419 Scams Cause Increasing Problems for REALTORS®
The popular online marketplace Craigslist and similar sites continue to be the targets of increasingly sophisticated scams involving real estate. Most these scams originate from overseas and target not only REALTORS®, but their clients as well. Known as the Nigerian 419 scam (after a section of Nigerian Law), it is often run by groups called Yahoo Boys or Yahoo-Yahoo Boys. Nigeria has struggled to deal with the issue as groups of Yahoo Boys have been found operating in the UK, Netherlands, and even US college campuses. Individuals all over the world assist them by acting as "agents." They run not only the Nigerian 419 scam, but a whole host of similar operations designed to bilk money from naïve victims known within Yahoo Boy circles as “maga.” (Karin Brulliard, Worldwide Slump Makes Nigeria’s Online Scammers Work That Much Harder, “The Washington Post,” August 7, 2009). The scammers glean information about genuine real estate listings from legitimate online sources. The data from listings for sale is repackaged and posted on Craigslist or similar sites, usually as a bogus rental. The scammer hopes to either steal deposit and rent money directly from the victim by posing as the property owner or obtain enough identity theft information to gain access to bank accounts.
Targeting the Public
Although this type of scam is not new, they have been gaining in popularity. Real estate listings from across the country have been targeted, and Southern Maryland is no exception. The scam has been active here as recently as September 2010. Listing agents are usually totally unaware the properties they have listed for sale are showing up as rentals on Craigslist and similar sites. The scammers surf the web, pick out listings to use for false listings, strip out contact information and supply only an email address as the point of contact for the phony listing. Those who respond to the email are told the listing agent or owner is travelling overseas or is in some other way unable to appear in person. The victim is to wire deposit money to an account while the “owner” falsely promises to mail the keys back to the victim.
The situation becomes more difficult to detect when a genuine rental property is targeted. One way the scams are revealed is when would-be victims seeking to view the alleged rental property drive to the location and see a real estate “for sale” sign with totally different contact information. Even people familiar with their local markets have been confused by false rental listings. Unlike properties with for sale signs posted for all to see, rental properties do not raise suspicion when would-be renters visit them because they usually have signs advertizing the legitimate rental opportunity.
Targeting Owners and Agents
Another variation on 419 scams involves phony replies to legitimate rental or sale offers. The crook usually follows the typical online scam pattern of claiming to be out of the country and in need of the agent’s help arranging the finances to return. Sometimes a romantic element is thrown in to further lower the victim’s defenses and add a sense of urgency. A fake cashier’s check or money order exceeding the required balance is sent with instructions to deduct what is needed for the rent or deposit and to wire the balance back to a third party agent the scammer claims has been hired to help. Time pressure is applied to turn the transaction around quickly. The crooks want the “excess” funds returned fast before the bank that cashed the fake cashier’s check or money order discovers the fraud. Banks hold the person cashing a fake instrument responsible for the funds, so the victim loses the original funds, any excess funds wired back to the criminal and often their identity as well.
Defending Against the Enemy
The first step towards avoiding these scams is awareness. A quick search in Google or Bing for Nigerian 419, Yahoo Boys or real estate scam pulls up a wealth of information. Examples of the messages exchanged during scam attempts can be found here. REALTOR® Michael Creel of Washington State has compiled an excellent resource on the 419ers on his Creel Deal blog. Craigslist has created a page to raise awareness as well. The New Yorker has a detailed story by Mitchell Zuckoff (The Perfect Mark) showing how relentless and heartless these scammers can be when the proper victim is found.
The National Association of REALTORS® also addresses the issue of real estate scams.
If your business involves overseas transactions, the old cautionary standards still apply. If it’s too good to be true, it probably isn’t. Resist the pressure to act quickly. Wait for the check to clear before returning excess funds to anyone. Fraudulent corporate checks have been used in place of money orders and cashier’s checks. Beware of third party “agents” who are brought in to act on behalf of a client. Check out claims of employment, but be aware stolen identities can be used as cover. If you receive a suspicious email but you’re just not sure it’s false, copy and paste parts of it into Google and search the web with it (enclose it in quotation marks to get an exact match). Chances are hundreds of others have been sent using almost the exact same wording. Read the examples in the sources cited above and become familiar with the scammer’s patterns of behavior.
People searching for home rentals should also take precautions. The scam is already working on listings in the Southern Maryland area. If you are seeking information about a rental posted online, ask if a REALTOR® is handling the deal. If so, ask for a license number and a name. Use the Maryland Real Estate Commission website to verify the license status of the agent but keep in mind the bad guys can do this too. Search the site you are on now for SMAR members and use the contact numbers provided to call the agent directly. Don’t rely on stories claiming that someone is acting on behalf of the listing agent while that agent is away. Verify them by calling the agent’s broker and get that number from a locall phone book. Be VERY suspicious of absentee owners who just can’t seem to be reached by phone and are never able to provide a definite answer to where they are. Remember these scammers sometimes enlist helpers to pose as owners. Drive to the property and look for signs. If rental or sale signs are posted, call the numbers on them to ensure you are dealing with the proper parties. Most of the Craiglist-type scams are detected by simply comparing the signs on the property to the information in the scam email.
If you suspect you have been drawn into one of these scams, there are steps you can take:
1) DO NOT cash or deposit suspicious checks. They are often provided at sums in excess of what is required along with instructions to send back the excess. YOU ARE HELD RESPONSIBLE FOR CASHING BAD CEHCKS! Not only can you lose your money, you can also end up in deep legal trouble.
2) Contact the FBI Internet Crimes Complaint Center (http://www.ic3.gov/complaint/default.aspx) and file a complaint. Quick action is often not possible, but some of these scams operate in the US or in countries with which the US has treaties. They may still be within the FBI’s reach. Even those originating overseas can be shut down if enough data is collected.
3) Notify the legitimate owner and listing agent of the scam. Keep in mind they are also victims of the scam. There’s no need to vent anger towards them, but be sure to encourage them to take step 4 as well.
4) Contact the online entity that hosts the listing. Inform them of the fraudulent nature of it and demand that it be removed immediately. If the site refuses to act, report that to the FBI as well.
5) Take action to minimize the effects of identity theft. If you have provided bank account numbers, credit card, debit card or social security number data, you’ll need to notify the banks and credit companies involved. Thieves can make much more money stealing your identity than they can by stealing your deposit money.
You may also choose to file a complaint at the Internet Crime Complaint Center.
Please check the FBI's Internet Crimes Division web site for additioanl information about the 419 scam and similar fraudulent schemes.