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Nigerian Email Scam Victim Sues Bank, Loses Appeal
reidhellyer writes "From California Litigation Attorney Blog: 'While many victims of the so-called "Nigerian e-mail scam" would be too embarrassed to trumpet that fact, others end up infamous for their victimhood like the appellant in a published opinion of the California Court of Appeal in Riverside. In March 2009, Charles Peters received an email from someone purporting to be a citizen of Malaysia. The e-mail informed Peters that certain third parties in the United States and Canada owed the Malaysian money, but that “they can not transfer the funds to any bank account outside America continent due to their new company policy [sic].” He asked Peters to “assist me in receiving the funds and forward to me.” He offered to pay Peters 12 percent of the money. Peters agreed after apparently negotiating an increase of his fee to 15 percent.'"
Haha, what a tool. Everyone knows that only Nigerian citizens are the real deal.
It may be 7 digits, but at least it's a semiprime
because malaysia is anywhere near africa ???
my 2 cents
The man is obviously an idiot not to realize that anyone who would increase the commission to 15% could be negotiated up to 17%.
At this point "Nigerian scam" refers to the technique and proceedings more than the origin.
Greed and abject stupidity. Seriously, why would the "victim"(aka mark) think that the person emailing him could not find a bank willing to transfer money for a 15% cut? Most banks transfer a lot more for a lot less money and are a lot more reliable than some random dude you email.
Monstar L
A fool and his money...
I received an e-mail of the latest version of this scam a couple of months ago. This time it was a US Marine trying to get money out of Iraq. After laughing at the idiocy of this I was joking with some friends that "Yeah, I bet the US government would like to get money out of Iraq too. Maybe this Marine should contact them." :P
Well, in his defense, Maylasia isn't in Africa. http://en.wikipedia.org/wiki/Maylasia
When a bank tells you a check has cleared, that's only provisional subject to final clearance. Who knew?
i think the problem is that the bank told him the deposits cleared, then they took it back saying the checks were altered.
If you read the article you will notice the victim tried to be cautious. He deposited the check into his bank account. He later verified with the bank that the check had cleared. Only then did he wire funds out of his account. Sometime later the bank revoked the checks claiming they had been altered. Since the victim did not have any money to cover the lost funds the bank attached a lien to his property.
It was actually the bank that lost money. The bank is trying to collect from the victim. The victim sued the bank to have the lien removed from his property. He lost, and lost again on appeal.
Frankly, I think it is the bank that should be held responsible here. They are the ones that verified the check was good, that it cleared, that the funds were in the victim's accounts, and they are the ones that allowed the funds to be wired out of the country. Ultimately, the bank will be held liable since they will never collect their $468,000. But they are all-to-happy to do whatever they can to ruin the victim's life in the process.
I'm not so sure the banks don't share in the blame. After all, they tell people the checks have cleared knowing damned well that most people don't know they might yet yank the money back out for a wide variety of reasons. In this case, the bank was more than happy to transfer a huge chunk of cash from the man's account, far more than he had ever had in there until the recent checks that had "cleared". Now it wants to take it out of his hide rather than pulling it back from the transfer.
The LEAST they could have done is told him when he checked that it was cleared was make sure he knew that didn't mean it couldn't be pulled out again. One lousy sentence out of a teller's mouth could have saved this guy half a million dollars worth of pain.
Yes, he should have known it was a scam (it's not just well known on sites like /., the local news has stories about it from time to time as well), but surely the banks should be VERY well aware of the scam and should at least make a minimal effort to warn their customers.
Of course the people that fall for this are rather naive, but the banks give a good helping hand in fucking you over. If the money is shown as in your account and the bank confirms the check cleared, what are people really supposed to believe? Most people have never heard the words "provisionally cleared" until the bank slaps them with a half a million dollar lawsuit. This is a very common fraud method, other variations is that they somehow "overpay" you and trick you into sending part of the money back or to pay some fraudulent transport company or whatever. In rare cases they'll even try to buy goods and recieve them before the check bounces. Fuck that, the banks should be forced to either clear the check or bounce the check and eat the loss themselves exactly once. If they have to bounce many checks, tough shit. It can't be that hard to set up something like a WU branch office in Nigeria that'll let you send money if you've paid them with real cash and not phoney baloney checks.
