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Avoiding Internet Scams:
Handling the Nigerian 419 and Overpayment Fraud


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July 30, 2005


As we learn that the Internet has become the digital parallel of human society, we have also found that, like a big city, there are some really bad people and places that exist online.  As a business owner operating only online, I have to not only surround myself with the software equivalent of an electric fence, but have to find ways of "extending that fence" around visitors to my sites.

Many the sites I operate, provide free classifieds to regional business owners and the general citizenry looking to sell the things they would use print classifieds and advertising for.  As these sites become popular, many unscrupulous individuals start preying on the good folks looking to sell their boats, cars, services, etc.  The advertiser is lead down the path of the sale only to find that the person making the offer is not from this country and/or wants to send a check for more than the amount asked.  This is a typical overpayment scam.

According to FTC officials, the scams work like this: Someone responds to your posting or ad, and offers to use a cashier’s check, personal check or corporate check to pay for the item you’re selling. At the last minute, the so-called buyer (or the buyer’s “agent”) comes up with a reason for writing the check for more than the purchase price, and asks you to wire back the difference after you deposit the check. You deposit the check and wire the funds back to the “buyers.” Later, the check bounces, leaving you liable for the entire amount.

Here’s how to avoid a check overpayment scam:

  • Know who you’re dealing with. In any transaction, independently confirm the buyer’s name, street address, and telephone number.

  • Don’t accept a check for more than your selling price, no matter how tempting. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don’t send the merchandise.

  • Consider an alternative method of payment. As a seller, you can suggest an escrow service or online payment service. There may be a charge for an escrow service. If the buyer insists on using a particular escrow or online payment service you’ve never heard of, check it out. Visit its website, and read its terms of agreement and privacy policy. Call the customer service line. If there isn’t one or if you call and can’t get answers about the service’s reliability, don’t use the service. To learn more about escrow services and online payment systems, visit www.ftc.gov/onlineshopping.

  • If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid. If that’s not possible, call the bank where it was purchased and ask if the check is valid. Get the bank’s phone number from directory assistance or an Internet site that you know and trust, not from the person who gave you the check.

  • If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don’t pressure you to send money by Western Union or a similar company. In addition, you have little recourse if there’s a problem with a wire transaction.
    Resist any pressure to “act now.” If the buyer’s offer is good now, it should be good after the check clears the issuing bank.

  • Throw away any offer that asks you to pay for a prize or a gift. If it’s free or a gift, you shouldn’t have to pay for it. Free is free.

  • Resist the urge to enter foreign lotteries. Most foreign lottery solicitations are phony. What’s more, it’s illegal to play a foreign lottery through the mail or the telephone.

But what about the protection I talked about?  One of the things I had to do was ensure that most non-U.S. parts of the world were blocked from posting or responding to ads in my classifieds.  One great tool is a daily list of IP addresses by country code.  I found one site that provides this list - you can access it here. From this I was able to block many areas in Africa, Europe, and Asia.  Since the classifieds I provide fall into a 200-300 mile radius, it did not affect my customers at all.  Anyone in the world can view the ads, but not everyone can respond electronically.

Here is a list of IP addresses that I have found to work to help keep the offshore (non U.S.) bad-guys away.  An IP address currently contains a series of octets displayed as xxx.xxx.xxx.xxx. If you see only one number, it means that I blocked the entire range beginning with that number. Those outlined in yellow are primarily the Nigerian IP ranges.  You may only need to block all of 196.

58 59 61 62 80 81
82 83 84 85 86 87
193 194 195 196.3.60 196.3.61 196.3.62
196.3.63 196.3.64 196.200 196.202 196.207  
202 203 210 211 212 213
217 218 219 220 221

222

__________________________
ADDENDUM (24 October 2005)
- Be careful in the use of single digit IP Blocks:  While India uses a portion of the 202 and 58 in the first position octet, so do some parts of the United States.  The recommended solution is to expand your block into 2 or three octet sets.

Use the following website to check:
http://www.geobytes.com/IpLocator.htm?GetLocation

Ambiguous partial IP addresses will not be resolved and may cause you to block those you want to see your site.
_____________________________

Well, that is fine to start, but there are some pretty bad folks operating in the non-banned domains in the North, Central, and South America. Depending on your situation and server control, use the link above or go to www.completewhois.com to get more data.

You may also want to consider alternate means to enable online transactions to protect you as a buyer and a seller. An escrow service may offer the protection you need from disagreements on receipt of product or services, misunderstandings, and all sorts of other issues that come up in the online marketplace.

Essentially, you are hiring a licensed and bonded 3rd party to hold the funds until all parties are satisfied with the transaction, at which point the buyer can order the release of his money to the seller. It provides protection for both Buyer and Seller.

There are number of online Escrow services available, however, fake Escrow service providers are on the rise. Check for "Fake Escrow sites" on Google.com to find list of fake Escrow services. Once again, try to stay away from escrow sites especially ones that a seller recommends.

Escrow.com is known to be a genuine escrow site since other reputed sites like eBay uses its service. PayPal also seems to be very well suited for this as well.  I do not endorse one over the other, I just think that they are good ideas to explore.

If you have been victim of such scams, visit http://www.secretservice.gov/alert419.shtml to file an official complaint.

I have touched on one of the big money scam problems on the Internet, however many of us have also found out that we can help deposed African monarchs get their money into our bank accounts and that we can win lotteries we never entered...via mysterious email!  I guess I entered when I forwarded all those chain emails going around saying bill Gates would pay me half his fortune if I sent the message to people who now don't like me (or block my email).  But I am being facetious.

These fall under the heading of "4-1-9" Fraud after the section of the Nigerian penal code which addresses fraud schemes.  You can get more information regarding the details of this type of fraud at the Secret Service's 919 website.

With all this to digest, don't get heartburn - just be a bit more wary.

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