INTERNATIONAL TRADE

International trades between countries and across continents have existed for centuries including previous civilizations. Traditionally international trade consisted of traded goods like textile, food items, spices, precious metals, precious stones, and objects of art and various items across the borders. Everybody has heard of the silk route as well as amber road and other famous routes that existed and the ports and settlements that flourished due to the trade, which was carried on through land route as well as sea routes.

We have come a long way since the earlier times and International trade today has taken on new dimension. It was a fact earlier that impact of trade between two countries was not limited to economics alone, but fuelled political, social ambitions too.

Today with the advancement of technology and impact of globalization has made it necessary for all countries to engage necessarily in international trade for their survival.

Various factors including but not limited to industrialization, development of transportation, globalization, technology that enables trade and communication has contributed to change in the format of business organizations as well as trade practices.

Companies and Organizations today are no longer entities with a local identity. Multi national organizations have emerged through the previous century with footprints all over the globe. They have in fact shrunk the earth and changed the way businesses are conducted. Companies no longer limit themselves to local markets. They no longer depend upon local resources. These companies setup manufacturing wherever it is conducive in terms of cheaper resource availability as well as support from local government and in terms of markets, geographical boundaries do not bother them. They are present everywhere.

Technology in terms of communication as well as software technology has changed the way business organizations manage activities be it manufacturing, procurement, finance or sales. Today software applications drive the processes and work at the speed of thought.

In present scenario, no country can afford to remain isolated from and not participate in globalization. While countries do open their economies to global competition, they need to tread very carefully not to upset their domestic economy and protected industries. This balancing act is often managed through individual countries trade and tariff policy, which forms a part of each countries foreign trade policy that governs its approach to international trade and commerce.

Post Second World War, World Trade Organization has been playing major role in facilitating and attempting to streamline the global trade and tariff structures with an aim to move towards free trade. However in reality, free trade may just be a dream as long as there is no parity between developed and developing economies.

Today most of the countries are party to several bi-lateral as well as multi lateral tariff and trade agreements like GATT — General Agreement on Tariffs and Trade though which they regulate imports and exports to and from specific countries.

In the last few decades we have seen the emergence of services export and imports and it is continually growing. Developing countries are harnessing their intellectual

capital to provide software services to the developed countries.

Today’s international trade has many more new dimensions like intellectual property, a variety of services, trade related investments, Bilateral and Multilateral Trade Agreements, Establishing terms for trade in services, investments as well as creating climate for dispute settlement.

Managing International trade has multi dimensional aspects, which need to be considered by each country. Any political, economic or other events anywhere in on the earth have an impact on each countries international trade. We have seen the impact of recession in one country affecting across the globe. We have also seen impact of financial markets crash in one country having ripple effects all over the world.

INTERNATIONAL TRADE FRAUD

As international trade is getting more and more complex and diversified, practitioners find it difficult to grasp all the sophisticated new technologies and up-to-date information. Corporate communication effectiveness and coordination will also suffer after amalgamation, LBO and re-structuring, which are so common nowadays. This has created a very favourable environment for the fraudsters. With increased competition globally and escalating cost of doing business, more traders are driven to frauds for survival. This is particularly so during the economic depression period. With the advancement in communication technologies, international trade frauds have developed into a more sophisticated operation. Fraudsters are more professional and creative, with a new fraud found in every six months. It becomes increasingly difficult to prevent frauds. Syndicate crimes and franchisee crimes are becoming more and more popular.

International trade fraud is an incident of international commercial transactions. It affects traders through loss of cargo, increased insurance premiums and shipping expenses, as well as the cost to final consumers. The types of fraud vary from documentary fraud; charter-party fraud; fraudulent insurance claims; scuttling; diversion of cargo; counterfeiting, and money laundering.

Some examples of the various scams happening in the international market are explained further.

West African Scam / Nigerian Advance Fee Fraud in Internet Web Mail Frauds

and Email Letter Scams

This particular scam targets middle class, middle age, business and professional men who would never be as easily deceived by a lottery scam. Estimates put the losses from these "Nigerian Advance Fee" operations at over $1 million "every single day" in the U.S. alone. The multi-stage fraud starts when you receive a scam fax, e-mail or letter such as these examples:

Nigerian Advanced Fee Fraud Email Scams

Lagos, Nigeria.Attention: The President/CEO

Dear Sir,

Confidential Business Proposal

Having consulted with my colleagues and based on the information gathered from the Nigerian Chambers Of Commerce And Industry, I have the privilege to request your assistance to transfer the sum of $47,500,000.00 (forty seven million, five hundred thousand United States dollars) into your accounts. The above sum resulted from an over-invoiced contract, executed, commissioned and paid for about five years (5) ago by a foreign contractor. This action was however intentional and since then the fund has been in a suspense account at The Central Bank Of Nigeria Apex Bank.

We are now ready to transfer the fund overseas and that is where you come in. It is important to inform you that as civil servants, we are forbidden to operate a foreign account; that is why we require your assistance. The total sum will be shared as follows: 70% for us, 25% for you and 5% for local and international expenses incidental to the transfer.

The transfer is risk free on both sides. I am an accountant with the Nigerian National Petroleum Corporation (NNPC). If you find this proposal acceptable, we shall require the following documents:

(a) your banker's name, telephone, account and fax numbers.

(b) your private telephone and fax numbers —for confidentiality and easy communication.

(c) your letter-headed paper stamped and signed.

Alternatively we will furnish you with the text of what to type into your letter-headed paper, along with a breakdown explaining, comprehensively what we require of you. The business will take us thirty (30) working days to accomplish.

Please reply urgently.

