any protection for paper financial instruments on their site.

Here are some of the known items being counterfeited in large quantities and literally circulating worldwide:

Visa Travelers Cheques: 1-800-227-6811.

MoneyGram Money Orders (counterfeits may still use the old Travelers Express logo): 1-800-542-3590.

US Postal Money Orders: 1-877-876-2455 (mail fraud) option 4, then go to option 2.

American Express Gift and Travelers Cheques: 1-800-221-7282.

FDIC Alerts on the counterfeit cashier's and official checks in circulation, here. There is a feature that allows you to search them. I would try it by using the name of the institution.

Counterfeit cashier's and official checks change almost daily. The counterfeiters use legitimate account numbers and convincing looking check stock that will verify in most automated telephone verification systems.

It's probably good advice to never trust an automated system. In the case of a counterfeit, real ABA/account numbers are used by the counterfeiters. Because the information is real, they get past an automated verification system fairly easily. If you really want to know and believe an item is a counterfeit, ask to speak to a live person, preferably in the fraud department.

If you are dealing with a suspected counterfeit cashier's, or official check, I highly recommend reading a post I collaborated on with Tom Fragala (CEO of Truston Identity Theft Protection Services):

Counterfeit Cashier's Checks Fuel Internet Crime

Bank employees sometimes verify counterfeit instruments as legitimate. In some instances, especially at a teller window, they have been mistaken. If this occurs, you will be notified days later and the bank will take no responsibility.

Even more alarming, I have talked to and get comments/e-mails from people all the time who are getting arrested after trying to negotiate these items.

Here is what I wrote about this growing phenomenon in a previous post, along with my personal speculation as to why this is happening more frequently:

When the check is discovered to be fraudulent, anywhere from right on the spot to about ten days later the person passing the item is left holding the bag. This can translate into a loss of their freedom (getting arrested), being held financially liable, or a combination of both these consequences.

The real victims can probably blame this new phenomenon on all the criminals, who are pretending to be victims and then cashing the items themselves. Here is how I described this in a recent post, where an International task force discovered millions of dollars (face value) of these items destined to be shipped, worldwide:

A new trend has been noted called reverse-scamming, also. This occurs when scammers have the bogus instruments sent to them, cash them and then never follow the instructions to wire the money.

If confronted, these reverse scammers will normally claim to be victims. A key way to pick out a reverse scammer is that, in most instances they forget to wire the money back to the scammer that sent them the counterfeit instrument.

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Will counterfeit Visa Traveler Cheques be the latest bogus financial instrument spread in Internet Scams?

(Photo courtesy of Flickr)

Counterfeit Visa Travelers Cheques -- so far seen in $500.00 denominations -- are starting to appear in different parts of the United States.

In the past few years, counterfeit U.S. Postal Money Orders, MoneyGram Money Orders, and American Express Gift Cheques have all been circulated by Internet fraud activity.

If history repeats itself, we will see counterfeit Visa Travelers Cheques show up outside the United States, also.

These instruments have been passed in a lot of work-at-home (job) scams. They are also passed in secret shopper, romance, lottery and auction scams.

These advance fee (419) type scams all have a common theme. A lure (scam) -- which plays on greed is offered to entice someone into cashing these items -- and wiring the money back to the fraudster behind the scheme.

The lure (scam) is always too good to be true and makes no sense.

Since it is against the law to pass a counterfeit financial instrument, people are sometimes arrested when they present these items. Even if they aren't arrested, they are held liable, when the fraud is discovered.

Unfortunately, banks often give credit to their customers on these items. Tellers have even told their customers the items are legitimate, which doesn't make any difference (for the customer) when they return. Of course, the bank isn't liable for any of this.

These items are also being presented to merchants. Retail criminals use them to purchase items, get the balance in cash, then refund the merchandise. Of course, if they are unable to refund the items, they will probably try to get gift cards or fence the merchandise. There is a lot of stolen merchandise being fenced (pretty easily) on Internet auction sites.

Intelligence indicates these many of these items are being printed overseas, then distributed in bulk, worldwide. Once received in bulk, they are broken down and distributed to the criminals, who then use them in the manners listed above.

Visa recommends that you do the following to verify if one of the Travelers Cheques are real:

Can you see a watermark in the cheque?

Can you see the holographic thread embedded in the cheque?

Is the customer present?

Have the cheques been countersigned in your presence?

Does the original signature match the countersignature?

Has valid identification been presented and the details recorded along with the customer name on the back of the cheques?

If you are suspicious, you can call them at 1-800-227-6811 to verify an item. This can also be done on-line, here.Visa also has a good interactive tool to identify the security features of the Visa Travelers Cheque, here.

Here are some of my previous posts on counterfeit instruments circulating via the Internet:

Counterfeit MoneyGram Money Orders being passed via Internet Scams

Counterfeit Cashier's Checks Fuel Internet Crime

American Express Gift Cheques Being Circulated in Internet Scams

Counterfeit Postal Money Orders Showing Up in IScams Again

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Fraudsters mutate counterfeit MoneyGram money order scam to fool victims/financial institutions

Counterfeit MoneyGram Money Orders seem to be surfacing all over the place, again! Here is what I wrote about them the last time I posted on them:

Recently, MoneyGram removed the Travelers Express name from their money order product. The new version is branded simply as MoneyGram, printed in Spanish (Espanol) in addition to English.

The old version with the Travelers Express name have been counterfeited and circulated via Internet scams for a couple of years. A lot of them had Walmart's logo printed on them. We've seen similar counterfeit American Express Gift Cheques and Postal Money Orders in recent years, also. Some of these items are still in circulation, including the older Travelers Express version.

For a long time, the counterfeiters seemed to prefer using a Walmart logo. Some of them even came with a letter from Walmart Financial Services.

The newer version, I saw on Friday bear a CVS Pharmacy logo and they are being distributed in lower dollar amounts. Presumably, the high dollar amounts $700.00 and over were being looked at too closely by financial institutions.

Not sure, but they could be starting to use a variety of logos to make them look legitimate. If anyone reading this has seen different, please add a comment to let everyone know.

The newer items seem to be in denominations of $500.00 or less.

These items normally are obtained when a person gets involved in a too good to be true financial scheme, or is solicited by a beautiful woman (or man) needing to be rescued from a foreign locale. This normally occurs on the Internet.

Here are some examples of the lures used to pass these items, along with links to old posts:

Some of these lures include, but aren't limited to (new lures surface frequently), secret shopper, romance, lottery, work-at-home and auction scams.

