Beware of Scams

With the economy in the toilet, there has been a rise in cases of scams and fraud. I'm sure you've heard of most of these shady deals but it can't hurt to be reminded again.

I just got an email detailing another scam. Though it's not new in any sense, it's quite well planned out and this is how it goes:

1. You get an SMS saying you've won a big amount of money. There's no contact details in the SMS.

2. Scammer calls and asks if you've received the SMS. Then scammer asks you for your bank account number so that the money can be deposited to your account.

Now, this is where it gets interesting. Scammer never asks you anything more than your account number. No passwords. No credit card number or anything. Everyone knows that with just an account number you cannot do anything much other than deposit money into it.

3. Scammer calls again later to say that your prize money has been deposited and asks you to verify it. The amount WILL show up on your account. You will be estatic and thinks that this is all well and good and that's the end of the story.

4. Scammer calls again later still and says that he/she has made a mistake and has deposited the money without first deducting a certain percentage as tax or whatever fees. The amount WILL be significantly less than your total winnings and the scammer begs you to return the amount or his/her company will asks him/her to compensate the amount.

What will you do? Most if not all people will think nothing of returning the amount. Since you already have the money listed in your account why not do the right thing, isn't it? Even though you return the requested amount of money, you'll still have plenty leftover right?

Well, this is where the scam will take place. The money that has been deposited into your account will be in the form of a cheque from a different bank (you WILL NOT know this piece of information unless you specifically check that transaction and request for the information).

Although the number SHOWS UP in your account, the real money transfer HAS NOT TAKEN PLACE yet. The money will NOT be transferred until the cheque CLEARS and that will usually take 3 working days. Within this time period, the issuer of the cheque can still very well CANCEL the cheque and the transaction will not take place at all. If you make any transfer to other accounts, then this transaction will be a totally separate case and if you transfer cash, the money WILL be deducted away from your account.

Thus the scammer will indeed get your money and then cancels the cheque and you will be left poorer. The scammer just exploited a known 'not-so-good' practice in the bank's procedures when clearing cheques.

So be wary. IF you do intend to return the money in the off-chance than the winning might be real, then wait at least 3 working days to confirm that you really have the money before refunding anything.

Scammers has exploited this procedure since a long time ago. Back even when the internet didn't even exist, this technique has been used. A popular technique was to buy lots of stuff and pay with cheque on a Friday or Saturday. The seller will then see the 'money' as being deposited and release the stock. Buyer will disappear with stock and cancel cheque thus seller will get no money but will have lost his stock. This 'new' scam is merely another version of this technique.