As important as it is to our everyday lives, the Internet can be used for all kinds of scams. Consumers should be particularly careful when using money transfer services to make purchases through Internet auction, marketplace and classified ad sites, such as eBay and Craigslist. Two of the most common Internet scams to be aware of are:
- Failure to deliver merchandise, which targets buyers as victims.
- Overpayment using a fake check, which targets sellers as victims.
“Internet scams succeed based on the fraudster’s ability to earn their victim’s trust,” said Joseph Cachey III, acting general counsel & chief compliance officer of Western Union. “Many fraudsters even coach their victims on how to safeguard their funds using a money transfer service, which supports the aura of trust they try to create. Unfortunately, these extremely convincing appeals, combined with a ‘once in a lifetime’ deal, create a very powerful potion that some people find too difficult to resist. People need to set their emotions aside, understand the facts of the situation and not send the money.”
Failure to Deliver Merchandise
The Failure to Deliver Merchandise scam couldn’t be simpler. A buyer (the victim) reaches an agreement to purchase an item from a seller (the fraudster) via the Internet. The seller requires payment through a money transfer service, such as Western Union, and picks up the funds using a professionally produced fake ID. The promised merchandise is never delivered.
Failure to Deliver Merchandise scams usually have one or more tell-tale signs:
- The merchandise being sold may be offered at a surprisingly low price.
- The seller will require that payment be made only through a money transfer service; possibly even suggesting ways of safeguarding the funds such as using a “test question” in lieu of an ID.
- The seller will work hard to gain the buyer’s trust by being friendly, identifying shared interests and offering convincing explanations as to why a price is so low or for requiring payment only through a money transfer service.
Overpayment Using a Fake Check
In these scams, a seller (the victim) reaches an agreement to sell an item to a buyer (the fraudster). The seller receives what appears to be a legitimate check drawn on a well-known bank for an amount higher than the agreed upon price. The buyer concocts an explanation for the overpayment and instructs the seller to deposit the check into a bank account, withdraw the excess funds and send those funds back using a money transfer service. The fraudster picks up the funds using a fake ID and the victim is left responsible for the bounced check.
Fake check fraudsters rely on check clearing lag times to commit their crimes. U.S. Federal Reserve Board regulations (RegCC) require that funds deposited into an account by check be made available for withdrawal within a certain number of business days after the deposit. Fake checks often take much longer to pass through the clearing system and eventually return to the bank unpaid. However, even though the victim has used the funds that were made available by law, the victim is still responsible for any withdrawals or payments made against the returned item.
Western Union provides a trusted and reliable way for people to send money to family members and friends. Unlike a bank, Western Union doesn’t open accounts for the people who use its service. A money transfer can be paid out to the receiver within a short time – even minutes – and after the money is paid, consumers cannot obtain a refund from Western Union even if the transfer was the result of fraud.
“Fraud is an industry-wide issue and preventing it is a shared responsibility among law enforcement, consumers and the corporate community,” said Cachey. “We and our Agents work hard to educate consumers and identify consumers who may be victims of fraud. Consumers need to be cautious and exercise the same diligence. As much as we and other money remitters do to help prevent fraud, consumers are still their own first, last and best line of defense.”