Wednesday, February 24, 2010

Latino Community and Internet Financial Fraud

I posted the following commentary on a new Latino law professors blog earlier in the week. I thought I would share the story with the readers of the corporate justice blog. Last Thursday afternoon, I received a frantic telephone call from my cousin who was born and raised in Ecuador but currently resides in Kendall, FL. After a few minutes of a harried conversation in Spanglish, she finally said, “oh my God, how could I have been so stupid, stupid, stupid.” My cousin has been the most recent victim of Internet financial fraud, and in the process has been swindled out of $3,800.

I assured her this type of financial fraud is very very common and the FBI has been looking into these types of financial frauds for years. I was rather surprised that she had never heard of these investigations. What happened to my cousin has happened to many many people. What I was more interested in determining was how a college-educated, well-experienced, accessories merchandise buyer for some of the most renowned fashion designer houses for more than 15 years, became the victim of a internet financial fraud scheme. She admitted that with the financial crisis, her job is not as secure as it used to be, and she was looking on the Internet, primarily on Hispanic-focused Internet websites for ways to make a little extra cash by working as a translator.

Last week, she responded to an email that offered her the opportunity to be a “secret shopper,” which required her to evaluate customer service procedures of local retailers in her community. This sounded right up her alley. The email suggested that the “Company” was looking for a “few secret shoppers in her area, and they would only select a few local residents.” She immediately, filled out an on-line form, which requested her personal data such name, address, and description of local community in particular types of retail stores. No credit card or banking information was requested. (I gather that would have triggered a red flag for potential victims.) A few days later she received a cashiers check for $3,800. The instructions required her to cash the check at “her local bank,” go to Western Union (WU) evaluate how well her local WU representative handled transactions with the public, in particular she should evaluate the level of courtesy, language ability, and efficiency displayed by WU representative. Once she had observed the WU representative she should conduct her own transaction and wire $3,600 (she should retain $200 as payment for her services) from the cashiers check that she had cashed at her local bank to the Company, which was located in Dubai, United Arabs Emirate.

My cousin immediately sent an email to the company and pointed out that $3,800 was a great deal of money for an initial customer service assignment, and whether there was anything “underhanded or potentially illegal” regarding the nature of the assignment. She received an immediate email response that assured her that the assignment was “100% LEGAL” and the amount of the cashiers check was the Company’s way of determining whether they were dealing with “honest secret shoppers.” My cousin’s fears were alleviated, and she performed her assignment as requested within approximately two hours of receiving the cashiers check including sending an evaluation report to the Company. She did not receive a response email from the Company. A few hours later, having heard nothing from the Company, she called me frantically, and shared this disturbing story.

The unfortunate reality is that the “cashiers check” is a fraudulent check. It was drawn on the United Federation of Teacher's Credit Union in Washington, D.C. A brief conversation with their Legal Department confirmed that they do not have a “secret shopper” pilot program nor do they have any representative or independent contractor that is located in Dubai, United Arabs Emirate. The check will not clear the inter-bank clearing process, which takes 2-3 days for in-state-checks and 3-5 days for out-of-state checks to clear. The account that the “cashiers check” is drawn on is not an active account. My cousin has been told that her local bank will withdraw the $3,800 funds from her personal account once the inter-bank clearing process rejects the cashiers check. I have advised my cousin to file a financial fraud affidavit with her local police department, which will permit her to file a theft and casualty loss on her itemized tax return for 2010. I also advised her to forward all correspondence to and from the Company to the FBI Criminal Investigation Division unit including the envelope in which the cashiers check was sent to her for forensic testing. The FBI Financial Crimes Report to the Public is available here. It really should be translated into multiple languages especially Spanish and French.

My cousin has learnt an expensive lesson. However, her experience has galvanized her to create an Internet Financial Fraud brochure in Spanish, which she will share with primarily Spanish speaking community groups in South Florida. I am a strong believer that all things no matter how demoralizing and painful they may be, happen for a higher purpose. Hopefully, my cousin’s unfortunate experience will prove to be a learning experience for many many people.

Lydie Nadia Cabrera Pierre-Louis


  1. This post provides an unfortunate example of the alarming trend of the increasing number of internet scams that are occurring across the country. Since the nation's financial crisis, internet scams are occurring more and more frequently. Something needs to be done to prevent people from being taken advantage of by these internet scams. The creation of an Internet Financial Fraud brochure in Spanish is a wonderful start and is likely to prevent many instances of future internet fraud. Maybe similar brochures could be created in several other languages to help combat internet fraud on a global level.

