Scammers, not gurus...

There is a relatively new scam going around (as in just the past couple of years) concerning cashiers checks. Essentially the scam is that someone will offer to pay you (for an item on eBay, or many other things) with a cashiers check, then they will send you a check that is much too large and ask you to send money to someone else (a shipper or something). The check is a fraud, however it's a good enough one that the banks won't catch it right away and will deposit the balance in your account. You then send the item and wire the money back to whoever the guy asked. A week or so later when the check is determined to have been a fraud, the bank will take the money back out of your account (with a penalty for "their troubles"), but your item and your wired cash are already gone for good.

Biff and I were targets of this just about a year ago (several months before I began this blog). I thought it might be fun to walk you through the path of the scam, including the warning signs that made us cautious, even before we had heard of such a scam.

It began when we posted a vacancy on a renting website. A few days later we received an inquiry from a gentleman who claimed to be a Dutch importer. He asked for some pictures (which is relatively normal) explaining that he would be moving to the United States for a couple of years on business.

WARNING #1: Biff and I have a very well documented application process that includes a credit check. Since this guy was from overseas a credit check would be nearly impossible, and I told Biff as much.

We didn't want to discount the possibility of renting to him though, since we were having some trouble generating interest in the property. The vacancy was to begin in Janurary, which is a relatively slow period.

He sent back this email:

===== Original Message From morgenssmth05@webbox.com =====
Pls could you get back to me with your phone number,i would like to give you a call to explain things.There are some things in the application that i dont feel to comfortable about giving out, except in person.Thanks and looking forward to hearing from you
Morgens


WARNING #2 - Our application was pretty standard stuff. Addresses, identification info, references, etc. We haven't had anyone balk at our applications yet, he was the first.

This itself was odd to us, since our application was relatively standard. But since the gentleman claimed to be from overseas, Biff agreed to the call. The call was routed through Canada (or so it indicated on Biff's caller ID), and the connection was horrible. Now for those of you who've never had the pleasure of calling overseas, a real phone line is hard to mess up. I've called my family from China and from England so far, and both of those connections were both quick and clear. So when Morgens call was so staticy that Biff could barely understand him.

WARNING #3 - Anyone who claims to do international business but can't make a clear phone call to the US has some serious issues.

The one thing we got from the call though was that Morgens intended to make payment via a certified check. This seemed legit to us at the time because we weren't aware of the fraud. However, he was insisting on sending it to us right away, despite the fact that he hadn't completed an application yet and we hadn't agreed on accpeting him as a tenant.

WARNING #4 - He tried to essentially bypass the application process, tempting us with a big check.

Biff, while cautious because a few red flags were flying, was willing to continue the application process. After all, we certainly didn't want to discriminate against someone because they weren't American. However we needed to assert extra caution before making any agreements. If he insisted upon sending the check, we'd just run the credit check after it arrived. We had never turned someone down because of a bad credit check (our rents tend to be in the higher range, discouraging those types of renters), so we had no reason to assume that he would be any different.

Biff sent him back a reply:

Morgens,

Excellent talking with you. As requested, here is my mailing address to send the certified check: I know our phone connection was not all that good, but I'd like to make sure that we agree on what we discussed.

a) You will send a certified check to my home address in the amount of $1990. This will cover your $800 security deposit (refundable at the end of your lease) and your first month's rent of $1190. You may prepay additional months if you like.

b) You will e-mail me the electronic application I sent to you, filled with the information you feel comfortable providing

c) You will send me via mail the missing information in the application (driver's license info, or whatever information you feel is necessary to verify your identity and credit history) along with your certified check.

Once this process is complete, if we accept your application, I will send you the lease agreement, which will include the term of your lease, your rights, your responsibilities, etc. I think we can certainly come to an agreement and can resolve these issues, despite the present difficulties of communicating overseas. Thank you for your patience and understanding.

Best Regards,
[Biff]


Our intent was to accept the check (but not cash it) and then do whatever research we could on this guy. At the very least we could have contacted his references in his home country and done some research on how to run a credit check in the Netherlands. I'm still not certain if you are capable of doing this, but since US credit checks are so easy to run from anywhere in the world, I had assumed that Europe would be equally easy.