Live today, because you never know what tomorrow brings
Asking the bank if the check cleared yields an answer which doesn't mean shit. If none of that means anything, what question must one ask the bank to require them to not reverse the answer? Is there a point where they can't do what ever the fuck they want to do?
I think I just cashed out all my cool points.
The scammers are well aware of the Flash money that vanishes when the bogus deposit fails to clear much later.
Unfortunately, there are too many that are not aware of this and get taken.
The truth shall set you free!
IUnfortunately, that's not how the bank thinks. The bank thinks "He used a false check to get money that wasn't his into his account". That he was in turn acting on behalf of a Malaysian fraudster who has run away with parts of the money is not relevant to them, the bank has never given the Malaysian any money. As far as they see it, the fraud was perpetrated by him against his bank account, and that's what they'll recover it against.
As long as you have the insane clearing system as you have, it has to be this way otherwise you could imagine the reverse scam where they collaborate, the bank has to eat a loss of $500k and then the two of them split the profit of $250k each. The sane solution would be a single and final clear/bounce, where the bank eats any loss. That'd probably lead to damn many checks bouncing at first but serious money transfers would adapt quickly and say "this is now the only way the US take payments".
Live today, because you never know what tomorrow brings
To quote Futurama, "you are technically correct, the best kind of correct". Yes this is called an "advance fee fraud", but that isn't how most people refer to this kind of thing. You are interpreting language to be much more prescriptive than it actually is. Language is simply a tool for humans to communicate, not some sacrosanct set of rules that cannot and should not be changed. Most people know this kind of fraud from the Nigerian emails and thus thats how they refer to it.
It's just like "kleenex". Yes, it's technically called tissue paper, but thats now how a lot of people refer to it. If your grandmother asks you to hand her a kleenex and all you have is scott's brand tissue paper are you really going to say, "Sorry grannie, I don't have any kleenex."?
Monstar L
I recall a story several years ago when one of the biggest group of people suckered by these scams were accountants and people in similar financial professions. In short, the people that are in a position to know better than anyone else, but they're more likely to be suckered by the 409 type of scam.
Oh yeah, and I should add to that.. the world needs to get out of last century. I've never written a check in my life, it's all plastic or cash. Debit cards go directly against your account and is far more practical and fraud-safe than checks without the high costs that cause shops to refuse taking Visa etc.
Live today, because you never know what tomorrow brings
So what are you proposing as an alternative? That the banks wait until each check has totally cleared(taking weeks or longer in some cases) to totally clear? What about the vast, vast majority of the cases where the check does clear? Should everyone else be forced to wait weeks so morons won't have to suffer the consequences of their own stupidity?
I assume that is exactly what the poster is proposing, and it is a damn good idea. The bank does not have to FORCE everyone to wait, but they should not say "the cheque has cleared", and then later say "sorry, the cheque has un-cleared, we want that money back."
It's OK for the bank to give you access to the money before they have it, but they should be 100% clear about the possibility of they clawing the money back. They should tell you that it is "provisionally clear" when you are allowed to take the money out but there is a chance they will ask for it back, and they should tell you it is "clear" when they are completely confident that they money is there and you can safely spend it. And once they have told you the cheque is "clear", then they have taken the risk.
Banks could do a lot more to prevent fraud, but they don't have really strong financial incentives to, because most of the banking laws are designed to push the risk from them to you. Why should they care when they aren't the ones losing the money?
I hate it when I make a joke and I get modded "+5 insightful". Mod the stupid comments "funny", not "insightful", pleas
The bank DOESN'T sit on checks. They send the imprint (300dpi scan) and the information transcribed into a fixed format record to the check clearing house (its a branch [usually Chicago] of the Federal reserve who make billions of dollars off of the "float" so they DON'T ever let it linger.)
Banks make YOU wait x business days because they can.
The check has usually cleared within a single business day.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
Anyone in the accountancy/banking business would have a whole career of experience telling them that it is both common and ethical to get free money.
Seems like they'd obviously be the ones to fall for it. To the rest of us, the promise of free money sends up a huge red flag, but to them its just a part of normal everyday business.
> He later verified with the bank that the check had cleared.
No. He verified that the check had been credited to his account subject to collection. Decades ago the bank would have postponed crediting his account for such a large, unusual item until after they had collected from the bank it was written on, but current law does not allow them to do that. This scam is a direct result of that law.