  2. During this time of financial crisis our minority communities are too often taken advantage of. I speak not only of non English speaking groups but also of the undereducated. The internet has been called “a window to our wallets” and I agree with Ms. Bragg that an Internet Financial Fraud Brochure would be a great benefit to other groups as well. The vicious prey on the weak and that includes those who are not internet savvy. The victim in this case was a well educated person, just not educated in the right way. Here, a few pointers may have made the difference in keeping that $3,800 and I am happy to hear that she has taken this experience and used it to help educate others.

  3. Stories of individuals being scammed through the internet are far too common nowadays. This story illustrates the frightening reality that nobody is safe from these type of scams. For this to happen to such an educated and experienced individual, one can only imagine the amount of uneducated and inexperienced individuals that have already or may become victim to a similar scam. I also believe that everything happens for a reason and I think that this is evidenced by the fact that this woman is using her horrible experience to make others aware. By expanding the awareness, others can avoid becoming prey to these con artists that attempt to make a living off of those who work hard to make an honest living. I think that the Internet Financial Fraud Brochure is a positive step and I agree that publishing this brochure in a variety of languages can be very beneficial.

  4. Unfortunately, these fraudulent activities happen on a day to day basis. I am originally from Nigeria, and we also have fraudulent schemes similar to this. The Nigerian internet fraud is called 419, and the individuals who initiate the internet fraud are called 419 boys. The 419 fraudulent scheme occurs initially by you receiving an email from an individual stating they are of Nigerian royalty, and they are having financial problems regarding their inheritance. The email requests for some money in order for the Nigerian individual to obtain their wealth. The email also states that once the individual receives their wealth, they will compensate you abundantly. Once you send the money, you receive more emails and updates about the progress of obtaining the wealth. However, the email request further monetary assistance because of other issues that arose. Once the individuals receive a certain amount of money from you, they discontinue the emails and cancel their email account.

  5. Financial fraud has been on the rise for many years. As Ms. Bragg stated, with the state of the economy, this is bound to continue to happen. Financial fraud can happen to anyone; educated, non-educated, rich, poor, etc. Most of us have received an e-mail that states exactly what Mr. Williams described above. The United States is truly a melting pot. And because of this, I too think that having the Internet Financial Fraud Brochure translated into many different languages is a good idea. People are working hard everyday to make ends meet and to have someone simply steal your money right from under your nose is not right. We all must be cautious and remember that if it seems too good to be true, more than likely it is.

  6. I am shocked that there is a sector of people that aren't aware of internet scams and how to avoid them. But now that I think about it and read this article, it makes sense that a language barrier would prevent people from being as astute about financial scams as they would be if they were more proficient. This also speaks to how poor communities are getting left behind in yet another educational area: technology. If people had appropriate exposure to computers and other types of technologies in their schools, homes and communities, they would be put on notice of these schemes, and would be able to avoid them properly. It's discouraging that these internet scams still continue to take advantage of people.

  7. It is so sad that every telephone call or email has to be analyzed and scrutinized for safety. We think our current generation is savvy and informed regarding frauds and scams, but this article highlights how easy it is to be defrauded. The number of online criminals targeting small groups of the population, intending to steal their money or their identity continues to grow. Unfortunately, these criminals are also able to perfect this illegal trade through the tips and warnings provided by helpful consumers highlighting how they discovered the fraud. Individuals who grew up outside the “computer” age or who simply cannot afford a computer are also a large group in this country needing protection. How to get the scam warnings to these groups is a terrible problem, but an additional problem is how to keep the information up to date. Who would not be concerned to receive an email or call from the IRS, your credit card company or your bank? People react and that is what the fraudsters are counting on. Some people have never previously received suspect calls are emails or knew anyone who did - so they do not even know to talk to someone before taking the requested action. As the economy continues to place financial pressure on families, fraudsters will be able to find unsuspecting individuals willing to try new avenues for producing income – when in fact they actually stand to lose what little money or identity they have. I applaud those who are preparing warnings for minority groups and it is unfortunate that sometimes learning about these scams comes at a price. This article really causes me to wonder what I can do to ensure the underprivileged, minority groups and the elderly receive fraud and identity theft warnings, because the reality of this article highlights that a large part of our community is unaware of these frauds.

