Saturday, January 05, 2008

Ever wonder how those Nigerian scams work?

Mary Baker at Dover Canyon (have I mentioned recently it's my favorite winery?) does too, and the matter got almost personal when someone attempted to entangle the winery in one of these scams. Read her fascinating account of it in the posts on her blog. Here's a taste:

First, the scamster orders wine from the winery or retailer. But there's a problem. He lives out of the country. He knows this is inconvenient for you, so he'll ask a shipping firm he's used before to pick up your wine, and take care of all the export documentation. All you need to do is charge his credit card for the sale and the shipper's fees, and then wire the transportation fees to the shipper, as they are not set up to take credit cards. How easy is that? Cha-ching, cha-ching.

Because the wine is being shipped overseas, the cost of shipping is high--maybe $200 a case. An order for 10 cases of wine would involve $2,000 in transport fees; a pallet of wine would be about $11,000.

Credit cards are the preferred method, because all the numbers are stolen. Sometimes they offer a money order instead. Few people know that although a bank may report that a money order has cleared and you have access to the funds, the order can still be voided.

There's a growing problem with credit card fraud, however, and that's the increasing use of Fraud Alert programs. Fraud Alert will trigger an alarm whenever there is 'unusual activity' on an account. To get around that, fraudsters will ask that you split the transaction between 4 or more cards.

The story's pretty gripping on its own -- especially when you learn who the "American contact" probably is. And the fact that the feds apparently had little interest in pursuing this attempted heist makes you wonder how serious they are about cracking down on fraud -- notwithstanding those bizarre PSAs about identity theft.