Mark Jenner & Co Limited – Forensic Accounting Services

When compiling the list of top ten Christmas scams for people to watch out for, the ones targeting relaxed people at home and in a festive mood spring to mind. However, if many of the population are more vulnerable at this time this does not mean that they should be complacent at others. All these frauds are operated throughout the year, it is just that at Christmas many seem to let their guard down and are more trusting.

Top ten scams

1. Sale of counterfeit goods – with millions on the look out for presents, the chance of a bargain buy is attractive. This is the time when counterfeiters have a field day. Rushed purchases and trying to beat the other shoppers means that less care is taken and sometimes the obvious overlooked. Do not buy from anybody other than a reputable purchaser.

2. Following on from number (1) above is the fraudulent on line auctions. My wife greeted me the other evening with the news that she had found the Mulberry handbag she was looking for on eBay. It was priced at £100 – could I believe her luck? Well the bag retails for about £800 in the Mulberry stores and you just might get £50 off in a high street retailer such as House of Fraser or John Lewis. Fortunately she saw sense and did not buy. The bag was either counterfeit or would simply not turn up.

3. Credit and Debit card fraud. With the increased use of plastic to smooth the Christmas buying out, less attention is placed on the transactions we make when our statements arrive. The fraudsters are more active during these busy periods, stealing your details and spending at your expense. Make sure you spot any discrepancies so that you can quickly begin to sort the matter out with your card provider. Otherwise you may be liable for continued fraudulent use for some time!

4. Fraudulent lottery wins. It is the festive season when a lot of poorer people feel the pinch. Especially the elderly are highly delighted when they receive notification of a lottery win that they did not know they had entered. The only trouble is that because it is a lottery situated abroad they have to pay some money upfront as a highly plausible “foreign transfer tax” to release the money.

5. Identity theft leading to fraudulent money transfers, purchases and loans is more prevalent during the period of increased transactions for presents that are occuring. You may overlook your normal diligent approach to throwing out personal details with your rubbish or the way your credit card is handled as you are visiting restaurants, bars and clubs more frequently at this time of year. The crooks know this and step up their activity.

6. Fake emails bring good returns for the “phishers” at this time of year. Many people take a break and therefore Internet activity goes up.

7. Loan scams are a problem over the Christmas break as many people find the expected spend at this time too much, especially those that are suffering as a result of the economic downturn. The opportunity of a small loan to tide you over the break is attractive but make sure you know what you are signing up to! Many of these short tem loans have an extortionatly high level of interest applied, which becomes crippling if a payment is late. Stick to conventional and regulated borrowing rather than a pay day loan or borrowing from disreputable sources.

8. Premium rate phone line scams always seem to increase the volume of trade they do at this time of year as a result of more people being on holiday and more being receptive to a bit of sweet talking over the phone. Do not let your guard down - and if a caller asks you to key in a response do not comply – you will simply be opening your account to them!

9. Rogue door step sellers also like to find people at home. Some of these may be genuine tradesmen but most door to door callers must be treated as potential fraudsters. Be carefull not to let people into your home unecessarily. If they seem to want to come in when you are not interested they may just want to case your house for a later theft.

10. A particular favourite at this time of the year is the slimming or miracle weight loss solution. In fact any health product always does well at this time of year as we are very concious of the over indulgence we we have committed. Do not fall for the false promises and only buy goods that you want for the right reasons. Remember  – the best cure is moderate eating of the correct foods and plenty of excercise. There is no miracle solution!

Phishing is a form of identity theft. It involves the fraudsters sending large numbers of spam emails out to unsuspecting Internet surfers. The email appears to be from a reputable source such as a high street bank. The logos being used and often the email address look genuine and many recipients consider the emails to be from who the say they are.

However, the emails use copies of the banks’ corporate letterhead. The email addresses are cloaked using sophisticated software or are so close to the real addrees that they are often accepted. For example the fradulent email could be something like: hbsc.com – at first glance you would think it came from HSBC! Please note that the example used is actually a legitimate site, simply used to show how easy a transcribed letter can fool the recipient – I am unable to disclose any real examples for obvious security reasons.

Once the unwary recipient clicks on the link on the email he or she is directed to a web site that looks to all intents and purposes like a legitimate bank web site. Invariably a request will be made to log in with security details. If you should do this you will find that your bank account is emptied right up to the overdraft limit very quickly!

I receive phishing emails from crooks that pretend to be banks that I do not even bank with – they are simply emailing as many contacts as they can in the hope that some will no doubt bank with the current bogus named bank and hopefully comply with the requests.

• It is importnat to note that no bank will ever ask by email for you to confirm your security details.