  8. Though I find you cousin's incident unfortunate, I am hardly surprised. As a common internet user, I see many adds that speak to "earning extra cash" by working on line or being a secret shopper. With today's economy, these opportunities are appealing at first; however, a quick route to earn money could cost much more than any amount of money. Your cousin is very lucky that she was targeted as a person involved in the scheme. With your help she took the appropriate measures to make it clear that she is the victim.
    Financial fraud has been a problem for years. With the advacnement of technology, companies/individuals are finding ways to expand their schemes to communities which are comprised of people who are uneducated. However, I don't believe education determines if a person will or will not fall for such a scheme. I know people who are educated and have fallen for financial schemes over the internet. With all of the sources available on the internet, people who commit these sort of schemes are able to develop more professional and believable ads.

  9. Tara-Anne CanadaMarch 2, 2010 at 9:35 AM

    It is hard to believe that people are shocked that there are others that are not aware of internet fraud. Not everyone is internet and computer savvy. Generally, only younger generations proficiently navigate the internet and computers because we grew up on this technology; however, that cannot always be expected either because of language barriers and the lack of means and resources. Not everyone has access to the resources where the scams are prevalent and if they do, a great percentage of those users are not aware or interested in the topic of the scams.

    On the other hand, even those that may be aware have a greater chance of overlooking the risk involved with some of the "get rich quick" schemes available. The unemployment rate has reached record highs and people NEED jobs and are willing to attempt anything to gain an income. Why not attempt a job that requires little time, little (if any) gas money/bus fare, and has great returns. Facially, these scams look like great opportunities. It is easy to see why so many people get caught up in the unfortunate situations.

  10. I think there are two main reasons smart people get sucked into these things. First, they think it could never happen to me. It's something you hear about, but I would never be that naive. Second, people are just by human nature trusting, especially in familiar surroundings. Because it was a Hispanic-focused website, she probably had her guard down. This by no means makes her stupid, just trusting. As long as there are trusting people, there will be scam artists out there working on new ways to prey on them.

    Even in legitimate business settings, the same is true. As someone who worked in the compliance/regulation field for many years, I've seen this first hand. When a company pays its employees on commission, many employees will seek to maximize their earnings at the expense of the customers best interest. For instance, I did a long-term investigation on annuities and exchanges in annuity products. Annuities paid higher commissions then other investment products, and I would look to make sure salesmen who were selling primarily annuity products were doing so because it was in their client's best interest, not theirs. Also exchanging annuity products is very lucrative for the salesman, and harmful to the customer. There are only a few legitimate reasons for doing such a transaction.

    Unfortunately, we all have to look out for ourselves. This was an expensive lesson for your cousin, but I hope it doesn't ruin what otherwise sounds like a good natured person.

  11. After reading this blog post, I think I automatically became more aware at what I do on the internet especially involving the creation of particularized passwords, etc. You must use caution when dealing with non-secure websites (and even dealing with secure ones). In order to slow the progress of these cyber financial frauds, there needs to be more regulation in the area of transfer of secure information.

    The instant case was obviously somewhat thought out considering when the woman e-mailed the Dubai company she received an automatic response. But, financial fraud through the internet isn't always as intricate as that. I would imagine that some people use the same pin code, password, etc. for all their online banking and e-mail. With the amount of private information that gets passed through the internet here it is extremely necessary for the procedures used to really be shored up.

  12. It never ceases to amazes me the creativity of the people setting up these schemes, from telephone solicitations to mail offers (My dad used to get letters from preachers with a "lucky" penny inside, promising imporved finances, and that they would mention him in their prayers if he would only mail them 1 dollar). I, on the other hand, was swindled out of about $400 through a telephone scam many years ago promising me some magazine subscriptions and a few "gifts" which turned out to be a cheap matching set of his/hers watches (at least I got that, though I never did get any magazines). After that, I stopped dealing with phone solicitations, but almost daily I still get emails asking me to help recover so and so's deacesed father/husband/brother's $120 million dollars being held up in Germany or Thailand. I've also seen the "seceret shopper" offers as well, but luckily I never pursued them.

  13. -Anthony Gonzalez

    Another one bites the dust. I hate these scams. I'm so hesitant to even remotely entertain any of those opportunities because you just never know.
    This kind of fraud really is very prevalent. We obviously do not safeguard ourselves as much until we get burned and these scammers know this. They know that even though many people fall victim and then learn, there are still many others that simply are not aware that these scams exist or think it won't happen to them.
    I just say, if you're considering taking an opportunity that involves you being put at risk upfront without much information to rely on, DON'T DO IT.

  14. Earning money online never been this easy and transparent. You would find great tips on how to make that dream amount every month. So go ahead and click here for more details and open floodgates to your online income. All the best.