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
There is nothing at all in the law that prevented the bank from telling him it was "cleared" but still subject to being pulled back. One sentence is not too much to ask in the name of customer service and could have saved a lot of grief.
According to the California Court of Appeal opinion, neither the lawyer for the scam "victim" nor the lawyer for the bank identified the correct legal issue (apportionment of fault per the Uniform Commercial Code). And neither the lawyers nor the Court of Appeal picked up on the federal Check 21 law issue (the law that says banks are required to give credit against fake cashier's checks within one day after deposit).
The plaintiff's lawyer, because he didn't spot the UCC issue, almost certainly failed to discover or put on evidence that the bank was negligent in crediting the fake check.
Yeah, why not?
Why the hell should it take weeks? Why not 10 seconds for your bank to verify with the issuing bank -- they don't send messages by pony express any more, it's all digital. When it can make them money, they do the transaction in less than a second, keep it and play with it while you're waiting.
Regardless of the fact that they told him otherwise, since the check hadn't actually cleared, the bank basically allowed him to overdraft his account by $400k and then took his home to collect the debt. The whole Malaysian scam thing is irrelevant. Does this bank let all of its customers overdraw 6 figures? I think this guy, his lawyer and the bank are all dumb as shit.
bite my glorious golden ass.
FTA: "Peters deposited the $808,988.90 in checks received from the purported Malaysian at the Chino Commercial Bank. After the bank notified Peters that the checks had cleared, Peters wire transferred $468,000 to Hong Kong. Shortly thereafter, the checks were dishonored after the bank detected that they had been altered. Since Peters was personally liable for any overdrafts on the account which had only a few thousand dollars, the bank sought to attach property owned by Peters to collect on the overdraft. The trial court granted the bank’s motion to attach against Peters in the amount of $458,782.60...
Despite the obvious life lessons, the legal one is this – don’t transfer funds received unless and until you know that collection of the original deposit is final. This is particularly true for lawyers and others who receive funds in trust. (Chino Commercial Bank v. Peters, Dec. 13, 2010, Case No. E049170.)"
So my question is this -- HOW do you know that collection of the original deposit is final? (I've never even heard that phrase before.) Apparently being told "the check has cleared" doesn't do it?
We know where leadership by an anti-intellectual "strongman" who scapegoats minorities and likes boisterous rallies goes
Would you tell someone that s/he's an "Indian giver" if a Native American is within earshot?
I wouldn't use that term under any circumstances. It's both derogatory and based on false beliefs (the belief, once common in the US, that American Indians traded away their land fair and square and then wanted it back, when in reality it was the Europeans who went back on their word in the overwhelming majority of agreements between the two groups). Neither "Nigerian scam" nor "Swiss cheese" are derogatory terms, nor are they based on false assumptions. I would use the phrase "Nigerian scam" within earshot of a Nigerian, and would say "Swiss cheese" within earshot of a Swissman, without hesitation, if the appropriate circumstances arose.
"I don't care about the Constitution!" --Bill O'Reilly, November 17, 2009
If you read the article you will notice the victim tried to be cautious. He deposited the check into his bank account. He later verified with the bank that the check had cleared.
The problem is that's not "being cautious" or the victim does not understand what "cleared" means; "cleared" items are only really certain to go through if they are bonafide, and the paying bank is solvent. If he were being cautious, he would have required a bank wire or certified funds, or he would have understood the paying bank has a RIGHT of CHARGE-BACK, and waited longer.
He would at the very least understood the "cleared" merely means the check was presented for payment and payment acknowledged by the paying bank, does not mean the funds are guaranteed, or that no issues are going to be raised, if the item is reviewed, or fraud is suspected.
The paying bank can change their decision and reject the transaction at any time during the settlement period according to local laws, after the check cleared.
Under the law, banks are not responsible for negligence, errors, misconduct, or default, by the other bank or other parties to the transaction.
The unavailability of funds to cover the invalid instrument is not the depositor bank's responsibility, it is up to the victim to seek recourse against the writer of the invalid check, and the initial "clearance" of the item does not relieve the depositor of liability.