Best regards

Howgul Abul Arhu

FROM: Dr Altaka YurmaniCentral Bank of NigeriaLagos, Nigeria01-658-21-2658

TO: CEOEverytown, USA

Dear Sir:

I have been requested by the Nigerian National Petroleum Company to contact you for assistance in resolving a matter. The Nigerian National Petroleum Company has recently concluded a large number of contracts for oil exploration in the sub-Sahara region. The contracts have immediately produced moneys equaling US$40,000,000. The Nigerian National Petroleum Company is desirous of oil exploration in other parts of the world, however, because of certain regulations of the Nigerian Government, it is unable to move these funds to another region.

You assistance is requested as a non-Nigerian citizen to assist the Nigerian National Petroleum Company, and also the Central Bank of Nigeria, in moving these funds out of Nigeria. If the funds can be transferred to your name, in your United States account, then you can forward the funds as directed by the Nigerian National Petroleum Company. In exchange for your accommodating services, the Nigerian National Petroleum Company would agree to allow you to retain 10%, or US$4 million of this amount.

However, to be a legitimate transferee of these moneys according to Nigerian law, you must presently be a depositor of at least US$100,000 in a Nigerian bank which is regulated by the Central Bank of Nigeria.

If it will be possible for you to assist us, we would be most grateful. We suggest that you meet with us in person in Lagos, and that during your visit I introduce you to the representatives of the Nigerian National Petroleum Company, as well as with certain officials of the Central Bank of Nigeria.

Please call me at your earliest convenience at 18-467-4975. Time is of the essence in this matter; very quickly the Nigerian Government will realize that the Central Bank is maintaining this amount on deposit, and attempt to levy certain depository taxes on it.

Yours truly,

Prince Alyusi Islassis

Blueprint for a Nigerian Advance Fee Fraud ScamThis is a five billion US$ worldwide scam which has run since at least 1989 under successive Governments of Nigeria. It is also referred to as "Advance Fee Fraud" and "419 Fraud" after the relevant section of the Criminal Code of Nigeria.

Official Notification

You first receive a letter, fax or e-mail from an insider or alleged "official" representing a present or former foreign government or agency. The letter, while appearing transparently bogus and even ridiculous to most, is unfortunately growing in its effectiveness and reach.

Initially targeting businessmen, the scam has now expanded to include the average citizen due to the low cost of email transmission in relation to potential gains. Church officials are also being specifically targeted with uniquely worded offers of charitable bequests. The common thread is that the initial letter sets the stage and is

the opening round of a scheme within a scheme.

The following characteristics may be found in these letters.

Historically mailed out, they have progressed on to faxes, then e-mails.

Many are addressed to "president" or "CEO," rather than a specific name.

They are marked "urgent" and "confidential."

They may contain spelling mistakes and grammatical errors which give you a sense of intellectual superiority, sympathy, or assurance of origin.

If mailed to you it will have foreign, exotic stamps.

Written almost always in all capital letters reminiscent of older teletypes even though currently e-mailed.

The dollar amounts to be transferred, invariably in the tens of millions of dollars, is also written out in text form. ie $32,460,000 USD ( Thirty-two million, four

hundred and sixty thousand United States Dollars )

They say you have been recommended for, or they have verified, your honesty and business acumen.

The Exalted Sender

The sender may claim to be one of the following:

a senior civil servant from a department in one of their Ministries i.e. the Audit Bureau Department of the Nigerian National Petroleum Corp. (NNPC), the International Remittance Department, the Ministry of Trade and Industry, the Federal Tenders Board, Ministry of Aviation, Ministry of Finance, Nigeria Export Promotion Council (NEPC), Nigerian Petroleum Resources Ministry Headquarters, OMPADEC (Oil Minerals Producing Area Development Commission) etc.Nigerian royalty or a political insider such as "the son of the President of Nigeria" or a "Nigerian prince or princess"

the spouse, relative, aide or confidante of a deposed leader

a Nigerian businessman or lawyer with an impressive title such as "Chief", "Barrister" or "Dr."

an auditor or accountant with strong ties to Nigerian officials

a religious figure such as a Deacon, Brother, Pastor

The Opportunity of a Lifetime

New variations of the scheme are being developed all the time but the most common forms of these fraudulent business proposals fall into these main categories:

Transfer of funds from "over-invoiced" or "over-estimated" contracts relating to resources, medical equipment, Turn Around Maintenance ( TAM ) or infrastructure

Assistance escaping the country with accumulated wealth (bribe money / graft )

Efforts to defraud government on "forgotten" or "former regime" accounts

Contract fraud (C.O.D. of goods or

services)

Conversion of hard currency or money laundering

Sale of crude oil or other commodities at below-market prices

Transfer of accounts of now defunct companies

Require money for chemicals to "clean" large amounts of marked currency

Purchase of real estate

Deposed Leaders and their families and associates

Over-invoiced contracts and government employees ( NNPC, Central Bank of Nigeria )

Forgotten accounts, wills and inheritances, death-bed claims of wealth.

Trade deals

Assistance getting stolen assets ( cash, diamonds ) out of the country

Gifts or bequests to charitable or religious organizations

Scholarships

Lottery winnings

Relative killed in World Trade Center left a fortune

Bogus job offers with rebate of wage overpayment using third party checks

Inflated and expense-paid offers to buy and ship your used vehicle to Nigeria

A Sense of Urgency

There is always a sense of urgency attached to the proposal. A government audit in the near future will close the window of opportunity or the job of the person able to transfer the funds is in jeopardy.

Singular Good Fortune

Unfortunately, there is a perception that no one is prone to enter into such an obviously suspicious relationship. However, a large number of victims are enticed into believing they have been singled out from the masses to share in multi-million dollar windfall profits for doing absolutely nothing.

