In the 18th century, there was a scam where a businessman was contacted by an individual allegedly trying to smuggle someone connected to a wealthy family out of a prison in Spain. In exchange for assistance, the scammer promised to share money with the businessman in exchange for a small amount of money to bribe prison guards.
Now picture this. A foreign company contacts your small business to do work for them. What do you do? Of course you start the business relationship because that’s why you are in business. For months they pay on time. Once the relationship is established, and you trust them, they fall back to the old “Nigerian Prince” scam.
The Nigerian Prince scam is an oldie. It’s also known as the “Advance-fee scam”. In its simplest form, it goes something like this: someone contacts you — it could be email, or a phone call. Something terrible has happened. Maybe your bank account has been zeroed, or the IRS is going to audit you because of some seemingly legitimate activity on your account. The consequences will leave you penniless. This is the bait. You are led to believe you are dealing with a legitimate company. The email looks very convincing, or the phone call seems real.
There are many variations. Sometimes the scam involves a mistake somewhere that could cost you a lot of money, or it could be the offer of a lifetime. That ship you’ve been waiting for all your life seems to have just docked, with real live sailors disembarking.
The common elements are these:
• Someone contacts you
• They offer to send you a tremendous amount of money.
• You keep a big chunk of it, then forward the rest to another account.
• Your emotions (excitement for a big payday, or fear of losing everything) flare up and you want to act fast.
In some of the more insidious and advanced variations, you are contacted by someone representing an overseas firm. You check them out using valid sources, and the business name they give you checks out. NO RED FLAGS. He contracts with you for services. For several months, the company actually pays you a few thousand dollars. They become your trusted business partner. Once the trust is established, they hit you with the scam. This is when the wool begins to fall off the wolf, but you most likely won’t see it because your human nature won’t let you. That is how trust works. Little red flags are ignored.
So, what can you do? What do the red flags look like?
• Any transaction that involves you buying gift cards, and giving the pin over the phone or through an email.
• Any scenario that has you wiring money from your bank account to another bank account.
• Any scenario that requires you to pay a “small fee” upfront.
• Any scenario involving bribe money or a loan from you.
Often, the scam artist will send you a check. You take it to the bank to have the funds verified. It isn’t hard for a scammer to get the legitimate routing number and account number of large companies. The teller at the bank will look up the account number and declare that, yes, there are sufficient funds. That further builds trust.
Bottom line. It doesn’t matter if they send you official-looking documents. It doesn’t matter if they send you an official-looking check. If a deal involves you spending your money, it’s a scam. Think about it. How often in your life do strangers (or friends for that matter) contact you asking you to send them money? Never.
Remember what Ronald Reagan said about the Soviet Union? “Trust, but verify.” That cliché should be left in the 80’s. In this new decade, the position we should all take is, “NEVER TRUST,” even if you verify.