Sadly enough, the lowering of the dollar amount seems to have had limited success because I am getting reports that some of these items have been cashed at financial institutions.

The saddest part of all of this is (from an earlier post):

A common denominator in most of the scams is that there will be a request to send the proceeds, minus your paltry cut (normally via wire transfer) back to the person sending you the instruments. That is (unless) they are buying goods from you. In this case, your property is what they want you to send to them.

In other words, if the item is cashed at a financial instiution, when it comes back as a counterfeit -- they will hold you and YOU ALONE liable.

Even sadder, people are also getting arrested for passing them. When counterfeit instruments started getting passed in Internet scams, the financial institutions were a lot more forgiving. This isn't necessarily the case anymore with the amount of losses being taken out there.

More and more often, criminals pretend to be victims and pass the items. I call these people, "reverse scammers" because they have no intention of wiring any money back to the original scammer.

If you are a true victim, I recommend taking to the good folks at FraudAid, who advocate for the people that are really victims. The key is being able to show all the correspondence, along with proof that money was actually wired. If you kept the money from the transaction, it is going to be hard claiming "victim status."

The best way to avoid getting scammed is to call and verify the item at MoneyGram, itself. This can be done by calling 1-800-542-3590. In almost (although not always in theory) all cases, this call will reveal the item as a counterfeit.

MoneyGram money orders aren't the only instruments being counterfeited. Counterfeit cashier's checks, money orders, gift and travelers cheques are also being counterfeited and used in these types of scams.

If you want to learn more about these scams, I recommend going to fakechecks.org, who has some great videos illustrating the scams used to pass these items.

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Counterfeit MoneyGram Money Orders being passed via Internet Scams

Recently, MoneyGram removed the Travelers Express name from their money order product. The new version is branded simply as MoneyGram, printed in Spanish (Espanol) in addition to English.

The old version with the Travelers Express name have been counterfeited and circulated via Internet scams for a couple of years. A lot of them had Walmart's logo printed on them. We've seen similar counterfeit American Express Gift Cheques and Postal Money Orders in recent years, also. Some of these items are still in circulation, including the older Travelers Express version.

The newer version (MoneyGram) printed in both Spanish and English are now being counterfeited and being circulated via Internet scams. The one I saw was accompanied by a letter from Walmart Financial Services.

Like other counterfeit financial instruments, we'll probably see these circulated via romance, auction, job, secret shopper and lottery scams. The common theme is that the scammer will always request that you send a portion of the money back to them (wire transfer is the preferred method).

In the case of auction scams, they may be used to buy expensive merchandise.

Cashing these items will leave you at a minimum, financially liable. I've also been told by readers that people are sometimes getting arrested for passing them!

The new version (recently seen) have receipts attached to them. Money Order companies often attach receipts to their products as a security feature. These receipts are used to obtain refunds, if a money order is lost, or stolen.

The counterfeiters have probably added this feature to instill a false sense of security.

Like their predecessors, these counterfeit Money Orders are (normally) easy identified by calling in and verifying their authenticity.

MoneyGram has an automated system to do this, which can be accessed by calling 1-800-542-3590. Live customer service help is available during normal business hours.

MoneyGram also has a page with a lot of relevant information on how to SAFELY negotiate these items, here.

Since this is something new, if anyone would like to help get the word out, please leave a comment on this post, or drop me a line at EdwardDickson@SBCGlobal.net.

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Romanian Second-Chance eBay Scammers Busted

The federal authorities are charging twenty-one Romanian fraudsters, who scammed a lot of people in second chance auction scams. According to the federal authorities, the scam was active for about three years and a lot of the victims lived in the Chicago area.

From the article, it was one of the (now) notorious second-chance scams, where a person is given a second chance to win an auction and asked to wire money to a distant locale (in this instance Romania).

Of course, once the money is wired, the person who sent it, never receives "fair value" for their hard-earned money. Please note that wiring money is a "common ploy" in all sorts of Internet scams. I would take a deep breath, when asked to wire money on a transaction (normally overseas) that seems a little "too good to be true."

In this instance, the federal authorities are asking for people, who think they might have been victims to come forward:

Anyone who believes they may have been a victim may e-mail inquiries to usailn.victim.witness@usdoj.gov. Include your name, address, phone number, 10-digit Western Union Money Transfer Control Number, amount transmitted, date funds were provided and the name of the individual to whom the funds were sent. Victims may also call a toll-free hotline number for updates about the case – (866) 364-2621.

Second chance scams have been active on auction sites - you can read all about them on Google, here.

Western Union has a page warning people about wiring money to people they don't really know, here.

I read about this on CBS2chicago.com, who has more details on this story, here.

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Too good to be true employment opportunities

Patrick Jordan (Sunbelt blog) did a nice post about a huge problem that frequently occurs on the dark-side of the Internet.

The problem, I'm referring to is people being recruited (some might say duped) to assume the risk involved in collecting the proceeds of Internet crime.

With all the fraud occuring on auction and e-commerce sites -- criminals need a way to move they money they are stealing. This activity is often referred to as money laundering.

They accomplish this with money transfer scams, which are sometimes referred to as job scams.

These scams are nothing more than a way to trick people into negotiating bogus financial instruments, or launder the proceeds of auction fraud!

We've all probably seen a spam e-mail, or two (I get several daily) with job offers that seem a little too good to be true. Most of these jobs seek a financial representative to handle payments for a foreign company. In reality -- the person is moving stolen money overseas -- where it disappears into thin air.

Besides being offered in spam e-mails, people are also recruited off job sites and sometimes even from the classifed sections of newspapers and magazines.

A sister scam to money transfer scams is referred to as a reshipping scam. The difference is in this job a person reships hot merchandise (normally from auction sites) to their bosses.

In most of these scams, they prefer you use Western Union or MoneyGram to send them their money. Once the money is picked any efforts to recover it will most likely be useless. Please note that there are many e-cash venues that are used, also.

While these jobs might have fancy titles, a lot of people refer to someone doing this as a "mule."


(courtesy of mattcoz at Flickr)

In Patrick's post, he reveals another twist to this activity, which are websites set-up to make these jobs appear to be legitimate.

Here is a screen shot (courtesy of the Sunbelt blog) of the site Patrick discovered:



He also lists some other sites to avoid from the same IP in his post, which can be seen, here.

Most of these scams are pretty easy to discover because they are offering too much money for too little work.

These job offers are nothing more than a way for criminals to get other people to take all the risk, while they reap the rewards of their illegal efforts!