And figuring that if there is no risk to you, in exchange for 10-30% of millions of dollars, it's at least worth the phone call or e-mail to check it out, even though you are extremely skeptical.

So you make the call and actually talk to the writer who begs you to keep this proposal a secret because he is personally taking quite a risk and fears discovery of his involvement.

Lagos Confidential

He emphasizes the confidential nature of the transaction with emphasis that any disclosure risks the completion of the transfer of funds. He reiterates its top secret nature and implies a tax free status if undiscovered. Knowing that it is likely, if not certainly, illegal you agree to keep quiet about it on your end.

Authenticity

Soon documents arrive by courier crowded with legal stamps and officialdom from the Central Bank of Nigeria, the Nigerian National Petroleum Corporation and your newly-appointed Nigerian lawyers the firm of Takurmani & Ruhn.

Banking Information

The signatories of the letters claim to be acting as middlemen and request that you supply three signed and stamped blank company letterheads and blank invoices together with bank details such as account numbers, addresses, telephone and fax numbers.

They say these will be used to show completion of the multi-million dollar "contract" which will be submitted for approval to the Central Bank of Nigeria. Upon approval, the funds will be remitted to your account.

One other purpose is to secure legitimate identification and account information in furtherance of their extensive and highly successful check fraud schemes. This involves having nomadic scammers open business accounts across the country using fake or stolen identification then cashing bogus checks, which they deposit, and move on before being discovered or apprehended.

The paperwork may also be used to forge letters of recommendation to other victim companies in the future and to seek out travel visas from the American Embassy in

Lagos for individuals wishing to escape the impoverished country.

The most likely thing to happen at some point, regarding this account, is an attempt, usually successful, to have you deposit a check of foreign origin as an inducement to have you provide a share of certain expenses.

Recently Nigerian rings have been opening investment accounts within various brokerage houses and depositing large sums of money with stolen and counterfeit corporate checks. In a number of cases, the brokerage firm has borne the loss, often totalling millions of dollars.

Some Requirements Arise

Upon receipt of the requested documents, you are then politely asked to transfer money to pay for newly-discovered transfer taxes and contract fees demanded by the Central Bank of Nigeria and fees for the attorneys acting on your behalf, if you choose not to come there in person.

Your initial contact person is most apologetic, but not surprised by the greed of

the attorneys and the government and bank officials, things not within his control.

Either initially or eventually you must provide further fees and payments, usually by wire transfer, for various taxes and expenses to consummate the transaction such as:

export or insurance fees to help move the money safely to foreign bank accounts

attorney fees, transaction fees or bribes

demurrage, storage or release fees by a Security Company

gifts, tender fees, cable and communications fees

a variety or processing, licensing or registration fees

advance fees, transfer taxes, performance bonds

By now you have become the primary supporter of the scheme and will willingly contribute a progressively larger amount of money whenever the deal is threatened by demands for a proportionate sharing of payments for various 'taxes' and 'fees'

supposedly to facilitate the processing and remittance of the alleged funds.

Each fee that is paid is described as the very last required but invariably "oversights", "errors", "complications" or "temporary difficulties" are discovered, necessitating additional payments and delays which allow the process to be stretched out over many months until you either run out of money or gullibility. The collection of these 'advance fees' is the real objective of the scam.

Come See For Yourself

You may be invited to visit Nigeria and meet with your fellow conspirators before finalizing the transfer of funds or the payment of your major advance fee if you balk at sending it without more proof of legitimate illegitimacy. During the visit you are introduced to the Nigerian "government officials" who can "approve" the transfer.

You are likely asked to put down a small deposit to show "good faith" and help to defray some of the expenses of your gracious hosts, which include bribes to the proper authorities.

An Intermediary

Expatriate Nigerians operate from cells in the Netherlands, Spain, United States, Britain, Canada, Hong Kong, Japan and other African countries with the assistance of confederates within West Africa.

They may claim to be a clearing house bank for the Central Bank of Nigeria, adding an even greater international scope and credibility to the operation.

This factor also draws in victims who are apprehensive of traveling to Africa but will make a short-haul flight to a predominantly white and stable country but where he is still out of familiar surroundings and more likely to overlook unorthodox business methods.

The term "Nigerian Advance Fee Fraud" is, therefore, only partially accurate and the problem is truly one of international dimensions, with both victims and offenders being located across the globe.

Marked Currency

After that, the next, and usually final "black money" stage, of classic 419 moves began to unfold. After the documents were signed, Dr. John Edward and George Chidera came

back with a security officer and an aluminum case full of US$ bank notes bundled in plastic and covered in a white powdery substance.

It was explained that all notes marked with numbers are to be cleansed by a chemical emulsion. In 419 parlance, this is known as the Wash-Wash stage. He was told that the procedure was introduced by South Africa during the apartheid regime to avoid the international boycott on weapon deals by physically transporting big cash amounts.

The trickster then demonstrates the process, by taking out five bank notes from the container and pouring the chemical liquid in the sink. He cleans the notes until the stamps disappeared.

Then you are told that unfortunately the National Bank of Nigeria has forgotten to supply the security company with the adequate quantity of chemicals to cleanse the entire $25 million.

It would be up to you as the beneficiary to come up with another $280,000, for another five litres of the cleansing chemical.

Lurking Dangers

Whether you accept their initial invitation or travel to Nigeria in an attempt to recover your money you are told that a visa will not be necessary to enter the country. They may then bribe airport officials to pass you through Immigration and Customs.

Because it is a serious offense in Nigeria to enter without a valid visa, your illegal entry may be used as leverage to coerce you into releasing additional funds to them.

