The Nigerian mail fraud, also referred to as the ‘4-1-9’ or ‘advance fee fraud’ exploits victims for monetary gain. Criminals send out thousands of spam emails, hoping that innocent and unsuspecting people will reply. These e-mails promise rich rewards to any official that will help, targeting officials in a bank, government or just ordinary people (Baines 2007). The mails promise multi-million dollar sums, with an open promise that the victim will keep a starting percentage of the money. The criminals pretend to be disadvantaged foreigners that need help in order to squirrel away millions of money out of their country.
When an unknowing victim falls for this ‘scam’ and agrees to help or rather participate in the highly lucrative deal, things start well at first, but somehow at some point things deteriorate and go wrong. Officials ask questions and thus need to be bribed. The criminals request money to bribe officials in order to get things back on track. The victim will pay and wait for the transfer that will never happen. The victim will get more excuses about the money and promises, how a little more cash will help the process. The criminals work their way out by blinding their victims with promises of unimaginable fortunes. He parts with 5000 dollars willingly while hoping to get 2000 dollars in return when the deal is complete.
Fraudulent sales can be described as a situation where an investor convinces a customer to purchase goods or services on the basis of false information. This fraud results in massive monetary losses for the victims, as well as a violation of investment laws. Fraudulent investment promoters are glib and resourceful. They lie about their high level financial connection and guarantee the investment. They may even promise to buy out the investment after a certain period. In order to close the deal, they serve up deceptive data, distort the importance of a present-day event and emphasize on the unique aspects of their investment opportunity, anything to prevent the victim from verifying their story. They tell the victims of the importance of taking the deal.
The criminals call the victims and request large amounts of money by overnight courier or through wire transfer, in order to secure the investment opportunity. Once the money transfer is complete, the victim will never get anything back but excuses for the delayed returns. Fraudulent sales schemes in the past have included the internet pyramid scheme, equipment leases, and computer trading systems, internet related and offshore investments, and viatical settlement among others.
Advance Fee Schemes
Advanced fee schemes promise their victims guaranteed loan as long as they pay a fee in advance. For instance, they claim to be capable to obtain funds from legitimate financial institutions such as banks; and they are willing to offer the victim a loan. The condition for the loan is a small percentage: say 5 per cent of the money the victim intends to borrow as a loan. If the victim intends to borrow 10,000 dollars, he has to pay 500 dollars. After the payment of the 5 percent is effected, they may disappear or stick around to bilk other unsuspecting people while they give excuses for not awarding the promised loan.
Electronic Funds Transfer Crime
The modern improvements in technology have created electronic forms of money and other non-face-to- face financial services in the electronic banking. The electronic banking can be used to facilitate money laundering. With the rapid technological advancements, money laundering is evident and complicated due to the high technology involved. Cyber attackers empty businesses accounts in minutes. Electronic fund transfer crimes occur in ACH (Automated Clearing House) network transactions (Hitchcock 2002). Any unauthorized ACH funds transfer to a bank account is an electronic funds transfer crime. The crimes perpetuated by the use of a computer Trojan software that fraudsters place on a computer through a ‘phishing’ attack launched through e-mail. When the Trojans instill their software in the victim’s computer, the thieves then log in keystrokes, searching for logins for bank accounts. These thieves use this information to generate their own logins and transfer money to other accounts or apply payments through the account, preferably overseas.
Most consumers invest in traditional offerings such as bonds, stock and commodities that are regulated by the Securities and Exchange Commission (SEC) and state securities regulators. Many people, however, invest large sums in less traditional offerings outside SEC such as arts and precious metals. Fraudulent investments target such people. Fraudulent investment promoters use aggressive tools such as infomercials to reach out to customers. They also defy state and federal securities registration laws (Organisation for Economic Co-operation and Development 2009). They offer imitation security investment prospects that impersonate the authentic savings in the headlines. They portray their ‘investment opportunities’ as high profit, low risk investments while they are high risk, long term and capital intensive investments. The most common fraudulent investment is the pyramid schemes. These encourage individuals to invest their funds while recruiting new members. The invested funds circulate to create the delusion of revenue where there is none. Eventually, the scheme fails, becomes worthless and leaves the investors with nothing.
Phishing is a technique used to obtain personal information with the purpose of identity theft. Phishers send fraudulent e-mail messages that seem to come from authentic businesses. These e-mails tend to fool the recipient victims into giving personal information, which pertain to account numbers and passwords, their credit card and social security numbers. The e-mail messages purport to come from legitimate businesses such as eBay or PayPal, internet service providers (such as yahoo) or even insurance agencies. The messages ask to verify certain data, such as account numbers and passwords, supposedly for inspection purposes. These e-mails look remarkably official; therefore, up to 20 per cent of unsuspecting recipients respond to them thus resulting in financial losses or identity theft among other fraudulent activities against them.
An example of phishing happened on November 17, 2003 where many eBay customers reported having received e-mail notifications that claimed their account’s information may have been compromised and restricted. The message suggested a hyper-link to what seemed to be an eBay’s homepage and had all the eBay internal links. The e-mail notification required these customers to re-register and submit credit card data, social security number and ATM personal identification numbers, date of birth and their mother’s maiden name. This was fishing as eBay had not sent the email and the webpage did not belong to eBay.
Pharming is one of the most difficult to detect online frauds, which can have devastating results upon the victim’s finances as well as his identity. In a farming scam, the traffic intended for one website is re-directed to a fraudulent online address without the knowledge of the victim. When visiting an unfamiliar website, the hackers alter the host files on the victim’s computer and steal vital personal information required later to commit identity theft. One can also become a victim of pharming if their computer is using a compromised server, allowing access to personal information.
Hacking and Use of Malware
Thieves can hack into a computer and install malware when a computer is online. When this malware successfully installs into a computer, without the owner’s knowledge or consent, they quietly transmit personal and financial information, including use names and passwords. A computer predator is also useful in this fraud; it pounces on the private information on a computer, which may be used to steal money and open credit card and bank accounts with the victim’s name. The information may also be sold to other parties who use it for illicit or illegal purposes.
Credit Card Skimming
Credit card skimming can be described as the theft of credit card information used in legitimate transaction. Skimming is carried out with the assistance of a small automated gadget called a skimmer. The skimmer’s strive to swipe and store many credit card numbers. Thieves also photocopy receipts of their victims in order to acquire the victim’s credit card numbers. Thieves use a small keypad to transcribe the three or four digit card security code not present at the magnetic strip. Skimming also occurs at gas stations, where a third party card reading device installed either inside or outside the fuel dispenser, or other card swiping terminals. This device capture’s the customer’s credit and debit card detail including their pin with each card swipe.
Carding refers to the process used to verify the validity of stolen card data. Thieves perform Carding by presenting the card information on a website with real time transaction processing. If the process is successful, it guarantees the thief that the card is still working. During carding, the thief does not purchase actual products, but rather makes a charitable donation. The transaction involves a small amount to avoid the attention of the cards issuer’s attentions and not to exceed the card’s credit limit. Today carding typically pertains to the credit card data obtained directly from victims by skimming or phishing. A Carder sells data files of the victim to another person who carries out the actual fraud.