Besides facing almost certain financial ruin, some of these employees are ending up living in new digs:

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Crimes Against Businesses Contribute to Job Losses

Organized retail crime costs retailers billions of dollars. In an era, where retailers are closing stores or going completely out of business, it's logical to assume that organized retail crime is a contributing factor to retailers shutting their doors and people losing their jobs. With the sour economy inspiring more and more theft and fraud, it is becoming more critical than ever before for companies to control their losses in their struggle to remain viable.

When retailers lose money to theft, the end result can be (assuming they don't go bankrupt) that jobs are cut. Payroll is normally the largest and most controllable expense in any business. When businesses start to show negative earnings — like a lot of them are right now — payroll is normally the first place they look to cut when trying to avoid shutting their doors.

In an effort to fight what experts say is a $30 billion a year organized retail crime issue, the National Retail Federation is welcoming legislation being introduced to give them more tools to fight this problem. Yesterday, three bills were introduced in Congress to assist retailers and law enforcement in this effort.

The three bills introduced are "the Combating Organized Retail Crime Act of 2009, sponsored by Senate Majority Whip Richard J. Durbin, D-Ill.; the Organized Retail Crime Act of 2009, sponsored by Representative Brad Ellsworth, D-Ind.; and the E-Fencing Enforcement Act of 2009, sponsored by House Judiciary Committee Crime, Terrorism and Homeland Security Subcommittee Chairman Bobby Scott, D-Va. The measures are similar to legislation first introduced last summer" according to the press release and podcast on this matter by the National Retail Federation.

In case you are unfamiliar with "Organized Retail Crime," it involves organized retail theft activity for profit. Once the merchandise is stolen, it is fenced (sold) to get a cash value out of it. Traditionally, this merchandise was sold at flea markets/dishonest retailers, but more and more often nowadays, retail crime rings are turning to auction sites to unload their stolen goods.

The reason for this is if they sell it on an auction site, they make a lot more money than in the more traditional fencing venues. Experts believe they net 70 percent of the retail value by selling their stolen wares on an auction site versus the 30 percent of retail value they receive in more traditional fencing venues.

Another possible factor contributing the problem is that consumers — who are operating with ever-decreasing personal budgets — are flocking to these sites to stretch their buying dollars. Without knowing it, they might be adding fuel to the fire and unknowingly buying this stolen merchandise.

Even if the retailer can prove that merchandise on an auction site is stolen, it can be extremely difficult for them to get the site to cooperate in going after the criminals selling it. Due to a lot of red-tape imposed by these sites to release information, it requires a lot of time/effort to get the site to cooperate in an investigation. Because of this, the crooks are normally long gone before any effective investigative action is taken.

Another phenomenon called phishing makes the activity even more anonymous/hard to track on auction sites. Phishing is where a person (user) is tricked into giving up their credentials to an account. For years, eBay and PayPal have ranked as some of the most phished brands out there. Criminals use this information to take over an account and commit fraud using someone else's selling account. When investigating auction fraud, time is of the essence, otherwise the trail is often too cold to track. The crooks use one of these accounts for a short period of time and then move on to another phished account to avoid detection.

Organized retail crime is also taking advantage of the identity theft/financial crimes phenomenon and working with the hacking element that has been attacking the financial industry. Counterfeit payment cards (credit/debit), checks and identification are all being used to electronically boost merchandise and walk right out the store with it. In the TJX data breach — which was the largest hack of financial data to date — a group was caught using cloned payment cards to buy $8 million worth gift cards from Walmart. In the more recent data breach at Heartland Payment Systems — which looks like it might surpass TJX in the amount of data stolen — the only arrests made thus far were a group using the stolen data to clone gift cards. Since gift cards are redeemed at retailers, this is yet another example of how the financial hackers and organized retail crime types are working together. To me, this is evidence that organized retail crime is becoming more sophisticated in their theft techniques, which will likely make this problem get even worse than it already is.

The three bills being introduced will force auction sites to cooperate with retailers and law enforcement, define organized criminal activity as a federal offense and establish stricter sentencing guidelines for criminals convicted of organized retail crime. Too frequently, under current laws, criminals involved in this activity are treated like petty thieves and get a slap on this wrist when they are caught. Last, but not least, it will hold auction sites more accountable for the sale of stolen merchandise if it could have been prevented.

Besides fencing, there is a lot of other fraud on auction sites that isn't necessarily tied in to fencing and victimizes auction customers/sellers, more personally. Legitimate e-commerce sellers are frequently ripped off with bogus financial instruments. Buyers are also defrauded in a wide variety of scams on these sites. Like the major retail types, who are behind this legislation, the more ordinary victims are often hung out to dry when they try to get any assistance from the auction sites. There is little doubt (my opinion) that auction sites need to clean up all the fraud that occurs on them. While they do provide value and a fun way to buy things, there have been too many innocent people victimized on them.

While this legislation primarily focuses on fencing, it's a start in the right direction. Perhaps other groups should join in and support this legislation, which if passed, will likely set some needed legal precedents. It will also make it a little harder for the criminally inclined to operate on auction sites.

Supporting this legislation makes a lot of sense for a lot of different reasons. These are not victimless crimes and the consequences are being felt by innocent consumers and businesses.

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Scammers Exploiting MoneyGram Money Order Verification System

If you were scammed recently with a money order, the counterfeit might have been an instrument spoofing the MoneyGram brand. These money orders have been known to appear in all the too good to be true/don’t exactly make sense come-ons being passed by spam e-mails or via a direct solicitation in a chat room.

In case you are not familiar with all the variations of these come-ons, they include , but aren't limited to (new lures surface frequently), the secret shopper, romance, lottery, work-at-home and auction scams.

The common denominator in most of the scams is there will be a request to send the money you receive via wire transfer (if you don’t get caught), to the fraudster sending you this garbage for a small cut of the total amount. That is unless they are buying goods from you. In this case, the item you are selling is what they want.

In the past, a simple call to MoneyGram’s verification line (1-800-542-3490) normally was all that was needed to reveal the fact that the item was fraudulent. Unfortunately, this is no longer the case. The criminals producing these instruments are now taking advantage of a flaw in the automated verification system, which is tricking people into believing that the money orders are good.

When a MoneyGram money order is called in for verification, the system prompts the user to enter all the particulars of the instrument, including the serial number and dollar amount. If the system doesn’t spot a discrepancy, it gives out a standard disclaimer stating there are no stops or holds on the item. If the system catches a discrepancy, it directs the caller to a live operator during their business hours.