Although a number of years ago now, I was victim of a phishing email. This shows how easy it is if even a fraud investigator can be tricked into believing that an email is genuine! I was selling some bits and pieces on eBay at the time and having quite a lot of fun buying and selling items. One day I received an email telling me that I was now eligible to get “power seller status”. This was very believeable, I knew all about this acolade which gave you more credibility when selling items and I had been quite busy lately. I clicked on the link and was immediately asked to confirm my user name and password. At this stage I was not suspicious as eBay is continually asking for you to do this when you surf around their web site.

However, once I had entered these details I was taken to a web page, that still looked like an official eBay page, that asked me to enter all my personal details that eBay allready had, including my bank or credit card details! At this point I immediately logged out.

I did not think any more about this as I thought I had escaped in the nick of time! However, a few days later I received another email from eBay, telling me that they were investigating a fraud associated with my account. I went to my account and noted that there was a Harley Davidson for sale at around $3,500! Shortly afterwards my account was taken down and I could not access it again. After a further few days I received another email from eBay telling me that they had resolved the fraud, that my account had been hijacked and that I must now sign in and create a new password.

Hats off to eBay, they sorted the problem and returned some listing fees of around $40 that had hit my account for the fake sale of a motor bike. The fraudster had phished my identity to use my 100% good seller reputation to try to sell some $3500 of fresh air to an unsuspecting buyer.

I am pretty hot on phishing emails now!

Most fraud cases investigated by Mark Jenner & Co involve some interaction with a bank. It may be simply through the examination of bank statements for an account used to launder proceeds of crime or it might be an investment scam used to steal large sums of money from high value clients in a Ponzi scam involving the offshore banking system. The banks are very skeleton of the financial system worldwide and are seen as both prime tools and targets of the fraudster.

Banks have always been the target of criminals for their very nature is to hold large amounts of money. However, in the 21st century we are not as concerned about bank robbers or bullion heists as about the risk of fraud. It is not that physical bank robberies do not happen, it is just that the robbers almost always get caught and fraud is increasingly seen as a much less risky option. Just about every fraud or money laundering activity will need interaction with a bank somewhere along the line. Stolen cash is very difficult to spend in large quantities but cheques and credit cards can afford the lavish lifestyles the criminals seek.

Within the bank there is the problem of embezzlement by the staff. Key members of staff are in a position to know the inner workings of the accounting controls put in place to prevent fraud by corrupt members of staff. Corruption can, and often does occur by a third party bribing a member of staff to obtain information concerning customers’ accounts. Identity theft and identity fraud are key areas where losses can occur. But id theft and embezzlement is not the only area of concern in the area of bank fraud.

The need for interaction by the criminals with banks to facilitate their spending of their proceeds of crime gives rise to the issue of anti money laundering controls that every bank must have in place. The bank is effectively tasked with acting as a whistle blower for law enforcement, reporting any suspicious customers or transactions that take place.

Criminals, fraudsters and even terrorists are finding it ever harder to use banks to move their money around the globe. Anti Money Laundering Regulations place restrictions on the ease with which money once was moved. The criminals often turn to fringe banks away from the high street to transact their proceeds of crime in an attempt to escape the gaze of the authorities. Corruption in second tier banks is well reported in the press. For example the Bank of Curacao was closed down at one stage as most of its customers were found to be involved in VAT fraud activities. Companies based in Europe would trade with each other, but the financial transactions were conducted remotely in Curacao. The bulk of the money never left the country, exchanging hands many times as the fraudsters conducted deals with each other. In one case where Mark Jenner & Co was involved, the only clue that a company was conducting fraudulent deals worth £millions on a regular basis was a single transaction in their UK based bank account showing a small payment of a modest sum settling a local expense in Curacao.  This was a slip by the crooks as legitimate looking accounting entries were normally recorded in the UK, France or Germany or wherever the management of the business was physically taking place.

Other fringe banking systems prone to the attention of the fraudster or money launderer are the money transfer systems that operate world wide. The Hawala banking system is notorious for not leaving any audit trail – transactions between countries at opposite ends of the world are conducted by worth of mouth. The word ‘Hawala’ means ‘trust’.

Hawala banking is traditionally used for ex patriot Asians residing in the West to send money back to their families, for example in Pakistan and India. It uses the transfer of ‘value’ or exchange of debt as one means for moving wealth. Other more formal systems such as Western Union will transfer small sums of cash in the same way, for a price. Both Hawala Banking and some of the transfer businesses such as Western Union have been associated with fraud and money laundering in recent years.

However, a number of more respectable money exchange systems are operating legitimately and taking more and more trade from the large high street banks. PayPal and the Revolution Money Exchange have been carving a growing slice of financial activity in recent years. The allegations of a Revolution Money Exchange Scam reported in 2008 was unfounded and this major USA bank backed organisation is probably less prone to bank fraud and corruption than most leading high street banks. Indeed it was probably because the Revolution Money Exchange was paying $25 to new clients opening an account and $10 for each referral brought in that cries of fraud and scam were made. Yet people do not realise that a leading bank such as Lloyds or Barclays might pay $100s and even $1000s to secure a new customer!