If your desire to pursue it wanes you are then pressured or threatened to provide one or more large sums of money to save the venture. Unsuspecting victims are intimidated, stripped of their money and sometimes even killed.

Under an awareness program, federal authorities have even gone to airports and convinced victims with thousands of dollars in their possession not to embark on flights that would have eventually placed them in harm's way. Surprisingly, such warnings occasionally go unheeded, so convinced are the victims that the deal is genuine.

U.S. Secret Service agents have been assigned on a temporary basis to the American Embassy in Lagos to locate and

rescue potential victims. In one month alone, in the summer of 1995, agents extricated seven U.S. victims from Nigeria, though one American was murdered while pursuing his lost money and numerous other foreign nationals have been reported as missing.

Recourse

In all likelihood, there are many people who do not report their losses to authorities due to either fear of implicating themselves in a fraud being committed on the government of Nigeria or because of the embarrassment from being deceived.

They are often reluctant to cooperate with police because they believe that they could be prosecuted, either in their own country or in Nigeria and may also fear reprisals being directed against them by the organized criminals involved.

Other problems which plague investigations of this nature are bank confidentiality and the fact that courts are less likely to empathize with victims if greed was the motivation for falling for the scam in the first place.

The Nigerian Federal Police have set up a special unit to investigate the scheme but due to the reluctance of victims to travel to Nigeria, prosecutions are difficult to institute. The scheme has continued unabated and cases emanating from Japan are now being reported.

In a bid to outsmart Nigerian police surveillance, some of the perpetrators are now operating in the nearby Republic of Benin, Ghana, and Burkina-Faso where foreign nationals now fly into in compliance with the directives of their Nigerian invitees. Accordingly, Interpol has now extended its surveillance to these countries, while alerting their counterparts about the activities of the fraudsters.

Last year, Nigerian Letter Scams constituted the third biggest consumer fraud on the Internet, trailing auctions and the sale of merchandise, according to the National Consumer League.

The Secret Service, under its mandate to protect U.S. currency and financial institutions, has since 1995 been working with the U.S. Department of Commerce, and Nigerian and other foreign authorities to try

to counter the operations, which range from the crude to quite sophisticated.

They indicate that they get 13,000 complaints a month from people who have received the dubious solicitations, about 80% of which now come by e-mail. In the past three years, the U.S. victims who have come forward state they have been swindled out of $100 million, according to the Secret Service, but as most fraud victims are too embarrassed to come forward this figure likely represents a tiny fraction of the actual losses.

Nigerian Recovery Scams

Reports received by INTERPOL indicate that the criminals are becoming so brazen and confident that they are contacting earlier victims of the fraud. Then, posing as Nigerian government officials investigating the fraud in a so-called attempt to get the victims' money back, request payment of an up-front fee.

The Victims

These operations target individuals, businesses, charities, learning institutions and government departments. They obtain

the names of potential victims from a variety of sources including trade journals, professional directories, newspapers, and commercial libraries. They do not target a single company, but rather send out mailings en masse.

Because it is businessmen and organizations which are targeted, the losses per incident can range from tens, to hundreds, of thousands of dollars and are currently estimated at over $1 million per day in the U.S. alone.

In the UK the average victim is conned out of more than £50,000.

A spokesman for the National Criminal Intelligence Service (NCIS) estimated that £150m is lost to the UK economy every year through this kind of scam.God Sent Me

A letter is arriving in Utah mail boxes purportedly from a Mormon living in Africa. The sender claims to belong to a Latter Day Saints family that is being persecuted and humiliated because of their beliefs.

Using phrases like, "my brother," and "God himself has directed me to you" he also

claims to work for the board of customs in his country and reports that his department made a huge profit last year.

Not only does he promise to spend 50% of that profit to "support Mormonism" in his country, he also promises to send $1.5 million dollars to you. All you need to do is to fax him the bank account number where you would like to receive it.

Keep The Orders Coming

Like many others, your business is contacted by a company from Nigeria which is extremely interested in purchasing your products. Your name was gleaned from a trade magazine.

They promise the prospect of large orders and request samples of your products prior to approval of the big order. Before you can begin shipping these large orders they have you send in bogus registration or import licensing fees.

They send you back numerous documents with official looking stamps, seals and logo, as well as letters of credit, payment schedules and authentic bank drafts for smaller orders. This supporting

documentation adds veracity to their claims of legitimacy.

They stress the urgency of their need and ask that you pre-prepare a large shipment for delivery and send it immediately upon receipt of their bank draft.

They cleverly start with small orders using proper drafts to lull you, then wham, you are hit with a big loss when your order is shipped and long gone, before you realize they have given you a worthless forgery for payment.

Embassy officials say that 50% of all Federal Express, UPS, and DHL shipments to Nigeria are returned because of fraud and theft.

ESCROW SCAMThe bogus escrow scam is a straightforward confidence trick in which a scammer operates a bogus escrow service.

Escrow services are intended to ensure security by acting as a middleman in transactions where the two parties do not trust each other. Rather than sending money or goods directly to the other party (which is insecure, as one or the other party must send its item first, at the risk that the other party may not reciprocate), both parties send their items to the escrow service, which holds them until both items are received, then sends each on to the intended recipient. If either party fails to deliver its part of the deal, the other party's item will be held at the escrow service and eventually returned.

In the bogus escrow scam, a scammer sets itself up as the recipient of money or goods and then requests the use of an escrow service which is, in fact, self-operated. This bogus escrow service assures the victim that the scammer has sent its item and that the victim should send its item to the escrow service. In fact, this amounts to sending the item to the scammer, who then

immediately closes down the escrow service and does not send its item to the victim. The scammer blames the escrow service, claiming that the item was with it at the time it closed down; if the victim did not investigate the escrow service before using it, the ruse may be believed.