In recent weeks, I’ve received reports of this being exploited in two ways. In the first instance – a legitimate money order is purchased for a small amount (normally $1.00) –then is chemically washed and altered to reflect a large dollar amount. It is then passed before it registers in the verification system – and since the system doesn’t recognize the dollar amount – it gives out the standard disclaimer that tells the caller there are no stops or holds on the item. According to the people, I’ve asked, money orders do not register in the system for anywhere between 24 and 96 hours after being issued by a MoneyGram agent.

In these instances, since the item was printed on actual paper, it contains all the known security features. These include a heat sensitive circle, which changes color when rubbed.

A second variation of this scam has also been seen. In this variation, the instrument is a copy of a money order purchased for a small dollar amount. These will pass muster in the system as described above, but the security features will not be present. In this second version of the scam, the dates were printed to make it appear as if the item had been purchased several weeks before the legitimate item actually was. I suspect this was to trick people, who had already discovered the "washed instrument" mutation of this scam.

When I first started getting reports on these variations of the scam, I thought it might be only targeting a limited geographical area. Normally when washing items occurs, this is the case. Since then, I've discovered this is happening throughout North America and the items are being shipped using overnight services, such as Federal Express and UPS.

I have also had reports that these are being passed not only via online come-ons, but also by professional groups who specialize in passing counterfeit instruments.

I went to the MoneyGram site to see if there were any warnings about this specific scam and found none. They do have a consumer protection area on their site, which refers to all the come-ons to trick people to cash these items. They also have information on how to verify their product in the FAQ area for customers on their site.

The sad fact is that money order companies do not take a loss on these instruments. When the items is discovered to be a fraud – they return it to the institution who cashed it and the institution goes after (if they can find them) – the person who cashed them. With any money order, it is nearly impossible to be made whole by the issuing company, itself. In fact, many experts will tell you that accepting a money order is more risky than accepting a personal check. If you listen to the disclaimer on the verification line it tells you exactly that.

So far as getting these instruments in too good to be true online scams – with the sour economy – I am seeing more and more people who really want to believe they have come into a financial windfall. When they fall for these scams – one thing is for certain – which are they are going to be held liable for cashing the items when the scam is discovered. This will certainly include being held financially liable, but can also mean facing criminal charges.

So far as counterfeit MoneyGram instruments – although a lot of them seem to be out there – they are not the only items being counterfeited. U.S. Postal Money Orders have been seen frequently in the past, too. Recently, the U.S. Postal Service redesigned their product and has a new page on their site to help consumers verify their product. Counterfeit cashier's checks, money orders, gift and travelers cheques are also known to be frequently counterfeited and used in these types of scams.

If you want to learn more about these scams, I recommend going to fakechecks.org, where you can see some highly visual demonstrations of these schemes. Another good resource on this subject – particularly if you are a victim – is FraudAid. The folks at FraudAid actually provide resources and advocate for people falling for these scams.

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Internet crime victims report counterfeit American Express gift cheques being sent to them!

Scam (too good to be true) lure courtesy of miriyaparino at Flickr.

Counterfeit checks like all the ones recently discovered by an International law enforcement team being sent from Nigeria aren't the only bogus financial instruments being sent all over the world.

In this recent effort against this activity, over 15,000 counterfeit instruments were discovered in a months time.

For the past couple of weeks, I've received a lot of e-mail and blog comments from people receiving counterfeit American Express gift cheques in the mail with instructions to cash them and wire the proceeds (minus a paltry commission) back to the sender (scammer).

The reason for all the e-mails and comments are because of previous posts, I've written about these counterfeit financial instruments.

Other than having their financial world ruined, there are reports of people getting arrested after trying to pass some of these instruments. One victim recently wrote me after discovering she had been scammed -- and told me that when she tried to report her problems to the authorities, they advised her to seek legal advice before proceeding -- or she might be charged with money laundering.

The American Express gift cheques can be verified by calling 1-800-525-7641.

Counterfeit MoneyGram and U.S. Postal money orders are still also being sent to people as payment for goods, or in too good to be true lures that are nothing more than a scam.

A lot of these bogus financial instuments come from work-at-home scams, secret shopper, romance, lottery and auction scams. New varieties of these scams appear from time to time, but the common denominator in any advance fee (419) scam is that it is too good to be true and it makes little, to no sense.

Another common denominator in most of these scams is that they will try to get you to wire money. Here is what I wrote about this in a previous post:

The fraudsters want you to cash these counterfeit gift cheques and send (normally wire) the money back to them. When they are discovered to be fraudulent -- you end up taking the "rap" for the scammer and they disappear in an "electronic mist."

If you've received any of these items in the mail, I've compiled a lot of information on how to identify them and report them to the right people, here.

Another development being seen is that real scammers are getting their hands on these instruments, who have no intention of wiring any money, anywhere. In effect, they are scamming the scammers. This makes it a lot harder to figure out, whether or not, a person is a victim or a scammer. Maybe this is one of the reasons more people are getting arrested?

Of course, if the victim never wired the money, they are probably lining their own pockets (my opinion).

The bottom line is that falling, or getting involved in one of these scams can cause you a lot of financial pain and suffering and you might even get into worse trouble.

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E Gold accused of being a money laundering vehicle for financial fraudsters and child pornographers

To anyone familiar with crime on the Internet, allegations of criminals using, or manipulating E Gold are nothing new. Like wire transfers, E-Gold gives their customers the ability to transfer the value of gold, electronically. To transfer the gold's value, all anyone needs is a e-mail address, account number and password.

Because of this, the accounts can be prone to phishing, and or crimeware (malware) attacks, using keylogging software. When this happens, the phishermen clean out the account and transfer it, elsewhere. E-Gold's terms of service stipulate that once a transfer is done, it cannot be reversed.

It should be noted that Internet criminals use wire transfer services (MoneyGram, Western Union) for the same reason -- they provide a lot of anonymity.

Apparently a task force from the Department of Justice has been looking into the money laundering angle, and is charging E Gold with several federal charges.

Here is a summary of the action against E Gold from the DOJ press release:

A federal grand jury in Washington, D.C. has indicted two companies operating a digital currency business and their owners on charges of money laundering, conspiracy, and operating an unlicensed money transmitting business, Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney for the District of Columbia Jeffrey A. Taylor announced today.

