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Overpayment scams

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Overpayment scams

Unread postby HillBilly » Sat Nov 23, 2013 8:35 pm

Overpayment Scams

Question: Do you (or intend to) sell goods and services via online advertising?

If the answer to above question is yes or maybe you need to arm yourself with some facts. These simple facts can save you from being defrauded by a growing number of online scams, and also facing the wrath of local law enforcement, as well as your own bank.

This type of scam can strike even the most net savvy surfer and put you in a state of confusion, desperation, and possibly in jail too.

It Begins...

You place an advertisement on an internet selling site such as eBay, Craigslist or one of the many hundreds of others, and sit back to await responses. Some time later you start to recieve enquirys about what you have on offer.

Some of the responses may look something like the following:-

Goodday
I just want to let you know that i'm highly interested in the purchse of your (items),but will like to know for how long you have been using this (items) ,i will like to know the present condition of the (items),how much you are going to sell it for me.I will also appreciate it if you can forward some recently taken pix of the (items) ,thanks and hoping to hear from you soonest,bye
.
Hi Ya
I came across your advert during my search for buying theseitem-----"
[your item]
,Pls let me know whether is still available for sale and also the price,my name is [scammer],am situated at [country] the best country so far.I have a shipper that will be responsible for the shipment in [different country] as well.Shipment will not be your stress.but before payment, i will want you to make me asure you will be honest and trust worthy with me throughout this transaction.Pay will issued by a certified [currency] Bank draft.Pls let me know the prise pls.

Warning Signs...

In the two very basic examples shown above, there are tell-tale signs of something not being quite right. Let's highlight those right away.

The first example has not been edited, it is one actually recieved and is a genuine scam attempt. The first thing to note is that there is no mention of your actual goods. In fact, where one would expect to see the name of your goods, we simply see the phrase "(items)" instead. This is a typical reply from a scammer who will be sending out hundreds of these emails to as many people he can get email addresses for. If you were to reply back and ask which advertisement he was interested in, he would probably not be able to tell you.

There is an attempt at idle banter too, and the request for recent photos is also a very typical ploy. It actually provides the scammer with a picture of what he is allegedly purchasing.

Next example is edited slightly as some areas can be adjusted by the scammer. However, it is obvious that the scammer is in one country and wants to use a shipper in another. You don't need to worry about shipping at all, and you are going to be paid by 'Certified Cheque'. Once again, signs of a scam is that you are dealing with someone who takes care of everything for you, uses their own shipping agent and pays by cheque. The responder being in one country, and the shipper being in another is actually a dead give-away.

To Cheque Or Not To Cheque...

If you get through the initial stages of the scam, the buyer will ask for your name and address to which to send a cheque or money orders. Typically your telephone number will also be requested. Providing your phone number is actually a common trick by a scammer to weed out those who "are not serious" or "play games" (ie: scammer baiters). You may get a call but the caller may hang up immediately. That is just to check you are a real person.

Back to the cheques again. There are many different forms of cheque, some terms for which you can find on the Wikipedia [link], but apart from the common 'Personal' or 'Business' cheque, we have the following:-

Cashier's Cheque
A cashier's cheque [link] is a cheque issued by a bank cashier or head teller or by a well known company. Payees may require cashier's cheques and reject personal cheques so that they can be certain that sufficient funds will continue to be available for payment to the payee. Though these cheques are thought to be as good as cash, they are still a paper cheque. Due to this belief, people fall to lottery scams when a cashier's cheque is sent.

In the UK this is known as a Banker's Draft. Within the UK, a Bankers Draft does not constitute the status of being issued by a "head teller" as in the US, more, it is designed to be a cheque guaranteed not to bounce as the value of the cheque has been verified as being in the account and allocated as such before issue. Bankers Drafts are not hand written, but are printed specially by the Bank (or Building Society) when issued.

(Source: Wikipedia [link])
Certified Cheque
A certified cheque [link] is a personal or company cheque that is certified as a valid cheque by the bank on which it is drawn. It can be a personal cheque, in which case the bank transfers the payable amount from the payer's account to a separate account so that there is certainty of sufficient funds. A hole is punched through the MICR numbers so the certified cheque will not process as an ordinary cheque when it is received for payment by the bank on which it is drawn. Bank officials must sign the face of the cheque. Although the face of the cheque is crowded, the back of the cheque is blank and the cheque can be deposited and routed through the banking system like an ordinary cheque.

(Source: Wikipedia [link])


Many people are under the impression that either a Cashier's Cheque or Certified Cheque is a 100% guarantee of authenticity, and that funds are available. Whilst if the cheques were real, one might say that, but unfortunately being sent these types of cheque for an online purchase is zero guarantee of anything other than a possible scam.

Other types of cheques are also commonly used, including International Money Orders [link], Gift Cheques (American Express) [link], or just plain old Money Orders.

Each of these 'instruments' can quite easily be forged or stolen. They can be mass-produced as counterfeits and used to fool many unwary seller.

The Sting...

So now you have got your cheque/money order and are surprised to see that it is actually for much more than your selling price. You may have already been alerted to this fact during previous communications with the buyer.

Now you are told that the 'extra' is for the shipper or other agent, maybe even for someone that they owe money to. You are asked to cash the cheque and transfer a balance to another location via Western Union or MoneyGram.

This is by far the single most important point that makes an innocent into a victim. Many hundreds of thousands of people worldwide get fooled by this folly, and end up weeping in the gutter. Why someone cannot see this as a scam I'll never understand, but many do get stung.

So what exactly is the sting, I hear you ask.

Simply put, the cheque or money order you are cashing is either a fake, a counterfeit or has been stolen. The proceeds of the cheque may indeed end up in your bank account, and you might think this is the end of it. You would be DEAD WRONG on that point.

Some time later, a few days, weeks maybe even months, the bank will suddenly reverse the funds. No, they won't ask first, they will simply take it out regardless of whether it puts you in the red or not. To cap it all you are then subjected to a fraud investigation, your account is locked and depending on where you live, you may also be arrested and prosecuted.

Read the paragraph above again.

If you had sent the balance to the scammer, you cannot claim it back. It is gone into the ether never to be seen again. Some people may think that the statement about being arrested is a falsehood, well think again:-

Summary

An overpayment scam works because of various factors; (1) The naivety of the victim and (2) the loophole in the bank cheque clearing system. Whilst naivety can be fixed with education, the loophole that is being abused to very good effect is a bit trickier to fix.

You may simply ask why the bank doesn't close the loophole as it so obvious. The answer to that is a very simple one. Would you want to wait weeks or months for a cheque to clear before the money was given to you? That is the real issue at the heart of this growing problem. The proceeds of a cheque are never actually yours until the issuing bank says the cheque is a good one.

No amount of screaming and shouting at your own bank will change that simple fact.

And Finally...

If you are selling stuff online, do yourself a huge favour. Sell to someone who actually lives in the same country/state as you do, and avoid anyone offering you more than the asking price. Stay with CASH transactions, unless you are all ready hooked up with a credit / debit card reader and the ability to approve transactions that way.

Be careful out there!

Further Reading
  • Consumer Direct (UK) - [link]
  • Federal Trade Commission (USA) - [link]
  • Fake Checks Dot Org - [link]

Errata:-
[June 15th, 2010]
Please note that this criminal activity is not limited to paper cheques. This crime can also be committed by someone offering an overpayment on a credit card too.
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HillBilly
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