Related Link: http://www.joewein.de/sw/419representative.htm
URL Title: The company representative scam (by Joe Wein)
When you receive an unsolicited email from a company looking for representatives to establish a business presence in other countries and more importantly, for transferring payments from customers, promising you 5-10% of those payments then you're dealing with a scam. No legitimate business will pay that much money for transferring legitimate payments because in all cases there are far cheaper and safer alternatives.
Offers that promise around 10% tend to be from Nigerian gangs, even though in many cases the companies claim to be Chinese (other countries where the companies are supposed to be based are Japan, Taiwan, Thailand, the UK, France, Australia and New Zealand). A similar scam run by Eastern European gangs usually involves ficticious European companies and promises around 5% of turnover.
The "representative scam" is a check fraud scam. It can work on a massive scale, causing damages from thousands to hundreds of thousands of dollars. Losses of several tens of thousands of dollars are very common. Most of the victims are from the USA and Canada because these are the countries where use of checks as a means of payment is most widely spread (Europeans and Japanese tend to make more use of wire transfers). The scam takes advantage of a misconception that many if not most people have that a check has been verified as genuine if it "clears" and money shows up in their bank account. In fact a check can bounce even after that. Not the bank but the person depositing the check is fully liable for any resulting losses.
In some cases, names of legitimate companies are abused when recruiting "reprsentatives". The criminals may even list the legitimate websites. They may register web addresses that are similar to the real companies' addresses. In other cases no real company by that name exists.
Any postal address listed in a representative scam is either fake or is the address of an legitimate company unconnected to the scammers. Most phone numbers used in the scams are either mobile phone numbers or "special service" numbers that redirect incoming calls to other phone numbers, such as the +44 70 numbers in the UK. All personal names used in the scams are either made up or are names of innocent people.
2. How the scam operates
The scammers are not Chinese (or even Asian) but Nigerian. They mail their "representatives" fake checks from "customers" to deposit in their personal or business accounts. The victims believe they are forwarding payments from customers in a sale by their employer but really they are sending their own money and neither a buyer or seller exists.
Often the checks are written on blank check forms stolen from legitimate businesses. Provided the business whose check is abused has sufficient funds in its account, the check will initially clear. The bank will make funds available in the account of the person who deposited the check. However, these funds are provisional. They are in effect lent by the bank against the promise that the deposited check is valid. You as the customer make that promise when you endorse a check during deposit. You and not the bank bear the full liability if the check is fraudulent! That is why you should never transfer funds on behalf of third parties, especially if you only know them via the internet.
When the check clears, the "representative" wires 90% of the amount to a bank account in another country, such as Japan, Taiwan, China, the Netherlands or the UK. Meanwhile the check gets forwarded to the holder of the account from which it is drawn, who will also see the money being debited from the account for the check they never wrote. This can take a month, but when it happens the check will bounce. Checks can bounce up to six months after they were written.
By that time the money is already out of the country and the representative is left to pick up the losses. The bank will debit the full amount of the check. For example, if a victim has cashed a $50,000 check and wired $45,000 to Japan, he or she will be left owing $45,000 to the bank even if they didn't touch one cent of the $5000 commission promised by the criminals.
3. The infrastructure of "representative" scams
"Representative" spams get sent from numerous sources at dozends of internet providers (ISP), mostly in Nigeria or satellite uplink providers. If an ISP is a major 419 spam source it probably is also a representative spam source. Replies to the spams are collected in reply maildrops and processed. The victims are asked for personal data and often are sent a contract to sign. After a week or two they may be notified of a "customer" who wants a payment. Often the criminals contact them posing as the customer: The emails come from the same sources as the signup emails, though the email addresses are different. Then the victims receive checks, which usually are mailed from Canada, the UK or Nigeria. The UK fake checks usually originate in Nigeria. The Canadian checks come from Nigerian gangs based in Ontario.
Once funds are made available by the bank, the criminals email the victims details of a bank account to wire 90% of the money to, their own money in effect. In some cases this may be a domestic account of another victim in the same country, or it may be a foreign account handled by a gang member in that country.
The receiving accounts are normally in the name of an individual or a different company name. The accounts may have been opened with fake ID or purchased from third parties who created them. The cash can be withdrawn using an ATM card, leaving little evidence where it went. The reason Far Eastern company identities are often used is that many countries in that region have weak banking oversight / strong banking privacy laws that make it easy to obscure the real account user. For example, Japan has a black market for established bank accounts and banks there do not normally send regular statements to a registered home address of the account holder. The Japanese police is reluctant to get involved when an account is used for international fraud that doesn't involves Japanese victims.