The basis of the DOJ charges are:

The indictment alleges that E Gold has been a highly favored method of payment by operators of investment scams, credit card and identity fraud, and sellers of online child pornography. The indictment alleges that the defendants conducted funds transfers on behalf of their customers, knowing that the funds involved were the proceeds of unlawful activity; namely child exploitation, credit card fraud, and wire (investment) fraud; and thereby violated federal money laundering statutes. The indictment further alleges that the defendants operated the E Gold operation without a license in the District of Columbia or any other state, or registering with the federal government, and thereby violated federal and state money transmitting laws. The indictment alleges that this conduct occurred at various times from 1999 through December 2005.

It appears a lot of different federal agencies worked on this investigation:

The case is being investigated by the U.S. Secret Service with the assistance of the IRS and the FBI. The case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Computer Crime and Intellectual Property Section of the Criminal Division. Assistance is also being provided by the Child Exploitation and Obscenity Section and the Asset Forfeiture and Money Laundering Section of the Criminal Division.

Full DOJ press release, here.

Besides allegedly being used to launder money, E Gold is often used in advance fee and auction scams, which trick people into sending their hard earned cash to fraudsters. I've written about the auction, secret shopper, romance, lottery and job variations of advance fee scams on this blog, frequently.

Like the problems with accounts being phished, or their value being drained because of crimeware, little can be done once the gold (converted to a monetary value) has been transferred.

When password details can be stolen, accounts can be taken over, also. This happens happens frequently on auction sites; when trusted accounts are compromised, then used for fraudulent purposes.

Wikipedia has an extensive article about Advance Fee (419), here.

It will be interesting to see how this plays out!

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California Lottery Nails Dishonest Retailers

When you cash in a small lottery prize at a lottery retailer, the amount might not exactly what you were were entitled to receive.

On 7/1/08, the California Lottery announced that they are using undercover agents to sting dishonest retailers, who cheat lottery winners out of their prizes. The press release on this matter pointed to a case in Morgan Hill, California where a dishonest retailer (and another individual) are being charged with grand theft of lottery tickets ranging in value from $500 to $25,000.

I decided to see if I could find any additional information on arrests and discovered another one that was reported by cbs13.com in Lodi, California. CBS 13 in Sacramento, with cameras rolling, approached Baljut Kang (one of the two arrested in Lodi), who refused to talk at first. Eventually, Kang stated to the reporter that the undercover agents found "some ticket in the garbage," which made them think she and her son were committing fraud (?).

According to the article, an undercover agent turned in one ticket worth $990 receiving only $24. Another ticket was presented at the retailer worth $25,000 and the agent was paid $10 for it. The article also states that this was the result of a statewide lottery sting. Other retailers were caught in Southern California.

The official press release indicates that this is the first enforcement effort of this kind anywhere in the country. This made me wonder if other States should run sting operations, also?

While dishonest retailers getting caught cheating customers is something new, lottery scams are big business for criminals. Spam e-mails, unsolicited telephone calls and even snail mails are used to dupe people into thinking they have won the lottery. Frequently, a person is then asked to negotiate a fraudulent instrument to cover tariffs and taxes and wire the money across an International border.

The California lottery has an interesting page, which can be seen on their website warning the public about this type of activity. In February, I did a post on the eve of a $270 Mega Million Lottery prize, about fraudsters attempting to impersonate the California lottery to trick unsuspecting people into cashing worthless checks.

Please note that scams -- where unsuspecting people are duped into cashing worthless checks and wiring the money before the financial institution catches on -- aren't limited to the lottery variety. Other varieties involving bogus financial instruments include work-at-home (job) scams, secret shopper, romance and auction scams. Known bogus items in circulation are Postal Money Orders, Travelers Express (MoneyGram) Money Orders, American Express Gift Cheques and Visa Travelers Cheques. A good site to learn more about scams involving fake checks is FakeChecks.org.

In California when you claim a ticket for a prize under $600, the retailer has to validate it in a machine, which prints a receipt showing exactly how much the prize was for. A good idea is to make sure you take a look at this receipt to ensure you are getting the right amount of money.

If you note suspicious activity, I'm sure that the dedicated law enforcement personnel at the California Lottery would like to hear from you. They can be reached at 1-800-LOTTERY.

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Will competition make it harder to write off fraud costs on auction sites?

Perhaps market forces will be what it takes to better protect buyers and sellers from fraud on auction sites? Competition dictates that the auction providers will have to offer a "better deal" to attract and maintain their customer base.

Internet auctions have become a "very" popular way to buy and sell goods, but they've also attracted a lot of fraud. And fraud seems to be motivating some changes at the most popular auction site, eBay.

eBay is limiting what types of transactions they protect and is banning Google's Checkout on it's site. In addition to this, they are increasing the dollar amount protected with PayPal.

Ina Steiner of AuctionBytes wrote:

eBay will double PayPal Buyer Protection on its site, offering up to $2,000 of coverage for qualified transactions on eBay.com, but is eliminating buyer-protection for non-PayPal transactions. The move is a dramatic effort by eBay to push buyers to use its PayPal online-payment service at a time when it faces increasing competition from Google Checkout, a method it prohibits sellers from accepting on its site.

AuctionBytes story, here.

The story also mentions that eBay no longer protects transactions with financial instruments, such as wire transfers, money orders and checks. Scams using these now "unprotected" financial instruments have been well documented in the auction world.

The message is that if you don't use PayPal, or a credit-card - you aren't protected on eBay.

Not sure if eBay is trying to limit it's own fraud exposure, or if they are marketing fraud protection?

Even though buyers might be getting "slightly" more protection - sellers seem to be more at risk of losing money from fraud than they were before. They are either going to have to limit their "accepted payment methods," or take the chance of losing more money.

And so far as credit cards - "sellers" still are and "always have been" at risk of receiving chargebacks from the financial institution involved.

It will be interesting to see how this progresses and how auction users react.

The auction business is getting more "competitive," and writing off the cost of fraud is going to become "increasingly more difficult."

Here are some previous posts, I've written on auction fraud:

Romanian Second-Chance eBay Scammers Busted

California Issues Alert on Emerging eBay Fraud Trend

How to Spot a Counterfeit on eBay

Bid Reaper, "TELLING IT LIKE IT IS" on eBay

Auction Fraud and the Romanian Connection

How to Protect Yourself on eBay

BBB Worker Takes Job Processing Fraudulent eBay Transactions

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Are Internet Check Scam Artists staging a December Surge?

(Picture of counterfeit financial instruments recently intercepted in the mail by an International law enforcement task force)

In the past several days, I've noticed a surge in counterfeit check alerts from the FDIC (Federal Deposit Insurance Corporation). From December 19th to the 21st, the FDIC issued 26 alerts from various financial institutions throughout the United States reporting counterfeit activity using their information.

