Thursday, June 01, 2006

419 scams

Here's what I don't understand about 419 scams: why is there no effective government involvement? The individual losses are relatively small, seen from an international finance point of view but the sums of money in aggregate are massive. Organized bands of criminals are using computers and the boundless naïveté of computer users to steal money from their victims. Why wouldn't this involve the government?

Look at the complete absence of critical thinking that the crooks are able to use:
In February, about a year after Gaston had posted her résumé on a job-search Web site, she received an e-mail about a part-time opportunity: to work as a courier for money for an international charity that builds homes for people in disaster areas. Her assignment was to deposit local donations into her own bank account, wait for the checks to clear and then wire the money to another address. She was told she would be paid 7 percent of every donation check, with a guarantee of $500 the first week on the job.

Gaston received a $4,500 cashier's check on Saturday, Feb. 26, and immediately deposited it in her Bank of America account. The teller told her it would take three days for the check to clear. On Wednesday, Gaston reviewed her account online and saw the funds were in her account. "I assumed, since it was a cashier's check, that Bank of America had actually gotten money from the other bank and put it into my account," she said.

On Thursday, Gaston withdrew $2,000 and wired it to a Ukrainian address. That's not unusual since most of these scams direct money outside the United States, often to Canada or Nigeria. The next day, Gaston followed instructions from another e-mail directing her to wire $1,900 to a different Ukrainian address.

"I couldn't believe I could make this much from this little bit of work," Gaston said. It was only a few days later that Gatson's euphoria wore off, when she caught a snippet of a TV news story about a person who had been scammed by an identical work-at-home scheme.

"My face turned completely green," said Gaston, who called the bank immediately. Bank officials told her there was nothing the bank could do and warned her that she would have to repay the $3,900 when the counterfeit cashier's check was finally returned to the bank.

Thank goodness she caught that TV show after only two thefts from her accounts.

The scams rely on a variety of leverage points to protect the criminal:
  • the banks are ineffective at detecting counterfeit cashier's checks, or even at warning their customers about the possibility of counterfeits.
  • even though the banks are duped, it is always the consumer who must pay.
  • the scams require international borders to be both permeable and impermeable: the money can pass through, but no effective legal action.
  • there's no way to retrieve that money once it is sent: banks are apparently uninterested in establishing contingent transfers, or attempting legal action afterwards.
  • there's no coordinated action taken against the receiving bank, which will have received stolen money from dozens of different banks.
This inaction is shameful. The assorted Western governments should force the scammer's government to disgorge this loot. Banks should warn their customers, and establish effective blacklists of remote banks to make it increasingly difficult to profit from this scam.

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