Check Scams, Debt Collection scams and other financial scams.
#21814 by Samantha Tue Feb 09, 2010 12:30 am
Debt Collection Scams target lawyers, legal firms and debt collection agencies.

Debt collection or delinquent money collection scams are sophisticated and very dangerous variations of the familiar fake check scams. Unlike conventional fake check scams which primarily victimize individuals, debt collection scams target law firms or debt collectors, professionals who commonly conduct this type of transaction as part of their normal business practice.

They can vary in execution but have the same basic premise. Typically, an individual lawyer or firm will receive an email or snail mail from someone representing a seemingly legitimate company, often claiming to be based in Asia. The scammer will explain that he has a client or clients in (or near to) the lawyer's country who owe money to his company for goods or services. (A more recent variation of this scam uses a "divorce settlement collection" ploy.)

After some email exchanges the scammer will agree to the terms and charges requested by the lawyer and sign a contract to retain his or her services to contact the supposedly delinquent client and collect payment.

The role of the delinquent client is played by the scammer himself, or an accomplice. Upon receiving an email or phone call from the lawyer, the "client" will agree to pay the contested charge(s) in part or full, with a certified cashier's check.

The scammer then instructs the lawyer or collector to deposit the check in his own bank, deduct his legal fees from the total, and then send the remainder by wire transfer to a bank account.

However, the cashier's check is counterfeit. Some weeks, or even months later, the check will be declared fraudulent and returned. When this happens, the lawyer's account will be debited for the full amount.

Sometimes the scammer poses as a legitimate attorney, referring a case to another lawyer for various reasons. See this article from law.com for more information about this variation.

THIS IS AN EXTREMELY DANGEROUS SCAM! Some firms have been scammed for hundreds of thousands of dollars!

Common Characteristics of Debt Collection Scams:
  • The scammer may include a business website in his email to lend credence to his alleged company's business. These websites are either fakes, easily and cheaply created, or a belong to a legitimate company who is in no way connected to the scam. If the scammer is behind the fraudulent website, he will usually ask the victim to contact him through an email address at the domain itself.
  • The bank listed on the counterfeit check will be real, but the phone number may be fake. In these cases, the scammers have set up a US-based 800 number to include on the check. If a potential victim chooses to call the bank to verify the check, an accomplice will pose as a bank employee and "confirm" that the check is good.

THESE ARE VERY SOPHISTICATED SCAMS. They appear to be legitimate and normal business transactions, but at their core they are simply variations of the much more common fake check overpayment scams.

IMPORTANT STEPS TO FOLLOW IF YOU ARE UNCERTAIN ABOUT SUCH A CONTRACT:
  • Verify the company: do some research to see if the company is legitimate. Even if the company itself is legitimate, verify that they are truly behind the proposed transaction and not merely being exploited.
  • Verify the phone number: some scammers use real companies to back up their story, but they use their own phone number. If the company is legitimate, find their phone number from a different source to confirm that it is real.
  • When verifying a check, do not rely on the phone number printed on the check: do an Internet search to locate the actual branch bank who purportedly issued the check and call through their listed number. As noted above, some scammers set up fake numbers to "verify" a bad check.
  • Some checks are stolen or altered rather than counterfeit, and may be declared genuine by the issuing bank. It will not be until the charge appears on the real account owner's statement that the fraud is uncovered. NO MATTER HOW LONG THIS PROCESS TAKES, THE PERSON OR COMPANY WHO CASHED THE FRAUDULENT CHECK WILL BE HELD LIABLE!
  • NEVER send money to the purported client unless you can confirm the check has actually cleared the issuing bank!

For examples of this scam, please read this thread.

For further information please see the FBI warning here.

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