How money-transfer scams work

How money-transfer scams work

I've been half-heartedly looking at bicycles lately. Part of me pines for a new city bike, but the rational side of my brain knows that I have two decent bikes already. Still, I've killed a lot of time by paging through the Craigslist bike ads.

At the top of every ad is the following warning about scams:

I've always wondered exactly how these scams work, but I've never taken the time to look it up. I have no plans to wire money to anyone in Nigeria, so what's the big deal?

Recently on Ask Metafilter, though, a user named PowerCat posted a question about his friend's new “job”. PowerCat writes:

Basically, this “job” involves my friend receiving very specific money transfer requests from some dude he found on Craigslist. He gets a transfer, sometimes Western Union, sometimes an Interac or email transfer, he then has to cash it and transer it to someone else. The guy usually wants this done within the next hour or so.

The guy explained that what he's doing is getting clients to buy gemstones over the internet or something, then he has to transfer it in my friend's name and then he has to collect the money and transfer it to some other person (a Nigerian!).

Is this some sort of money laundering scam?

The consensus is that yes, duh, this is a scam. PowerCat's friend may be making easy money right now, but he's going to be screwed as soon as the banks catch on. Apparently, this is exactly the sort of scam that gets perpetrated on Craigslist. An AskMetafilter user named koeselitz posted an awesome explanation of how this internet money scam works:

This is most likely a fake-check-cashing scheme. Check-cashing scams are popular on Craigslist. […] So: if the money's coming from a Canadian bank, but the scammer is in Nigeria, who is sending you money? Most likely you are only one of two people being scammed; probably the other person is being sent physical fake checks and being asked to cash them and wire the money to you.

This is a variation on a very common Craigslist scam. It's much sneakier, however; in the average fake-check scam, what happens is:

  • Scammer has some pretense to send a check (e.g. ‘I'd like to buy the bike you listed on Craigslist, but I'm visiting Africa and won't be back for a few months…')
  • Scammer ‘accidentally' writes the check for WAY too much ($1000 too much) and begs a favor: ‘could you cash the check and mail the change back to me? If you do, I'll let you keep $200!'
  • Happy dupe goes and cashes the check, keeps the $200 that the ‘generous' scammer offered, and sends cash back.
  • Two days later, he is contacted by his bank, who says that the check was fake and that he owes them $1000.
  • Someone cries himself to sleep every night for the next month.

This scam, while pretty successful, has one tough point for scammers: it's hard to for them to convince somebody to mail them cash sight-unseen, especially when the address is in Nigeria. I imagine they lose a number of people when they ask for that cash to be mailed back, although, again, they're pretty successful.

The rest of koeselitz's explanation is too long to reprint here. But if you've ever wondered how these internet money scams work, I encourage you to spend a few minutes reading the entire post.

Remember folks: If it seems too good to be true, it probably is. In the real world, you don't get “something for nothing”. Be careful out there. (And for more information, check out the Craigslist “about scams” page.)

More about...Psychology

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