The bogus escrow scam is popular on eBay, where escrow services are often used for high-value transactions. The rise of Internet escrow has led to a dramatic increase in bogus internet escrow companies. However, several legitimate and licensed escrow companies do exist.

Tips for spotting Escrow Fraud

Don't be talked into using a particular escrow serviceBe suspicious of using an escrow service recommended by an online buyer or seller. Be sure to scrutinize the site carefully before using the service. When the seller directs you to an escrow site of their choosing,

that's a warning flag. Don't assume that because a company has a website that it is legitimate.

Call customer serviceCall an escrow site's customer service number. Not being able to get a live person on the phone is a big red flag. If you call and get a fax or a generic voice mail that says leave a message, than it's probably a scam. Don't use any escrow service that doesn't list an address or phone number. Get on the telephone and converse with folks and verify their credentials."

Verify and then trustIf using an on-line escrow company, verify any and all endorsements and credentials on an online escrow site. Check that the seals are really of  TRUSTe, Better Business Bureau and VeriSign Secure on the escrow site.

Study all licensing information carefully. Contact any licensing authority listed on the escrow company website and verify that the site is actually registered. Check this information carefully. Many scam sites have ripped off the legitimate license numbers from other companies.

You'll also want to check when an escrow site's domain name was registered. Many scam escrow sites say they've been in business for years but only have been registered for a few days or weeks. You can use a "Whois" tool at any domain name registrar, such as networksolutions.com or godaddy.com, to find out.

Steer clear of escrow sites with sloppy contentA sloppy Web site is probably a scam. Spelling errors, grammar problems, inconsistent information or broken links are good indicators that an escrow site is a scam.

Of course, a great website is no guarantee an escrow service is legitimate. A flashy, flawless escrow site could still be a fake.

No matter how good an escrow site looks, be sure to verify all claims and content.

How you pay could be a tip offTake a close look at how an escrow site asks you to pay. If an escrow site asks you to make a payment to an individual or agent rather than a corporate identity, it's a scam. A legitimate escrow service will never ask

you to send your money or your product to the other party.

Beware of escrow sites that use person-to-person money transfers such as Western Union and MoneyGram. Western Union is not affiliated with any escrow service.

An escrow company on the up and up will ask you to wire money from your bank to their bank. They'll provide you with a routing number and account number.

If you wire money to an escrow service, ask your bank to tell you where the wire transfer is being sent.

Do a searchSearch for the escrow site on Google, Yahoo, or another search engine. If your search turns up zero results, be wary. If your search turns up consumer complaints about the escrow site, avoid doing business with the site. Again, just because the site does show up is not guarantee that it is legitimate.

Be wary of "safe" and "secure" online escrow companiesScammers love to use those words "safe" or "secure" when naming scam sites. A dash in an escrow company's name, such as secure-

escrow.com, is another red flag. The dash seems to show up in many phony company names.

Avoid escrow sites with Web addresses that end in "org." A legitimate escrow service would never try to pass itself off as a non-profit organization. You'll also want to avoid escrow sites with Web addresses that end in ".biz", ".cc", ".info" and ".US".

Don't be blinded by a super dealMany phony escrow sites place phony ads on Internet auction and classifieds sites. These ads promise potential buyers and sellers unbelievably good deals. 

If the price on a motorcycle seems to be way under market price there is a good chance it really doesn't exist. .

Another tip off is when you send an e-mail to a buyer or seller and you get a scripted, "Dear Sir" response, referring you to an escrow site that they've used many times.

And if a seller offers to pay shipping and insurance on a really big item, that's another red flag that the deal may not be on the up and up.

Watch out for copycat sitesMany scammers copy the content of real Escrow sites. These sites may use a similar name or domain mane to confuse you. Make sure you are on the correct site. Call the customer service and verify. Watch out for companies that claim to be "affiliated" with legitimate company. Don't use an "affiliate." Use the real company.

Watch out for fake e-mailA scammer tried to pass a fake email as coming from "Square Trade" as an escrow service. "Square Trade" is not an escrow service. Looking closely at the e-mail you'll notice it looks rather official looking. The scammer tries to make it look like you are sending your money to safe location. It even displays a "Trust-e" seal to make you believe it is secure. Look at the payment information. "Square Trade" is not the recipient.  The instructions are actually telling you to send the money directly to the scammer. In this case knowing that "Square Trade" is not an escrow company is a dead giveaway, but similar e-mails could be sent pretending to be real escrow companies. Always contact the escrow company directly. 

CLICK FRAUD

Click fraud is an illegal practice that occurs when individuals click on Web site click through advertisements (either banner ads or paid text links) to increase the payable number of click through to the advertiser. The illegal clicks could either be performed by having a person manually click the advertising hyperlinks or by using automated software or Online bots that are programmed to click these banner ads and pay per click text ad links. Research has indicated that click fraud is perpetrated by individuals who use click fraud to increase their own personal banner ad revenues and also by companies who use click fraud as a way to deplete a competitor's advertising budget.

Click fraud can be as simple as one person starting a small Web site, becoming a publisher of ads, and clicking on those ads to generate revenue. Often the number of clicks and their value is so small that the fraud goes undetected. Publishers may

claim that small amounts of such clicking is an accident, which is often the case.

Much larger-scale fraud also occurs. Those engaged in large-scale fraud will often run scripts which simulate a human clicking on ads in Web pages. However, huge numbers of clicks appearing to come from just one, or a small number of computers, or a single geographic area, look highly suspicious to the advertising network and advertisers. Clicks coming from a computer known to be that of a publisher also look suspicious to those watching for click fraud. A person attempting large-scale fraud, from one computer, stands a good chance of being caught.

