It’s a very big business. Of course, it is not easy to work out the value of a criminal enterprise – but some estimates put the value at a third of the Nigerian economy. It isn’t necessary to pass an accountancy GCSE to work out why it is so attractive to the fraudster.
According to one email marketer, I can send 50 million emails for $83 (#52). Our fraudster only needs to hook one out of a million willing to pay the fees, bribes and expenses necessary to transport the money for him to be rolling in clover.
We financial sophisticates know, of course, that the demand for up-front fees will go on and on, while the supposed fortune never will appear, for the whole plan is a simple variation of advance fee fraud. Just a play on the greed and avarice of those hooked.
I also find it hard to have much sympathy for those caught in such schemes, even those who travel to Nigeria and get beaten, kidnapped or worse. Right at the start, these letters it makes clear that the fictitious money has been stolen, so those hoping to profit out of the trans-shipment are themselves acting criminally. Or would be if the money actually existed.
Having disposed of the most common scam on the net, just reiterating what we all know and advise our clients anyway, on to a couple of things slightly different which have been tried out on me in the past few months.
As we all become more net savvy, posting our offerings onto websites, and generally using the system to advertise our wares, we’re actually rather glad to get new orders from far away places. That was the point of the investment after all.
Small companies can now deal with each other directly, or with individual customers, and this brings with it both benefits, in that one can reach these people at all, but also costs – most notably, whether payment will be arrive.
When my company joined a few trading boards, and started spreading the word around that we existed, within days we had been bombarded with emails requesting samples of our products. Wonderful! The electronic revolution really is the answer to a salesman’s prayers … Yet we couldn’t help noticing that there was a preponderance of West African companies wanting samples.
And samples of every model of mobile phone that we offered. We quickly (and I hope others would be faster than we were to spot this) realised that sending £1,000 of samples to someone who had simply sent us an email wasn’t really the way we wanted to go bust. If we did have to go bust by preference it would be in waves of champagne or other more immoral delights.
So just a small tip to pass onto those you advise, to be careful of where and how many samples are sent, because there seem to be people out there who make a living out of accepting and reselling them.
If and when an overseas order does come up, the major question we face is ‘How will we get paid?’ Credit checks are valueless in half the world, letters of credit are expensive for small sums, prepayment exposes the buyer to the risk of your own trustworthiness. How should it be done?
We had two customers who independently suggested that they should pay by banker’s draft. Why this was less of a prepayment than a bank transfer or why such transfers were so expensive was never explained.
But the customer is always right, and we booked the business with the South Korean customer and awaited the DHL package.
This duly arrived, along with a banker’s draft drawn on the Seoul Bank for more than the contract value. We were told that there had been a mistake in their accounts department, and could we wire the overpayment to an account in Nigeria?
This set alarm bells ringing and led us to check with our bank that a foreign banker’s draft really is as good as real money. ‘Aaahh, but it isn’t’, explained our friendly local banker. I should point out that we kept all the old branch telephone numbers when the bank introduced those regional call centres. Much easier to get a walking talking banker on the old numbers.
A foreign banker’s draft can take up to six weeks to clear, and there is no guarantee that it will – as it didn’t – and nor did our Nigerian friend get his money or the Korean, if he ever existed, his phones.
This isn’t a new form of fraud, passing false bills of exchange being an old offence, and not too far away from the basis for the Ealing comedy about the million pound note.
All that’s different is the precise design of the false bill, and the fact that if we or you were caught by it, there is absolutely no remedy in law. And of course, the fact that the fraudsters are playing further down the food chain now. As all those smaller companies get on the web, it is the small companies that don’t have the same knowledge base about foreign trade and payment as the large ones who have been doing this for decades. Those smaller companies would benefit from a gentle reminder from the accountants and all advisors to keep an eye out for this scam.
ANOTHER FAVOURITE – MAGIC MONEY
Losses of $4-5m have been recorded. Victims are targeted worldwide with tens of thousands of letters and e-mails being sent out daily. Most people show good sense and throw them away, but if 1% show interest and 1% of that 1% get hooked then there are still big profits for the fraudsters.
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