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US Law Firms Targeted By Cyberscams
Hugh Pickens writes "The San Francisco Chronicle reports that last year a Long Beach law firm received an e-mail from a Hong Kong businessman seeking help collecting debts from American customers. After a month of signing paperwork and exchanging telephone calls, the attorney received word that one debtor had sent a $200,000 cashier's check to pay off his balance. The attorney deposited it in his firm's account, subtracted his $10,000 fee and wired the remaining $190,000 to his Hong Kong client. Then the attorney's bank called and told him the $200,000 check had bounced. 'They send me a nice, big, worthless check,' says the attorney. In this case, the bank was able to prevent the wire transfer from reaching its destination, but attorneys say they are on the receiving end of sophisticated scams with increasing frequency that include attacks to steal client data that can be sold or used to learn the details of future litigation."
Your a lawyer.... go sue 'em boy!
Classic scam:
1, Scammer pretends to be a buyer for some fairly expensive product, e.g. a car
2. Scammer sends false cashier's check to client
3. Scammer asks to cancel the deal because of some crisis, offers to cover any expenses he's had and a compensation for wasting their time
4. Many people will have compassion for their situation and agree to undo the sale
5. They wire the reminder - maybe 90% of the purchase price - back
6. The check sent in #2 bounces, the money returned in #5 gone and they're out a ton of money
7. Profit, for the scammer. No ??? here.
Live today, because you never know what tomorrow brings
So, basically, the attorney/law firm covered for the client's ability to pay? I guess things like this is necessary to make things run smoothly in business, but it still seems a bit... naive, especially when you've never met the client in person. And especially when it's a check. Instant wire transfers would have made this particular problem moot (obviously), but since the client just assumed they would accept a check they did it out of professional courtesy?
Emotions! In your brain!
... no one sends anyone else any money until they verify that the check they've received is good?
The first time I get payment from a client I always wait to see if it clears before moving forward on a project. It's one of the reasons we require deposits before starting work.
" attorneys say they are on the receiving end of sophisticated scams with increasing frequency"
It took some real genius to plan and execute this scam, I see why a lawyer would fall for this.
Should we tell them about Nigeria?
Nah.
--
My other sig is at the cleaners
And so you too would have gotten taken by this scam. They received a cashier's check (aka bank cheque) and their bank accepted it. They, like you, believed that an accepted bank cheque was as good as cash so they wired the refund (which, FYI, is the same as cash, since you can't take it back) and got stuck.
A lot of stuff can bounce in practice if fraud is involved, even if there are supposed to be guarantees. I think the lesson here is that you better leave the money laundering to the big guys who can better deal with the risk.
accept the wired money is not the same as cash as the summary stated they were able to take it back and did not get stuck.
Morpheus, God of Dreams.
The combination of debt collector and lawyer seems to have removed my ability to sympathize.
Orwell: "In a Time of Universal Deceit, telling the Truth is a Revolutionary Act"
Doesn't help in US and maybe in some other countries - in most countries it would then be the banks problem / loss but I digress. I have had the transactions reversed after 3-4 weeks in US banks because they (the clearing house - what a joke!) failed in process! One reason not to use the US banks for small transactions - big / enterprise / government transactions are handled differently. $200K is not big, by the way.
rest of the civilized world wants to know.
Who logs in to gdm? Not I, said the duck.
The American Bar Association reported on this mere 17 months ago. I think it's less remarkable that some California firm got bilked as much as they got swindled while ignorant of a direct warning from their prime industry trade journal.
A more compelling version of the scam, to me, is overpayment of retainer fees as a new client. Fortunately, only idiot California firms are vulnerable as the ABA has warned about this variation as well. Interestingly, though, the tab appears to have been $500K in that one.
Checks are outdated, and because of their age combined with the new technology of today, scammers are able to effectively use them for scams like this. However, people don't have a lot of choice but to use checks. For the individual, there's not really any way to effectively and cheaply transfer money.
We need a new money transfer system for individuals, something along the line of the ACH that businesses use (if you auto pay bills, that's how they are transferred). Something where when the transfer is authorized there's a secure system for checking that the money is available and will be sent, and verifies the identities on both ends.
The problem you could end up with simply making banks responsible is that it would just slow things down a whole lot. So you tell the bank "You are responsible for any bad checks." The bank says "Ok, no problem." Then, you deposit a rent check from your roommate. It doesn't show up in your account the next day, nor the next week, nor the week after. You call and ask what is going on and they tell you that they are waiting on the transaction to finalize. More or less they'd have to take the check, clear it internally, send it back to the originating bank, wait for the funds to clear through the fed wire, and then perhaps hold them if there was additional time the originating bank could cancel.
We just need a better system. All the technology exists, the problem is just costs/availability. We need a system that is available individuals, but that doesn't cost too much. Something like PayPal works for individuals but costs too much. You aren't going to accept a 3% cut out of rent each month. ACH works well and doesn't cost much, but isn't available to individuals, just for large batch type transactions. We need something where I can specify you will get money, you can verify this is legit and the transfer is going through, and the cost per transaction is very low.
I have a law office which is purely local. I have no "international" interests. I get a lot of these "offers". Sometimes, they even spell all the words correctly. It always seems to be from Hong Kong.