Now is this a little excessive to be trying to dig up stuff on a guy who isn't even in the country just to fill a vacancy? Probably. But Biff and I are both young and to be honest, it was still kind of a game to us. Half of the fun was in figuring out new things and we were embracing every challenge. The other reason we were pursuing this was that we had no other bites on that vacancy yet. Honestly, if someone local had filled out an application, we'd simply have sent our apologies to Morgens and dealt with the local. But at this point there were no other bites at all.

Now Morgens think he has us hooked. He writes us back this e-mail:

>===== Original Message From morgenssmth05@webbox.com =====
Thanks for your reply and also for assisting me. I have sent you a certified bank check in your name and to your address. I'll be paying for 2 months($1990) but will be sending a check worth $6490. You'll kindly cash the check and deduct your funds for the house and you will send the excess funds to my shipper . He is to ship my belongings down to the US and i have kept him on hold for too long. I am doing this so as to secure the house first before he transfers my belongings to the location,this is the only assistance i will be needing from you and will be most grateful.Pls if there is anything you don't understand pls get back at me as soon as possible. Thanks and hope to see you soon.
Morgens Smith

There's the trap. He intends to send us a very large check and then send the "excess" funds over to his "shipper". So the goal of the game is revealed and Biff and I start to figure out that something is definitely wrong with this guy. He's asking us to handle over $4000 of his money? Still unaware of the cashiers check fraud, we started to wonder about money laundering schemes.

Note also that while we're requested that he send us a copy of his driver's license and other forms of ID with the check, Morgens is just talking about the check. He has no intention of sending us that information, and his goal is for us to be so excited by the large sum on the check that we forget about all of our documentation. This is why having a system that you follow works, it helps override the emotion of getting a check for the vacancy that you desperately want to fill.

Right around this time we received a mass mailing from the website that we advertised on describing this scam in detail. We identified Morgens as a fraud immediately (we were very suspicious of him as it was), and pretty much discontinued contact with him. We did receive the certified check and informed the FBI, though don't expect anything to come from it. Most of these scammers work out of loosely regulated nations, such as Nigeria, where law enforcement can't track them down.

Right after this episode with Morgens, Biff received two more e-mails, on the same day:

Laurence Johnson has inquired about your property on Military By Owner.

# Comments: I am interested in this place for rent I have seen the photos and they are great!!! About Me My name is Laurence Johnson, a British Archaeologist. I am currently embarking on a research in US. I have completed all official processes. The research would take about a year and so I am looking for a year's lease. As I am already aware there needs to be an application process and income verification. I will not be able to provide some of the needed information due to my status as an independent Scientist with funding from Financiers. To this end, I will be willing to make payment for the 12 months period which I am going to occupy the place for rent. This payment would be coming from my financier. I hope this solves things. Please send me the lease agreement for my review. Talk to you soon. Thanks. Laurence.
Tel:+44-703-194-0278.

This highly questionable request (again note the request for us to send him the lease for review, assuming that we'd take him. His goal is to send us a check as soon as possible, bypassing any paperwork or identification if possible) was followed almost immediately with this one:

My name is Jeff Newman, a British Archaeologist. I am currently embarking on a research in US. I have completed all official processes. The research would take about a year and so I am looking for a year's lease. As I am already aware there needs to be an application process and income verification. I will not be able to provide some of the needed information due to my status as an independent Scientist with funding from Financiers. To this end, I will be willing to make payment for the 12 months period which I am going to occupy the place for rent. This payment would be coming from my financier. I hope this solves things. Please send me the lease agreement for my review. Talk to you soon. Thanks.

At least the scammers aren't very organized. Score one for the good guys.

The importance of this article (besides making you aware of a common scam), is to emphasize the necessity of a good process. Biff and I carefully thought out our tenant selection process, which helps us avoid falling for traps like this, even when we have a vacant property that we were feeling pressured to rent out quickly. Because of that, we were very suspicious of our international friend well before we knew how his scam worked.

If you are looking to rent out property, make a very well-documented process. You have no idea how many landlords take in tenants that they otherwise wouldn't just because of some sob story or a financial pressure. Decisions made emotionally often make a situation worse, not better. Make your decisions now, document all the steps you will follow, so that you don't have to make them when you are under pressure.

If you want to read some more about this scam, read this one person's experience with Nigerian scammers when he tried to sell his SAAB.

Here are a few more links on the scam:

The US Government's warning
www.cashierscheckscam.com
About.com's page on the Nigerian Cashier's Check scam