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The telltale signs of a fraudster

Guest contributor Christopher C. Carr , Esq., MBA on how to spot a fraudulent client in your inbox.

Don’t let a fraudster pull the wool over your eyes.

As discussed in my prior post, attorneys need to stay on alert for collection scams. Even for a savvy attorney, it’s easier to become an unwitting target of fraud than you may realize.  For example, publicizing a big win in a lawsuit on your website may indeed bring you new clients, but some of them may actually be intent on profiting from a fraud perpetrated against your firm.

These scams can take on many guises. For example, a few weeks ago I got a very sophisticated scam letter. This time it was purportedly the representative of a Japanese law firm wanting local representation for litigation against debtors in the US.  I immediately asked for his bona fides and he wrote back pretending to be insulted by my lack of trust.  I then wrote back and explained that I had been taken in before and had lost some $2,000 in such a scheme and had thus adopted a policy whereby my firm holds all payments until final payment is issued to my bank by the depository bank on any settlement check (not just provisional payment because the check can still bounce until honored by the depositary institution).

Needless to say, I never heard from my Japanese “colleague” again.

Or how about this fine example which I received in my email for March 24, 2012:

Hello,

I have been directed by the management of HOYA CORPORATION based in Japan,to contact you and seek the legal representation of your law firm in collection of debt, we will be very glad if your law firm is willing to render its efficient and professional legal services. We currently have some outstanding invoices that need to be paid by our customers in your country.We have made several attempts to enforce payment but to no avail. Can you be of help to us?

I await your response.

Taro Hagiwara
HOYA CORPORATION
Head Office 2-7-5 Naka-Ochiai,
Shinjuku-ku, Tokyo 161-8525 Japan
Website:www.hoya.co.jp

Reading the signs

Let’s look at some if the identifying marks of this trade:

  1. Typos and other language errors: Note the punctuation errors and idiomatic problems in the text above.  These are harbingers of this type of fraud and may actually be intentional for the purpose of hiding the true identity of the author from the authorities. However, the message will virtually always contain typos or non-idiomatic English usage, suggesting that the drafter is not even employed by the institution they claim to represent. For example, in the letter above:  “…CORPORATION based in Japan,to contact…”
  2. No logos: Another dead giveaway is a suspiciously “plain” appearance.  But don’t use this as your only guide.  I have recently begun seeing fake PayPal and even some bank items bearing an authentic looking logo.
  3. International debt collection: The message will nearly always solicit your assistance to collect a debt purportedly owed by some American commercial entity or ex-spouse of a foreign national.
  4. Different names: The account you are supposed to credit with the payment will not be in the same name as your client. There may be some excuse like “it’s my mother’s account and she has a different last name than mine.”
  5. Urgency: Anyone who pressures you to pay them however gently or subtlety should be immediately suspect; it means they’re trying to get paid before you receive notice of final payment.
  6. Slow build-up: Sometimes the scammers take a different route: they actually pay a couple of checks for smaller amounts to lull you into a false sense of security. Then they float a big rubber check with a reason like: “We are in a cash flow crunch, would you please pay us early just this once because you are holding up a lot of our money.” If you fall for it, the check bounces and they are never heard from again.
  7. Righteous indignation: When you express doubt about their claims or start asking questions, they respond as if they’re offended. In actuality, they’re trying to make you doubt your own better judgment.
  8. Reality check: As always if it seems to be too good to be true, it probably is!

So how do you test for legitimacy?

If you see any of the telltale signs above or anything else that makes you suspicious, make sure you:

  • Check their IP address.  It should be in the same location as they claim.
  • Ask them to wait until you are notified of final payment. Just watch for the “slow build-up trick” above.
  • Ask for their ID. Make sure it’s legitimate, and do some in depth Internet research as well.

If you use caution, common sense, and follow the tips above, you should be able to spot a scammer without too much trouble. Otherwise, you and your coworkers could find yourself the victim of a firm-busting fraudulent transaction.
About the Author

Christopher C. Carr , Esq., MBA (Finance) is a suburban Philadelphia, Pennsylvania solo consumer bankruptcy attorney.  He has been in practice for over 25 years in Real Estate & Mortgage Modifications; Debtor & Foreclosure Defense; Small Business, including Business Divorces; Elder Law; Technology, including Computer Law & E-Commerce & Entertainment Law. His background also includes significant experience as a financial planning analyst with a Fortune 100 Company.

Mr. Carr blogs regularly on debt and bankruptcy topics at http://christophercarrlaw.wordpress.com/.

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