It starts with an email from a potential "client." They say they want to book you from overseas. Offer to send you a check, send a check for more than your fees, and ask you to pay for the invitation printer (or whatever) for them.
On my end, more small potatoes then the case ITA, this scam is easy to spot. The people don't act like a real wedding client, they don't want to talk on the phone, they don't know how to discuss wedding packages, they make have bad grammar etc... You can spot this long before they get to the ask.
For a long time, as soon as I had two or more tale-tale signs, I would quit the conversation. Then I got a PO Box. Now, I drag it on as long as possible (unless I'm extra busy that week). I like to see the look of the fake checks, and I like to waste their time.
San Francisco Photographers
Weren't they suspicious that they received the $200,000 rather than $10,000?
Why do you rob lawyers? Because that's where all the money is.
How many stories of Nigerian scams have we seen in the press over the years? Just because a lawyer fell for one, the scams have suddenly become "sophisticated"?
Methinks the victim has a higher opinion of his intelligence than reality has demonstrated.
I'm not tense. I'm just terribly, terribly, alert.
He did wait till it hit his account, that's where the scammer (almost) got him. Banks will release the funds for a cashier's check before the check clears, allowing to you go about your business as usual. This is generally a safe practice, but if the limbo period is a long time there is the potential to be scammed.
Cashier's checks are practically safer than cash. The bank teller will check to see if it is counterfeit, and if it is not (or if it is a very good counterfeit) the bank will release the funds immediately and then send the check (actually an image of the check) off to the issuing bank to complete the transfer. The only reason this fails is if the cashier's check itself was either stolen or a very good forgery. Insufficient funds is impossible unless the bank somehow went bankrupt in the time the check was issued to the time it was redeemed. The anti-counterfeit measures are as good or better than those used for cash, so counterfeiting is very hard to pull off.
If it is a large sum of money (and large is relative to your situation) and you haven't done business with the individual before, it's a good idea to put a hold on the check until it actually clears instead of assuming the money in your account is good. 99.99% of the time it will be, but that 0.01% could be a check large enough to bankrupt you. So put a hold on the check so the bank doesn't release the funds until the check clears, and you are completely safe.
Security is mostly a superstition... Avoiding danger is no safer in the long run than outright exposure. - Helen Keller
Wired money transfers and cashier's checks are essentially the same thing. Wired transfers are initiated by the payer at his bank, while cashier's checks are initiated by the payee at his bank.
In BOTH cases money is taken from the payer's account immediately. There is no way for a legitimate cashier's check to bounce, and there is no way for a legitimate wire transfer to bounce. You must have sufficient funds before the transaction can even be requested, and they are removed immediately.
In BOTH cases it takes time for the money to route from one bank to another bank. This can take up to 20 days. With wired transfers this process is initiated immediately after the payer requests the money be sent to the payee. With cashier's checks the transfer is delayed by however long it takes for the payer to send the payee the cashier's check so the payee can deposit it.
The disadvantage with wire transfers compared to cashier's checks is that funds from a cashier's check are released immediately while the banks deal with the actual money transfer (i.e. that potential 20 day wait), whereas with a wire transfer those funds are completely unavailable until the transfer is complete. The advantage with wire transfers is there is virtually no potential for fraud on the transfer itself, whereas the immediate release of funds does open a window for fraud with cashier's checks.
That's how this guy didn't lose any money, because it takes quite a while to wire funds to a bank in Hong-Kong - longer than it took for the lawyer's bank to realize the cashier's check was a fraud. So they canceled the transfer of $190,000, pulled back the $10,000, and nobody got screwed except out of their time. Had that 190,000 gone through, the lawyer would have been out $190,000 unless he had a very kind and understanding client in Hong-Kong who would be willing to send back that $190,000.
Security is mostly a superstition... Avoiding danger is no safer in the long run than outright exposure. - Helen Keller
accept the wired money is not the same as cash as the summary stated they were able to take it back and did not get stuck.
That's the really amazing part of the story! A smaller customer probably couldn't get that level of service.
I once had a deposit pulled back out after a year and a half. The check had processing stamps on it just a few days old and the stamps were on top of a shoe print. Apparently rather than processing the check, they dropped it on the floor and under something for over a year and somehow managed to miss that the accounts didn't balance.. The person who wrote the check had closed the account and moved in the interval it sat on the floor (I doubt it was fraud). Since it was over 60 days, the bank put the deposit back and presumably ate the loss, but they knew very well it was over the limit and still tried to take the money from me even though the fault was clearly within one of the two banks.
The more experience I gain working with banks, the closer my level of confidence in them approaches 'National Bank of Coffee Can".
Technically, you're giving out the same information either way. Write me a check, and you've just given me your routing number and account number - they're at the bottom of every check.
Psychologically, though, many people feel the same way; wire transfers are viewed as more intrusive, at least in the US. Sure, I'll sell you this car right now - just give me your bank account number and routing number. No? OK, you can just write me a check instead.
That's why you meet and your bank or his and get the cash then and there with him, if not tell him to fuck him self the deals off.
Cash is king.
Why is common sense called that if it's not common?