Obviously, as can be seen here, "Cleared" means only that the transaction has cleared the banks' books, and provisional settlement of the transaction is completed; in his haste, he neglected to wait the longer waiting period, to ensure the item dispute period had sunsetted, and obtain confirmation of final settlement of the transaction.
don't forget the other side to that. if banks eat the loss, then costs of transfers would go up, and/or banks will refuse to do transfers. It'll also go back to the previous mechanism where transfers take lots longer to clear (weeks or even ,onths) before money is available. and direct deposit goes out the window, too.
I imagine by "direct deposit" you mean businesses mailing in paychecks to be paid to employee accounts or something like that? The whole problem with checks is that you have to match what's deposited with what's issued. I can go into my online bank now and issue a payment today and it'll be in your account in the morning, fully settled between the banks. That money is gone, has left my account, left the bank and isn't coming back unless I sue you to get it back. My paycheck comes straight to my account each month like clockwork the same way, it's settled the same night it's transferred into my account. That way all the instructions come from my account and I can't transfer money I don't have to do frauds like this. It's a lot harder taking control of my bank account that uses a code calculator than it is to make a piece of paper that looks like it came from my bank with a signature that looks like mine, after all I've signed quite a few places.
Sure, you can claim there's a few advantages to checks, but most of them are negated in that who really trusts a check that hasn't cleared? By the time it's cleared - the provisionally cleared you talk of here - you could have gotten yourself to an online bank, a telephone bank, a bank office and had the money electronically transfered or found an ATM and handed over cash. That is if you're not carrying around a cell phone capable of the same, usually you need a small code calculator as well but it's all pocket size. And if you have a terminal you don't even need that, the offline solution terminals use is pretty much like checks, you use the card, id and signature. That way it's up to the business to decide if they want things online, for example most taxis are now online so they know if you can pay the taxi ride or not or if the card is reported stolen. It's not quite that easy to issue an APB of a stolen checkbook, don't accept these checks.
Live today, because you never know what tomorrow brings
After the bank notified Peters that the checks had cleared, Peters wire transferred $468,000 to Hong Kong.
Shortly thereafter, the checks were dishonored after the bank detected that they had been altered.
So what the hell does clearing a check mean? I always assumed that this means that the bank verified that the check was good and they received the funds from the other bank. How much later can a bank claim that a check is no good after it has cleared it?
He doesn't sound quite as dumb as the blog post made him out to be.
If I deposit a check, and the bank tells me on the phone or in writing that it cleared, as an ordinary non-financial person I would assume that the money is secure in my account.
A bank has a greater knowledge of these matters than its consumer customers, and therefore a greater obligation.
My bank should be serving me and making a reasonable effort to look after my interest and avoid fraud.
The bank should know that these scams are going on. They should know that some of their customers are likely to fall for them, thinking that they've deposited valid funds.
The banks could stop this fraud by making it clear to their customers that even though the check has cleared and the money has been entered into their account, the entry is just provisional.
I think a bank has an obligation to do so.
So the victim had a reasonable case against the bank. He might have won if the courts decided that way. They didn't.
So now this fraud will go on.
The scammer successfully made off with $460,000 that never existed. This is no "I need $200 from you to cover the transferal fees" scam. This is some crazy shit.
Just ascribing a nationality to something doesn't even remotely infer that everyone in said nation is involved with such activity. Do all French "french kiss"? Doubtful. Are all Swiss involved in making cheese, or even eating what we call "Swiss cheese"? Nope, but we still call it that. Are all Japanese infected with "Japanese Encephallitis"? Nope, in fact the disease has almost been eradicated from the country. Spanish flu? Wasn't even from Spain. etc. We call it the nigerian scam because it was Nigerians who first popularized it. Thats all, nothing more, nothing less. It does not suggest that all people from Nigeria are scammers. If you don't like it then you are going to have popularize a new term, but good luck with that.
Monstar L
Why the hell should it take weeks?
Because it can take the account holder weeks to get their statement, see that someone has presented a fake check against their account, and cause the transaction to be dishonored. If this happens, the depositor who deposited the bad check doesn't have the right to the money, even if their account had been credited.
Being "totally clear" is not about moving money permanently; that is final settlement, when the bank says your check cleared they mean it has passed provisional settlement. Being totally clear is about agreeing to move money, and there being no issues.
Since it can take days before a review occurs or issues are reported, 10 seconds is not reasonable for settlement to occur. Even credit card transactions do not make provisional settlement so quickly, it takes 24 hours, and of course is not final until approximately 60 days, before that time the CC issuer has CHARGE-BACK rights, just as the bank paying a cheque has a CHARGE-BACK right.