One type of fraud that circumvents detection based on IP patterns uses existing user traffic, turning this into clicks or impressions. Such an attack can be camouflaged from users by using 0-size iframes to display advertisements that are programmatically retrieved using JavaScript. It could also be camouflaged from advertisers and portals by ensuring that so-called "reverse spiders" are presented with a legitimate page, while human visitors are presented with a page that commits click fraud. The use of 0-size

iframes and other techniques involving human visitors may also be combined with the use of incentivized traffic, where members of "Paid to Read" sites are paid small amounts of money (often a fraction of a cent) to visit a website and/or click on keywords and search results, sometimes hundreds or thousands of times every day. Some owners of PTR sites are members of PPC engines and may send many email ads to users who do search, while sending little ads to those who do not. They do this mainly because the charge per click on search results is often the only source of revenue to the site. This is known as forced searching, a practice that is frowned upon in the Get Paid To industry.

Organized crime can handle this by having many computers with their own Internet connections in different geographic locations. Often, scripts fail to mimic true human behaviour, so organized crime networks use Trojan code to turn the average person's machines into zombie computers and use sporadic redirects or DNS cache poisoning to turn the oblivious user's actions into actions generating revenue for the scammer. It can be difficult for advertisers,

advertising networks, and authorities to pursue cases against networks of people spread around multiple countries.

Impression fraud is when falsely generated ad impressions affect an advertiser's account. In the case of click-through rate based auction models, the advertiser may be penalized for having an unacceptably low click-through for a given keyword. This involves making numerous searches for a keyword without clicking of the ad. Such ads are disabled automatically, enabling a competitor's lower-bid ad for the same keyword to continue, while several high bidders (on the first page of the search results) have been eliminated.

LETTER OF CREDIT FRAUDThere are several types of fraud possible relating to Letters of Credit.  The buyer would be concerned about the beneficiary of a Letter of Credit submitting fraudulent documentation to the issuing bank.  If the documents presented conform to the L/C requirements, the issuing bank may honor the presentation and remit payment to the seller under the L/C. 

The seller as the beneficiary of a Letter of Credit is also subject to the risk of fraud. For example, if the seller receives a counterfeit Letter of Credit and ships against it, they will not receive payment for the goods shipped from the bank that proportedly issued the L/C.  To address this risk, sellers should require that all L/Cs be either Advised or Confirmed.  One of the benefits of Advised or Confirmed L/Cs is that the authenticity of the L/C itself is verified before the L/C will be Advised or Confirmed.

Legitimate L/C are never sold or offered as investments. They are issued by banks to ensure payment for goods shipped in connection with international trade.

Payment on a L/C generally requires that the paying bank receive documentation certifying that the goods ordered have been shipped and are en route to their intended destination. L/C frauds are often attempted against banks by providing false documentation to show that goods were shipped when, in fact, no goods or inferior goods were shipped.

Other L/C frauds occur when con artists offer a “letter of credit” or “bank guarantee” as an investment wherein the investor is promised huge interest rates on the order of 100 to 300 percent annually. Such investment “opportunities” simply do not exist.

Tips for Avoiding L/C Fraud: If an “opportunity” appears too good to be

true, it probably is. Do not invest in anything unless you

understand the deal. Con artists rely on complex transactions and faulty logic to “explain” fraudulent investment schemes.

Do not invest or attempt to “purchase” a “letter of credit.” Such investments simply do not exist.

Be wary of any investment that offers the promise of extremely high yields.

Independently verify the terms of any investment that you intend to make, including the parties involved and the nature of the investment.

PHISHING SCAM

A phishing scam is an identity theft scam that arrives via email. The email appears to come from a legitimate source such as a trusted business or financial institution, and includes an urgent request for personal information usually invoking some critical need to update an account immediately. Clicking on a link provided in the email leads to an official-looking website. Personal information provided to this site, however, goes directly to the scam artist.

Fraud is a growing problem on the Internet as people are tricked into providing personal information including credit card numbers, passwords, Mother's maiden name, bank account numbers, ATM pass codes and social security numbers. Virus protectors and firewalls do not catch most phishing scams because they do not contain suspect code, while spam filters let them pass because they appears to come from legitimate sources.

The links included in phishing scams take the unsuspecting person to a fraudulent

website designed to mimic the real thing, often down to the smallest detail including copyright notices, submenu titles and so on. It's virtually impossible for most people to tell they are the target of a phisher by looking at the site alone. Clues in the address can sometimes reveal the deception, however.

Similar looking characters might be substituted in the spelling of the link for the real character so that a "1" (numeral one) is used in place of a lower-case "L." For example, phishers have used paypa1.com rather than paypal.com. Other times an IP address — a numerical address — is used to hide the fact that the link is not taking the victim to the real site. Phishing scams have become so sophisticated; however, that phishers can also appear to be using legitimate links, right down to the real site's security certificate.

The best way to someone can protect himself from phishing scams is to avoid supplying personal information to an email request. If the request might be legitimate, the company's customer service department should be called to verify the request before

providing any information; any phone numbers contained in the email, if any are included, should not be used. Even if the request is legitimate, one should manually enter the required address in the browser rather than clicking on a link, as a phisher scam could conceivably run concurrent with legitimate business.

For example, in early April 2005 a mass emailing that appeared to be from Microsoft Corporation urged recipients to download a much anticipated security update. Those that clicked on the link in the email were taken to a site that looked like a legitimate Microsoft update site. Instead of updating their software, however, they were actually downloading a Trojan horse — a remote access program that can steal personal information. Microsoft does not use email notification in this way, but many users were caught unaware.

