Cover Your Assets

Counterfeit Scams

I started this Wiki after realizing how long a particular scam posting in forums had gone undetected. The posting [405991] is a perfect example of a counterfeit scam. This impressed upon me the need for a resource for sellers here.

Don't take payment in anything that your bank won't honor. Legal tender is perfectly good, and most countries tend to take a very dim view of people who print their own money. Taking the word of a scammer, that it's perfectly fine is begging for disaster. In cases like this, not only will you lose your hard work and the money you spent on supplies and shipping, etc. you'll possibly lose your freedom if you try to pass the funny money as if it were actual cash.

Your bank transacts only real money that is backed by the issuing government. Coins that contain sliver or gold may have value by weight of metal, but they can't be represented as real legal tender unless they are issued by the mint, and released to circulation. The value of the metal in the coin makes no difference other than to distinguish it as a particularly high quality Mardi Gras coin.

The way this scam works is that the scammer distributes fake money in place of real money, He makes this attractive by fronting a catalog of allegedly available consumer goods that the fake money will buy. The victim then buys the fake money in order to trade in the member network and is encouraged to bring in new members buy pushing non-members into accepting this money instead of cash. Any transactions for consumer goods in the network go through a central clearing house... controlled by the scammer. He skims real money off the top as people buy the fake money to purchase from the membership catalog. The membership catalog is also a fake and is often nothing more than the scammer taking money in advance from the victim, and buying the item on Ebay. Problems arise when things like automobiles and boats become involved, where transfer of registered ownership requires a tax be paid. In addition to being charged with tendering a counterfeit instrument, the victim may also be charged with tax evasion, money laundering, and conspiracy to defraud. The victim becomes a criminal. Real money goes in to the scammer, only fake money comes out.

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Using a legal tender from one country in a different country can likewise present serious problems.

There are plenty of legitimate ways to accept remittance within a country, or internationally without subjecting yourself to the complications of accepting funny money. It's hard enough to keep track of checks, and money orders that might not be legit, credit card transactions that might or might not be authorized without ever entertaining the bogus currency markets.

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Another problem entirely, but still in the same category are fake checks and money orders. Often a scammer will attempt to pass a very real looking fake check. Keep in mind that a check is a printed piece of paper, not cash. Anyone can buy checks printed up. They can even order them printed on fictitious banks and bogus accounts on legit banks. If you are going to accept checks, make sure your buyer understands that the transaction will not proceed until the bank verifies the check as paid.

In the U.S.A. the banks are restricted by law to a limited period of time before they credit an account for a deposited check. This may be similar elsewhere. There is a time period between the time that the bank credits the account and the time the check is actually verified as legit. This can be weeks, even months. Many common Internet scams are designed to exploit this oddity of U.S. banking law. This also applies to money orders.

Don't be impressed by "certified" checks as they are no different. If a scammer is willing to lie about the check being payable, how likely do you think it is that they wouldn't also lie about its being "certified" as well.

Another common scam, is to buy a perfectly legitimate money order for some trivial amount, and then dissolve the printing ink used to imprint the amount in a combination of common commercial solvents. The money order is then smoothed out using a perfectly ordinary laundry iron and then imprinted with a new, higher amount. Walmart and U.S. Postal money orders are commonly used but any type of money order would work equally well. Make sure that any customer wishing to pay using a check or money order understands that the sale won't be processed until the bank receives the money.

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The "Offshore Bank" scam... Very similar to the funny money scam but the transactions are all electronic, paid through an unregistered and unregulated "mystery bank" online. These fake banks will offer incentives like "tax sheltering." When they get enough depositors they disappear, leaving the members holding useless emails as their only claim to their money. Often fake banks also imply a level of "shadiness" that discourages reporting them by the victims, as the victims themselves become implicated in tax evasion and money laundering. Many of these are actually fronts for drug cartels, who use the victims deposits to cover their own money trail, while fleecing them at the same time.

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For more information on Fake Banks, and money laundries, or to report one, visit Artists Against 419, http://www.AA419.org a volunteer non-profit activist group dedicated to confronting and reporting fake banks and money changing scammers.