These checks are used in all the different varieties of overpayment scams. The basic MO (method of operation) in these scams is to trick someone into negotiating a bogus financial instrument and sending the money back to the person behind the scam. The victim is offered a small part of the money for doing this.

Of course, they are held liable for all of it when the item is discovered to be fraudulent.

Some of the known varieties of the overpayment scams are the lottery, auction, secret shopper, romance and work-at-home (job) scam(s). Please note you can search any of these "scam" terms at the top of this page for more information.

Spam e-mail is normally the vehicle in which these scams are presented, however they show up in more traditional print venues (including junk mail) from time to time, also.

One thing to bear in mind is that counterfeit checks (cheques) often appear to be legitimate in verification systems. The reason for this is simple, they use legitimate account numbers.

Victims have even asked employees at their financial institution of choice if the instrument was legitimate. Sadly, the items are often so good that the person is told that they are real. A financial institution employee verifying an item offers you no guarantee that the item is good. The person passing the instrument is the one who is liable for it.

Another tricky thing is that many financial institutions will also give their customers credit for these items in their accounts. This often gives the victim a false sense of security and causes them to send the money back to the scammer before realizing what is going on.

Federal rules dictate that banks can only put holds for a specified period of time depending on what type of check it is. The people behind the scams know about this and take advantage of it.

Although the money can be sent in a lot of different ways, most scammers prefer the use of Western Union, or MoneyGram wire transfer services. The reason for this is once the money is picked up (often within minutes), there is no recourse for the person who sent it.

Besides counterfeit checks, we've seen other instruments counterfeited on an industrial scale and sent to unsuspecting people, also. The known items in circulation are have included Postal Money Orders, Travelers Express (MoneyGram) Money Orders, American Express Gift Cheques and Visa Travelers Cheques.

The end result of these scams is that the person negotiating the item will be held financially liable. People are also getting arrested in certain circumstances for passing these items, also.

The National Consumers League recently set up a site (fakechecks.org), which is a great reference on Internet scams involving checks (complete with visual presentations), here.

Here is a post, I wrote with more information on how to verify one of these items:

Tools to verify those too good to be true financial instruments you got in the mail

Please note that if the deal you are being presented is too good to be true, or you are being asked to wire money it probably isn't worth going to the effort of trying to verify the item.

Also note that these scams have become so sophisticated that there is no guarantee that any amount of verification can guarantee the item is legitimate!

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eBay/Craigslist praised by Congressman for efforts to curb sales of stolen military equipment on their sites (?)

I've written a few things about scams and fencing stolen merchandise on auction sites. Recently, the GAO discovered that items stolen from the military are for sale on eBay and Craigslist.

Even more interesting were the results of narrowly focused hearings (my opinion) on this matter in Washington, which can be seen at the bottom of this post. The reason I believe they were "narrowly focused" is because there is no shortage of fraud, phishing and financial misdeeds on auction sites.

Of course, there is also no shortage of ordinary citizens and businesses that have been taken to the cleaners on an auction site. Stolen government items are only a small part of the overall problem.

From the GAO report:

GAO found numerous defense-related items for sale to the highest bidder on eBay and Craigslist. A review of policies and procedures for these Web sites determined that there are few safeguards to prevent the sale of sensitive and stolen defense-related items using the sites. During the period of investigation, GAO undercover investigators purchased a dozen sensitive items on eBay and Craigslist to demonstrate how easy it was to obtain them. Many of these items were stolen from the U.S. military. According to the Department of Defense (DOD), it considers the sensitive items GAO purchased to be on the U.S. Munitions List, meaning that there are restrictions on their overseas sales. However, if investigators had been members of the general public, there is a risk that they could have illegally resold these items to an international broker or transferred them overseas.

Apparently, body armor, MRE (meals ready to eat), uniforms, night vision goggles, NBC (Nuclear Biological Chemical) equipment and even F-14 components were some of the items purchased on eBay and Craiglist by undercover investigators.

The obvious concern would be terrorists, or other not very friendly people getting their hands on some of this stuff.

Given the organized effort on a lot of auction sites to fence stolen merchandise via some pretty sophisticated methods, it's not surprising that the GAO found military equipment for sale on the sites. Many have speculated that these sites are used as a means of fencing the proceeds of what is known as organized retail crime. Of course, less organized criminals obviously sell their goods on auction sites, also.

Organized retail crime obtains their goods by a variety of methods from common theft to using stolen financial instruments. A lot of stolen financial instruments are used to purchase items on auction sites and e-commerce sites. Of course, they are used in more traditional store settings for the same purpose, also.

On eBay, account credentials and payment accounts (PayPal) are phished all the time, enabling an additional layer of anonymity to the schemes. In fact, over the years, many experts have stated that eBay and PayPal are the two most phished brands out there.

One thing not mentioned in the report is that people don't always get what was advertised on these sites. It isn't inconceivable that a complete fighter jet might be put up for sale, paid for and in the end a toy, or "nothing at all" is received by the buyer.

Trust me, this wouldn't be the first time something like this has happened on an auction site.

A lot of counterfeit (knock-off) merchandise is sold on the sites, advertised as the "real thing," also.

Our leaders in Congress reacted by calling Jim Buckmaster (Craigslist) and Tod Cohen (eBay) in to speak with them on the matter.

Anne Broache (CNet) writes:

By calling Craigslist CEO Jim Buckmaster and eBay government relations chief Tod Cohen to Washington for the hearing, the subcommittee seemed to be preparing to place those executives in the hot seat. But the tone of that questioning was actually quite cordial. At the end of the panel, Tierney even praised the companies for "trying very hard" to keep sensitive military goods off their sites and acknowledged the rules of the road aren't the most clear.

Based on her article, which reports that Buckmaster and Cohen were treated with "kid gloves" during the session, my prediction is that little is going to be done to regulate the sale of stolen goods on auction sites as a result of this.

Meanwhile, everyone running for office is saying they will be the one doing something about the problem of special interests in Washington.

On a closing note, I want to commend the GAO for their efforts to expose a problem. I'm just saying it's a shame that no one listened to what they were saying, very carefully.

HTML version of the GAO report, here.

PDF version, here.

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Fraudulent Gift Cheque Update from American Express

Since September, I've been writing about counterfeit American Express Gift Cheques showing up in a variety of Internet fraud schemes.

Readers have reported receiving these items primarily as a result of work-at-home scams, but they can show up in a variety of Internet fraud come-ons. They might also show up in secret shopper, romance, lottery and auction scams.