In the US, the Federal Trade Commission (FTC) and others have concentrated on public education to fight phishing scams, as catching phishers is difficult. Fraudulent sites operate for very short periods of time and scams are often run from other

countries. In March 2005, Microsoft filed 117 phishing lawsuits in the Western District of Washington with unnamed defendants.

The Anti-Phishing Working Group (APWG) is an international organization of volunteers working to track phishing scams. Their website keeps an online database of fraudulent emails submitted to them. You can check this site for new scams, or send them phisher email you receive. The APWG is largely an information hub but they do provide links to consumer resources. The FTC also has advice for consumers, an email address for reporting phishing, on their website.

COUNTERFEIT INTERNATIONAL MONEY ORDER AND CASHIER’S

CHECK SCAM

A fraud scheme involving counterfeit checks and money orders is speeding across the Internet, costing financial institutions and their customers thousands of dollars.

A Typical Money Order Scam

A typical money order scam involves an inquiry from somebody far away -- another state or country. They say they’ll buy your item, but when the money order arrives it’s for much more than it should be. The buyer will ask you to send the excess money (above and beyond your sale price) somewhere. Perhaps you’re supposed to send the funds to an expensive shipper who handles overseas transactions. Perhaps the buyer will ask you to refund the excess

because he couldn’t get a money order for the correct amount. In any case, you’ll lose that money for good if you send it.

Sometimes a money order scam is much simpler: you just get a fake money order and send your merchandise away. The buyer doesn’t ask you to send cash -- they just get the goods for free.

Where Things Fall Apart

If you send money that you think you got from a money order, expect to hear from your bank. When you deposit a money order in your account, your bank will allow you to use some or all of the payment immediately. However, the bank has not yet collected the funds from the money order issuer -- that’ll take a few days or weeks.

When your bank tries to collect the funds (from Western Union, let’s say), they’ll find out that they’ve got a money order scam on their hands. They won’t get any money, and they’ll deduct the fake money from your account. If your account is empty, you’ll go into the negative and you’ll have to pay the bank back. Plus your checks will bounce and your debit/ATM card will become worthless if

the money order scam wipes out your account.

Protecting Yourself

What can you do to protect yourself from money order scams? The best thing you can do is work with people you know and trust. You may have to expose yourself to the risk of money order scams if you want new customers though.

You’ll be able to spot most money order scams a mile away if you pay attention. But when life gets busy it’s easy to miss a detail and forget how these scams work. A major red flag -- and something you should never go along with -- is a request to send or wire money after you’ve been paid with a money order. Other red flags:

An offer that came from out of the blue (how did this generous trusting person find you?)

International money orders Messages with numerous grammar and

spelling mistakes Refusal to pay you electronically (they

can’t wire money or use an online service)

Buyer is not very interested in checking out the merchandise or product details

Buyer asks for sensitive information like your bank account number, etc

It sounds too good to be true

Always verify funds when you’re paid with a money order. Call the money order issuer and check to see if you’ve got a legitimate document. You can never be 100% certain, but you can improve your chances.

If you have any doubt, don’t spend the money you get from a money order. Treat it as suspect -- if you’re lucky you can spend it someday. Otherwise be prepared to repay the bank. It can take weeks or months for the bank to figure out that you’ve fallen into a money order scam. Most of the time you’ll find out about a bad money order within a few weeks, but it can take longer.

Feel free to ask your bank for help. They’ve seen money order scams before and can talk about any suspicious transactions with you.

PROFILE OF COMMON THEMES AND BEHAVIORS

OF CON-ARTISTS

The primary tool, skill and resource of con-artists is making promises. Most importantly, such promises must be convincing, often using the same skills and techniques of any good, successful salesperson. Swindlers, however, have a decided unfair advantage over any honest salesperson or marketing representative - they don’t have to make good on any of their promises. Being free from this fundamental responsibility, they have no reluctance or hesitation to promise whatever it takes to persuade you to part with your money.

A favourite pitch for new investors or small growing businesses is that small investors can become rich only if they learn and employ the investment strategies used by wealthy persons. Naturally, the swindler takes the role of mentor and teacher, or wins trust as a guiding “partner,” promising to handle everything, and always seeming

to know better. The usual result is lots of unfulfilled promises, unrealized promised “opportunities,” and substantial investment into a business structure which either only benefits the con artist personally, or if it does not bring direct benefit, plays a role in assisting the con artist with larger fraud operations targeting a larger group of victims.

Most con artists go first class, using the “Reputable Business” approach. Using profits from previous fraud operations, they even go so far as to rent plush offices, hire an interior decorator and professional sounding receptionist and open what has the appearance - but not the reality - of a reputable investment firm. You may even have to phone for an appointment, and once there don’t be surprised to be kept waiting (that’s intended to make you all the more eager). This kind of con artist’s success depends on how long he can keep his victims from knowing they are being cheated. Investors are assured that their large profits are being reinvested to earn even larger profits, and business executives are assured that their “partner” is working hard on their commercial project as a first priority.

Con artists of the “Reputable Business” profile may join local civic groups, contribute to charities, and generally play the role of solid citizen, placing more emphasis on how “trustworthy” he is, and avoiding discussions of specific step by step progress on the project. One difference between a reputable investment firm and a swindler is that reputable firms encourage you to ask questions, to obtain as much information as possible. The only thing a con artist wants is your money.

Most con artists are reluctant to put anything in writing that might cause them to incur any liabilities, or provide material that, at some point, might become evidence in a fraud trial. Secondly, swindlers don’t want you to do anything at your leisure. They want your money now. Information you do receive is usually vague and non-committal, or can be properly interpreted only in the context of undocumented verbal discussions.

