International Trade Scams
U.S. companies must be aware of international business scams and illegitimate trade deals. One of the most common scams in international business is based in Nigeria and operates throughout the world. While there are many legitimate Nigerian companies who are doing business in the United States and with American exporters, there is also, unfortunately, an organized crime ring that tries to take advantage of American companies and individuals. The following article gives specific details about these illegitimate business deals, how to help companies identify if they are the target of a scam, and where to report possible scams.
Where Do These Scams Originate?
Many of theses scams originate in the West African country of Nigeria. There is a large organized crime ring that is based in Nigeria with members operating in other African countries and around the globe, even in Europe and Canada.
How Do These Scams Work?
According to the U.S. Secret Service Financial Crimes Division, "Nigerian nationals, purporting to be officials of their government or banking institutions, will fax, mail, or email letters to individuals and businesses in the United States and other countries. The correspondence will inform the recipient that a reputable foreign company or individual is needed for the deposit of an overpayment on a procurement contract. The letter will claim that the Nigerian government overpaid anywhere from $10 to $60 million U.S. dollars on these contracts."
This fraud is called "4-1-9 fraud after the section of the Nigerian penal code that addresses fraud schemes" according to the U.S. Secret Service Financial Crimes Division.
Recently, scams have also taken the form of bogus sales contracts. An African firm or government official requesting a rather large export sale will contact the targeted individual or company. The sale will often ask for samples (e.g. cellular phones and equipment) to be sent in advance of the sales negotiation.
Other schemes may involve a religious-based contribution, inheritance, an ex-dictator/relative of ex-dictator trying to get money out of the country before going to jail, and people purporting to want to invest in your company. All of these act as bait. The scammers then try to get the victim 100% convinced that they would get the payoff. It is at this time that the "fees" are demanded.
How Do I Know These Correspondences Are Scams And Not Legitimate Business Deals?
There is often a perception that no one would enter such an obviously suspicious relationship. However, many victims have been led to believe they can share in such windfall profits. Individuals are asked to provide funds to cover various fees and for personal identifiers such as Social Security numbers, bank account numbers, and other similar data. The correspondence will usually ask the individual to pay a fee in order to transfer assets from a Nigerian bank account to another account. These scams are called Advanced Fee Fraud because of the demand for upfront fee payments.
Can You Provide Examples Of These Correspondences?
Below are three examples of different types of letters:
- (Postmarked Johannesburg, South Africa) From an officer of an official oil development commission of the Nigerian government. The commission supposedly gets 10% of Nigeria's total annual oil revenue to use for development projects. The official states that he and his colleagues have "carefully acquired" USD $22 million by "duplication of files and over-invoicing." He invites the addressee to recoup a handsome commission of 30% of the USD $22 million because to get the money out of Nigeria, he needs to send the money as an overdue contract payment to a foreign firm or person. All the potential foreign partner needs to do in this "risk free process" is send the name and address of the bank, account number and name of beneficiary to which the officer will send the money. He offers to meet the partner and invest money in the partner's country.
- (Postmarked Lagos, Nigeria) From an official of the Nigerian national petroleum corporation. Another oil scam, the official writes that he is a member of an ad hoc committee set up to review contracts led by corrupt earlier military governments. After paying legitimate contracts, the Committee discovered an excess USD $45.5 million that needs to be transferred to the foreign partner's bank account. Again, the partner gets a hefty 30% commission, with 10% more to be used for "taxation and expenses." The official even offers to import goods from the foreign partner's firm with the Nigerians' 60% in order to establish a "lasting business." Again, all that is needed for this "safe and guaranteed" transaction is bank account information.
- (Postmarked Kotuka, Ghana) From a government official. Having received the foreign partner's name from a "reliable friend," The official reveals he is the son of deposed Zairean dictator Mobutu Sese Seko. He has USD $12.5 million from one of his father's diamond sales to invest in a profitable business venture in the partner's country (Nigeria is too risky due to the "unstable political climate.") The official is less generous than the oil executives, offering only a 15% commission, though 10% will be set aside for expenses. All the foreign partner need do is contact him.
Are There Certain Specific Details In These Correspondences That Would Help Me To Determine If They Are Scams?
Requests to send money, bank drafts, bank account numbers, or personal information are red flags. Also, the correspondence typically talks about the confidentiality of these deals, urging the addressee not to speak to anyone about the transaction. Some correspondences will be addressed to a "Dear Sir" while others may come addressed to a specific individual. Urgency of response is another typical sign.
If you or your company has never done business in Africa before and/or do not know how the correspondents could have received your personal information, you should be suspicious. Most persons doing business in Africa are familiar with their industry and can trace new professional contacts to a specific source.
What Is Being Done To Stop These Scams?
The Secret Service Financial Crimes Division established "Operation 4-1-9" to target Nigerian Advanced Fee Fraud on an international basis. According to the U.S. Secret Service Financial Crime Division, "the Agents on temporary assignment to the American Embassy in Lagos, Nigeria, in conjunction with the Regional Security Office, supplied information in the form of investigative leads to the Federal Investigation and Intelligence Bureau of the Nigerian National Police. Officials of the FIIB and Secret Service have made a round of arrests in Lagos. Evidence seized included telephones and facsimile machines, government and Central Bank of Nigeria letterhead, international business directories, scam letters, and addressed envelopes, and files containing correspondence from victims throughout the world."
What Should I Do If I Receive A Scam Letter?
First, it is important that you do not correspond AT ALL with the persons named in the scam letters. Any contact with the perpetrators puts you at risk of being scammed. Do not reply to their letters, emails, or call them by telephone. If you have been victimized and lost money due to Nigerian scam letters or any similarly-related fraudulent activities, contact your local Secret Service field office.