Banks Stick Foreigner-Scammed Consumers


By: Erik Rush

In December of 2007, someone close to me was contacted by a company that had come across their resume on one of the large Internet job sites. They were contracted for a short-term project that ended in mid-January 2008. Toward the end of January, they were alerted by their bank (a very large commercial bank) to the fact that the cashier’s checks they had received from this company in payment had been counterfeit, and that they were personally responsible for the cumulative balance of the transactions, or some $10,000, plus fees.

In addition, the bank seized the assets in a joint checking account held by this individual and their spouse, a small amount of funds in a corporate account in which the couple were principals, and their children’s saving accounts. This of course, rendered their family “dead in the water,” as it were, in terms of paying their bills, buying food, gasoline and so forth. This person was informed as well that the bank would send to collection or litigate for any monies unrecovered by the account seizures.

As many in the same position, they wondered how such a thing could possibly happen.

My research began at the local police station, where my friend was directed by the bank to file a fraud report, more to defray the suggestion of complicity than anything else. The local fraud specialist stunned me by relating how often this sort of thing happens. “The banks aren’t doing nearly enough to protect the consumer,” she said more than once. “They just let these checks go through without verification and hold the consumer responsible when they don’t clear. It happens all the time.”

As most of us know, cashier’s checks are generally considered to be “as good as cash” (which is why they are used in the first place). It had also taken this bank weeks to discover that these checks were actually counterfeit. Despite this, these people were held to the letter of the bank’s Customer Agreement, and the cashier’s checks were treated – save for the threats of litigation – as though they were bounced checks for paltry sums written by someone who forgot to reconcile their checkbook properly.

As I discovered through subsequent research, these crimes have become more and more prevalent; the perpetrators are invariably overseas interests from places like China, Eastern Europe, India, Africa and the Middle East, occasionally employing their fellow foreign nationals in the U.S. and Canada.

“They deliberately target Americans,” one fraud analyst told me, “because they figure the average American can take the financial hit.”

Most people who have had an email account for more than three or four minutes are aware of the “Nigerian Scam,” an advance-fee fraud which originated in West Africa and proliferated with the advent of email and spyware. This fraud involves an individual receiving an unsolicited email from a “desperate party” looking to transfer a large sum of money (sometimes millions of dollars) out of a foreign country and needing the help of someone in the West. There are usually fees involved that are perceived to be inconsequential by the victim compared to the megabucks promised, but those fees, and anything the scammers can glean from personal accounts are stolen.

There’s another version of this fraud, where “companies,” often employing many convincing trappings of legitimate enterprises, use hackers to gain access to bank computers, then utilize the “contractor’s” bank account to make money transfers for a percentage. Again, the unwary account holder – who has obviously not asked themselves the right questions – is often held liable.

Other scams involve operatives from Africa and the Middle East who “pay” for expensive merchandise and services through auction and pay online sites using account information stolen from other members of these sites. If the victim has already dutifully shipped the merchandise or provided the service, they’re out of luck – and may wind up owing money if they’re using a pay online site.
So why don’t we hear more about this? One reason is that people feel profoundly stupid when they get taken. The second, as experts in the banking industry have stated, banks and other financial institutions don’t want depositors to know that their money isn’t safe in the bank. Check, computer and financial institutions fraud totaled 10% of the nearly $200 million lost to Internet fraud alone in 2006 (The Internet Crime Complaint Center, www.ic3.gov ).

Since this sort of thing is so widely underreported by individuals and financial institutions, it’s nearly impossible to determine the actual number of Americans who have been victimized. Still, one leans toward extrapolation: If this happens “all the time” in my city of 100,000 people, how often does it occur in American cities of a few million or more? Bear in mind that the friend to whom I refer was contacted regarding their resume – they are far from being wealthy.

Then what about the online job sites through which these predators troll to find their victims? According to my local source, they have less facility to adequately police their sites than law enforcement has to pursue these anonymous entities.

One might ask why the banking industry doesn’t take more precautions. Well, this would involve admitting there’s a problem, which might engender uneasiness among banking customers. Far easier to deny the problem, cheap the deal, and hold the consumer responsible, even though in many instances one telephone call made by a teller to an originating bank could prevent such losses and grief.

Ironic that the banking industry – which makes money off of our money – holds the consumer liable for third-party criminal activity that banks themselves could easily prevent. I can’t help but seeing a class action in here somewhere. These are the only avenues which tend to eventually force monolithic forces with deep pockets to clean up their acts.

I once wrote that when I was a kid, foreign interests would not dream of kidnapping American diplomats, killing Americans abroad, or destructively targeting American interests in other countries for fear of triggering a barrage of H-bombs upon them or U.S. Marines being dispatched to storm their shores with all due speed.

It is evident that cyberspace is a challenging area to police, but as Americans have observed in the case of child predation and other areas, few are making the effort. The boldness of online scam artists and the apathy and cavalier comportment our government and financial institutions display is simply another face of America’s disintegration on the global stage.



Erik Rush is a staff writer for the New Media Alliance, Inc. The New Media Alliance is a non-profit (501c3) national coalition of writers, journalists and grass-roots media outlets.

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