The fraudsters want you to cash these counterfeit gift cheques and send (normally wire) the money back to them. When they are discovered to be fraudulent - you end up taking the "rap" and they disappear in an "electronic mist."

Several readers reported being asked to wire the money to Nigeria and the United Kingdom. I recently wrote a post based on large amounts of counterfeit financial instruments being found at airports in the United Kingdom (allegedly from Nigeria), here.

Most of the counterfeit gift cheques, seen thus far, have been in the $500.00, or $1000.00 denominations. Note American Express doesn't issue gift cheques for more than $100.00.

American Express states in their bulletin that gift cheques are safe when verified prior to negotiating them. Anyone can call them and verify an item at 1-800-525-7641.

Unfortunately, a lot of people don't verify these items. Many people have also deposited them, initially received credit, and then had their accounts garnished when the items returned.

I've also had a couple of people write me and say they were arrested for trying to cash them. Presenting counterfeit financial instruments is considered a crime in most places. It will be up to the person arrested to prove they were a victim of a scam and not involved, intentionally.

American Express gift cheque bulletin, here.

Listed below are the posts, I've written since September, along with some scary comments from readers:

Counterfeit American Express Gift Cheques

Counterfeit American Express Gift Cheques (Update)

American Express Gift Cheques Being Circulated in Internet Scams

American Express gift cheques aren't the only items that have been counterfeited and passed via Internet scams. In the past we've seen a lot of Postal Money Orders and Travelers Express (MoneyGram) money orders being counterfeited, also.

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80 year old man loses over $700,000 to advance fee (419) scammers

With spam e-mails offering too good to be true come-ons filling up our mailboxes, we often forget that there are some very real people who get victimized after falling for one of them.

Of course with the availability of botnets -- which command legions of spam spewing zombies (compromised computers)-- even if only a few people fall for the scheme, the scammers still make a tidy sum off of other people's misfortunes.

An example of this can be found on the Newport Beach Police website, where an elderly gentlemen lost a lot of money (probably his life savings) to one of these schemes:

Recently, an 80 year old resident of the city learned he was a victim of an international lottery scam. He originally received an email claiming he had won an overseas lottery which required him to pay a processing fee to have the funds released. This scam continued for a two year period and ended with the victim losing over $700,000.00.

Scam operators (often based in Canada) are using email, telephone and direct mail to entice U.S. consumers to buy chances in high-stakes foreign lotteries from as far away as Australia and Europe. These lottery solicitations violate U.S. law, which prohibits the cross-border sale or purchase of lottery tickets by phone or mail.

This type of scam is often referred to as an Advance Fee (419) scam.

Of course, the lottery scam isn't the only one out there. There are work-at-home (job) scams, secret shopper, romance, lottery and auction scams being sent out in millions (billions ?) of e-mails, also. And if you don't have your own financial resources, the scammers will gladly provide you with a wide array of counterfeit financial instruments to negotiate. They could care less if you get arrested and expect that you will wire them any proceeds if you successfully pass the bogus instrument.

Please note, that just because you initially are able to pass the instrument doesn't mean that someone won't come after you, later.

The news release from Newport Beach Police Department offers the following advice on how to report scams like this:

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

They also point to a page on the FTC website about cross border scams, which can be seen here.

If you are a more "visual type," I recommend going to fakechecks.org, which has a series of video presentations on this subject.

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Counterfeit Check (Cheque) Scams are all over the Internet

The amount of counterfeit checks (cheques) being circulated via various Internet scams, and even the classifieds (paper media) is on the rise.

A new trend is also being seen, where people are getting these counterfeits items in the mail (unsolicited). Some of us, who watch this closely, suspect they are data mining information off job sites, like Monster.com and Craigs List.

Last April, I did a post about a Better Business Bureau (BBB) employee, who got a lot of negative attention after she accepted a job to cash bogus intruments and send the money overseas.

Common scams in which these checks are sent for someone to cash and wire the money back to fraudsters are the check cashing (job), lottery, auction, secret shopper, romance and Nigerian letter varieties.

According to the National Consumers League, counterfeit checks schemes rank near the top of the scams reported to them by victims.

High quality counterfeit money orders and travelers/gift cheques are making the Internet fraud scene, also. In the recent past, these have included Postal Money Orders, Travelers Express (MoneyGram) Money Orders and most recently, American Express Gift Cheques.

The NCL has an interesting page on their site about the most prevalent scams reported to them in 2007, here.

And don't expect the bank to tell you (whether or not) a check is good. Since they have no liability in the matter, they will often say the item is good, give you provisional (temporary) credit, then take the money away from you when it is determined to be a fraud.

Here is a previous post about how this occurs:

Don't Trust a Bank to Tell You Whether a Check is Good, or Not

Some of these scams direct you to places like Walmart to cash the item, and wire the money back to them, also. I've had readers leave comments and send me e-mails about getting arrested after attempting to pass one of these items at Walmart.

Before we smear Walmart, consider that with the amount of these items in circulation, its getting harder and harder to determine, who is and who is not, really a victim.

Check fraudsters are now posing as victims, and are scamming the scammers by cashing the items. If they are caught, they claim to be innocent victims.

I've personally spoken to a few of these alleged victims, and for some reason; they never seem to have wired (or sent) any of the money back?

Interestingly enough, the scammers love to direct people to Walmart (probably because they cash checks and wire money), but they could care less if you get arrested.

The bottom line is that even if the check is initially considered good, it can easily return, and the person passing it is held responsible.

Deb Radcliff (cybercrime author) did an interesting blog post about how law enforcement, and the companies having their brands used on these checks aren't going after the cuplrits, here.

Unfortunately, they normally don't have much to go on, and the crime is normally initiated from a foreign country.

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How Using Pirated Software Turns People into Internet Crime Victims

The Business Software Alliance's October report called Online Software Scams: A Threat to Your Security reveals the dangers of buying or downloading pirated software. Sadly, pirated software doesn't always advertise that it is counterfeit and often appears to be the "real thing" to the untrained eye. This poses a clear and present danger to anyone shopping for software, whether it be on a e-commerce site, peer to peer (P2) site or at a more traditional shopping venue.

In the report's introduction it points to an actual example of how a misguided employee of the Wagner Resource Group of McLean Virginia used his office computer to download video and music files using Limewire and exposed the entire corporation to the dark side of the Internet. "In this case, the Wagner employee’s action set off a terrible chain reaction, opening up the firm’s computers to outsiders and exposing the names, dates of birth, and Social Security numbers of about 2,000 of the firm’s clients, including US Supreme Court Justice Stephen Breyer, according to the report.