In England they seem to do this to some extent. When I take out 1000+ GBP in cash the bank asks you politely what it was for. Some people might take offence to that but they're simply making sure you're not about to give it all to some scammer.
They are 100% clear about this. It's a part of the NACHA standards. It's typical to get the funds in your account the day after a check is wired to the Fed. But it's a very clear part of the standard that the recieving bank has 3 (IIRC) days to return an "NSF" and the customer has up to 60 days to dispute the check, and if either one happens, the funds are immediately pulled from your account. This is all part of the documented standard.
The problem here is that the victim checked that it had cleared, by which time, IMHO, it should be too late for the bank to reverse the transaction.
Yeah, that's exactly what's not happening. The banks can take the money back up to two months after deposit. Taking unknown checks is economic extreme sports with no safety net.
Live today, because you never know what tomorrow brings
Do you know what you call a doctor if he pronounces you "perfectly healthy" but what he really means is there's an odd spot on your lung but it almost never turns out to be a rapidly developing cancer?
The defendant.
In other words, unlike the doctor, the bank KNEW that it was only provisionally cleared but chose not to inform the man of that rather important bit of information. It sounds to me like exactly the sort of "let's not worry about the impossible" that lead to the big financial meltdown.
I think in some cases it is not because they cannot see through the scam, but rather because they think they are safe. Consider that they receive all the money first, and then they transfer part of it on. It is not like they are paying somebody money before receiving their own share. But then after they have received money (possibly from a victim from internet banking phishing) and transferred part of that money to an account abroad, the original transfer is reverted.
Somebody who is in that position where they thought part of it through but forgot the part about the first transaction being reverted will have to play stupid. They cannot admit that they had some idea what was going on, because then they would admit to have deliberately taken part in the crime. Playing stupid may be unlikely to get your money back, but with a bit of luck it may save them from a sentence.
Not saying this is necessarily saying this is what happened in this case, just saying that these people may not be as stupid as it looks. One saying goes: "Never attribute to malice what can adequately be explained by incompetence", another saying goes: "Any sufficiently advanced incompetence is indistinguishable from malice". But in some cases it may actually be a combination of malice and stupidity, and it can be hard to tell how much of each.
Do you care about the security of your wireless mouse?
Heh.
We use the same system in The Netherlands. Checks are completely antiquated ofcourse. But you know what? International bank traffic can have the ability to revoke wire transfers as well. So one day the money is in your account and you hand over the carkeys. The next day the car is gone to Poland or Russia and a week later, the wire transfer is cancelled. And if you already spent that money on a new car, the bank will happily put your account in the red with a 19% yearly interest rate attached.
Don't think that wire transfers from dubious banks in Russia or Africa are much better than checks. You could get a very nasty surprise that way.
Therefore, by the (faulty) logic you're using, you're just a cow with a keyboard - osu-neko (2604)
I recall a story several years ago when one of the biggest group of people suckered by these scams were accountants and people in similar financial professions. In short, the people that are in a position to know better than anyone else, but they're more likely to be suckered by the 409 type of scam.
You'd think the maintenance people would be more likely to get caught up in 409 Scams. We seriously need to clean this mess up.
419 scams probably hit a disproportionate amount of Toledo residents.
You are talking about what we call TT. Here (in Japan) the system is internal to Japanese banks - there is no such thing as revoking a transfer. When the money is in your account it's there and that's it.
Oh yeah, and I should add to that.. the world needs to get out of last century. I've never written a check in my life, it's all plastic or cash.
I still use mostly checks to pay bills. I'd like the convenience of electronic payment of some kind, but not in the current implementation where businesses have saddled it with a bunch of baggage that allows them to continue leaching funds directly from customers whether the customers want them to or not. When I was younger, I learned the hard way that it's a lot easier to refuse to send a company a check than it is to get them to refund money they've already yanked out of your bank account.
"...always new atoms but always doing the same dance, remembering what the dance was yesterday." -Richard Feynman
Another explanation is that the average person would find it fishy to be asked to set up a bank transfer out of the blue when they have no credentials to do so, whereas an accountant or financial adviser would probably have their name out there and expect someone to possibly seek their help with a bank transfer.
That brings me to an interesting point, / . is just "the ramblings of socially-inept, technology-literate news-mongers".