Most con-men deliberately make themselves difficult to investigate, most often by operating in states or communities where authorities are known to be short staffed or occupied with more pressing criminal activities, by changing their names, modus

operandi, and especially their fields or industries of business, and by stressing the urgency of the commercial project or investment so you won’t have time to investigate.

Another common approach to fraud operations is “Friendship Scams”. This method places heavy emphasis on “friends” with “connections”, involving lots of talk about social circles of “important” people, and introductory meetings with lots of people which are only marginally or questionably related to the essential commercial project or investment at hand. During such meetings, the con-artists make all efforts at misrepresenting relations, creating a sense of interdependence or putting social pressure not to ask questions, and later not to make scandals or voice dissatisfaction. The essential strategy in “Friendship Scams” is playing one scam off of another, using various people who currently believe in or trust the con artist to reinforce each other’s trust, and to strengthen the credibility of the many diverse and highly attractive promises made to each person.

While the “Friendship Scam” approach is very attractive, and can often appear highly

credible, it is important to remember that - even if the claims are true - the fact is that “close friendships” and “personal relations” with important people differs very strongly from realistic, down to earth working relationships on a professional level.

There is a great difference between mere social relations and one or two current shaky business projects together, and solid, long-term working relationships which would be professional assets. Moreover, the best “connections” are not passing 13 social relations, but rather “institutional” ties, in the sense of relations, cooperation and interdependence between organizations, which survive the ebb and flow of individual interpersonal relations. Any con artist can show a photograph with some famous person at a glitzy event, whereas only a successful and legitimate businessman or firm can show a signed official cooperation agreement with that famous person, their firm or government agency.

Another common pattern of fraudulent operations, which is pervasive to many different types and profiles of con artists, is the element of complication. By keeping things complicated, the con artist increases reliance on him, and maintains his role as

being central in the business, investment or transaction. Complicated descriptions or structures also serve to distract or discourage busy people from sorting out the many details to get to the truth.

PROTECTIVE RECOMMENDATIONS

A lack of understanding or reluctance to believe the nature of business fraud fuels the opportunities for this criminal industry, and adds to its damages and costs. Security professionals frequently comment that executives are often reluctant to believe that fraud is committed by their own employees or independent contractors, and because of the clandestine nature of the offenses, most perpetrators are not even investigated until significant losses are incurred or critical commercial projects undermined.

The fact is that business fraud is against the law in India, and violates multiple provisions analogous laws of other countries. If fraudulent activity involves interstate commerce - including use of the mails, phone lines or airlines - criminal statutes apply, making the offense a felony. In most cases, however, law enforcement agencies seem helpless against con-artists, primarily due to lack of understanding by

lawyers and prosecutors, and the victims’ lack of their own investigative resources to present a better initial complaint to law enforcement. This problem is compounded by the fact that con artists only engage in elegant, “white collar”, non-violent crimes, and often have significant financial resources from their previous con schemes, ensuring that they quickly get out on bail and set up in another state or region before the prosecutors have made any investigative progress or fully developed evidence.

Doing business, in any industry on any territory, inherently entails risks. The traditional perceptions of corporate managers have typically blamed outsiders, such as “bad partners,” organized crime or corrupt government officials, for business failures of their key commercial projects. Criminal investigative experience, however, shows that the most damaging risk comes primarily from corporate insiders and partners, as key enabling players who assist local outsiders in taking advantage of the economic security weaknesses of the company. Indeed, the majority of outside fraud and corruption is actually initiated,

aided and abetted by internal corruption factors.

Accordingly, the most powerful and effective way to protect yourself and your organization against business fraud is simply to carefully analyze and evaluate the individuals with whom you do business. This approach consists of the following 8 elements:

(1) Give priority to firms and organizations for professional services and representation of your commercial interests, instead of placing trust in individuals or “friends” with “connections.”

(2) If you are dealing with a representative, call the company to make sure that person really works there or has contractual relations. Verify that the company does what the representative says, and is prepared to back up or follow through on promises made by that individual.

(3) Before entrusting individuals or employees with new or important projects of high commercial value, investigate and analyze their current professional and personal circumstances, and recent history with other transactions or projects, to detect

warning signs of risk or tendency of business fraud.

(4) Investigate the person and firm you would be dealing with. Do not be distracted with the quantity, type or prestige of its office locations, and similar superficial criteria which con-artists only take advantage of to give false confidence. Concentrate on its capabilities, established partnership relations with other capable firms, and generally its ability to perform the work promised.

(5) Do not rely only upon “open source” or standard “due diligence” information, such as credit reports or business filings, to investigate a person or firm who you plan to entrust with an important project. Such raw data is often superficial or even misleading when taken at face value or out of context. Talk to experienced investigators or law enforcement veterans who can identify which seemingly innocent pieces of information may indicate a “red flag” for a risk or pattern of fraud, and who know when, where and how to look further for other relevant information to get a clear and accurate representation of the whole truth.

(6) The most accurate indicator of reliability is that the firm or company relies upon its

corporate name, image and reputation, and conducts business under that one trademark identity. Individuals or businesses that maintain multiple corporate registrations under unrelated names, frequently change them, do not use most of them, or do not conduct the majority of business under any one name or trademark, present a risk factor. Legitimate and successful companies actively build their brand, use it, and work to uphold its image.

(7) Closely examine the basis and merits of any proposed business or investment offer, or proposed modifications or extensions of an existing business or investment, preferably with professional legal or financial advisors. A key indicator is the transparency and disclosure of detailed mechanisms of the proposed transaction or methods of work to be performed, prior to signing a contract or making payment. If you hire “secret” services, you are likely to get equally “secret” results.

(8) Continue to monitor the performance of the project, business or investment, giving priority to first-hand professional information, directly from those actually performing the work, instead of relying upon

assurances of individual representatives or referral agents.