Although many view downloading a video or music file as a victimless crime, the consequences can become personal when cyber criminals add a little malicious software (often referred to as crimeware) to the mix. Specifically, it can lead to identity (information) theft or turn a user's machine into a zombie, which is controlled remotely and used to commit other misdeeds on the Internet.

It is estimated that one-third of all software is counterfeit. In 2008, a study was conducted that revealed that if software piracy could be reduced by 10 percent in the United States it would generate 32,000 new jobs, 41 billion in economic growth and 7 billion in tax revenues.

A lot of pirated software is sold via downloads. When this occurs, the normal form of payment is a credit or debit card. This means that the person, who buys pirated software is providing this information to a criminal, who in turn might use it again or sell it to a third party. Like pirated software, credit/debit card information is sold on the Internet in underground chat rooms.

The report also covers another area, where Internet crime is known to flourish, or auction sites. In 2005, a study was done on software sold on eBay and roughly 50 percent of the items purchased had malicious/unwanted elements or had been tampered with.

While auction sites have worked with outside industries on preventing theft and abuse, they generally disclaim any responsibility for what occurs on their site. Additionally, there is little to no protection for the consumer buying these products (my opinion).

Because of this, the BSA is calling for auction sites to assume responsibility, step up the warning process on their sites and slow the process down by eliminating the "buy it now" process, which makes monitoring illegal sales nearly impossible.

The software industry isn't the only industry calling out issues with auction sites. In August, two bills were introduced to combat crime on auction sites, which were largely supported by the National Retail Federation. The sale of stolen or counterfeit goods in general has long been an issue on these sites. A good resource to learn about the danger of counterfeit goods in general is the International Anticounterfeting Coalition.

The BSA offers a lot of tips for consumers on how to avoid becoming a victim in their recently released report. It also offers a more visual means of learning by offering a video on the subject.

Suspected piracy can also be reported at http://www.bsacybersafety.com/ or by calling 1-888-NO-PIRACY.

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Does anyone know - whether or not - check fraud is on the rise?

I sometimes wonder - whether or not - anyone really knows how much check fraud is out there?

Law enforcement jurisdictions often have dollar amounts (some fairly high), which must be met before a case is actively investigated - causing it to be recorded as a statistic. And in the private sector - a lot of NOT very "clear reasons" are used to return checks, which might or (might not) mean fraud.

My two favorites reasons the banks use to return checks are "refer to maker" and "stop payment." This might mean someone was unhappy with a service that was performed, or it could mean the item is counterfeit and the owner of the account placed "stop payments" on the checks. It's even possible that items returned as NSF (non-sufficient funds) are forgeries, or counterfeits because the owner of the account has yet to discover their account has been compromised.

The same holds true with "fraud accounts" that banks open for crooks (new account fraud). New account fraud occurs when fraudster(s) open an account (often with fake information), write a series of checks for a lot more than what is in the account, and disappear (literally).

Often they do this over a weekend, and withdraw the amount they initially deposited, also.

New account fraud items normally return as (NSF) non-sufficient items until the bank closes the account. Once this occurs, they are classified as "account closed." Non-sufficient fund and account closed items are normally not considered a fraud classification.

The only thing that is certain is that the loser is going to be the party, who accepted the check, and not the banks. In fact -- some believe the banks are the winners in this process -- because they make a lot of money from "bounced check" fees.

In a lot of the recent Internet scams, customers have even gone to a bank employee to ask if an item is good. After trusting the employee's expertise, the check was deposited and the funds were made "available." A few days later, the item was returned as fraud and the customer's account was "garnished."

And in all the cases, I've heard where this happened, the bank didn't accept any liability. Here's a post, I wrote about this:

Don't Trust a Bank to Tell You Whether a Check is Good, or Not

The other day, I came upon an article by SmartPros, indicating that a "possibility exists" that check fraud will rise in the coming year.

According to SmartPros:

Identity theft trends in the next year may include an increase in check fraud, check synthesizing and check counterfeiting, according to The Identity Theft Resource Center, a nonprofit victim assistance center.

SmartPros story, here.

In case no one has been watching - check fraud appears to have been growing rapidly over the past several years. It's true that all the bogus "financial paper" circulating aren't only checks, we are seeing a lot of counterfeit money orders, also.

Counterfeit cashier's checks and other bogus paper financial instruments (money orders, travelers and gift cheques) have been showing up in secret shopper, romance, lottery, work-at-home and auction scams at ever increasing rates. The situation seems to be getting worse - as more and more people - become Internet users.

In fact, eBay recently announced they will no longer offer any protection for paper financial instruments on their site.

And so far as the amount of them out there, there is evidence that bogus paper financial instruments are being produced on an industrial level:

Are Counterfeit Documents being Mass-Produced in Nigeria?

The Federal Deposit Insurance Corporation sends out alerts on all the counterfeit cashier's checks, which are pretty hard to keep up with. If you want to see what I mean, link here.

We read a lot about "DIY" (do-it-yourself) kits being sold to commit phishing and eBay fraud in shady Internet crime forums -- but in the case of checks -- DIY kits are openly sold in stores, and available on e-commerce sites.

In fact, there are a lot of "legitimate companies" selling all sorts of software, printers and even magnetic ink, which are capable of turning out some pretty convincing counterfeits. Throw in a computer, and it's not very difficult to start making checks.

To show all the "DIY check technology" for sale on the Internet, I ran a Google search, here. Of course, a lot of this (including the paper) can be bought at your local office supply store, also.

As with a lot of fraud, technology seems to be enabling the problem.

Although check fraud might continue to grow, there is little doubt that it's already a huge problem. BankersOnline did an article in 2002 stating:

About five years ago, U S NEWS and WORLD REPORT did the most in-depth study on this that we've had, and I've used their figures ever since. They probably are low by now. They said the financial institutions in the United States lose about $12 Billion a year in check fraud, and the retail industry loses a like amount. The total loss being $24 Billion as a result of check fraud. I think identity theft is getting a lot of publicity now - but it's been around for a long time. We just never gave it the designation of identity theft.

Since this report is now 5 years old and it is using figures that were 5 years old -- no one probably knows how much check fraud is really going on.

I guess until everyone comes up with some uniform standards, it's going to be impossible to determine how much check fraud is really out there.

BankersOnline article by Barbara Hurst, here.

A great resource on check fraud is the National Check Fraud Center. Their site provides a lot of expert information on check fraud and how to protect yourself from it.

Is check fraud on the rise? Despite the lack of statistics - my best guess is that it is!

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