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How Not To Get (China) Internet Scammed.

By Dan Harris and Steve Dickinson

Rich Kuslan over at Aziabizblog has an excellent post up on emails (usually allegedly from China) that seek to scam attorneys. The post is entitled, "How Not to Get Scammed by a Scam Email," and much of the post serves as an equally good lesson on how not to get scammed by a Chinese seller of product whom you are dealing with only over the internet. Let me back track a bit and talk the attorney scam. These are getting incredibly common and they do sometimes work. The scammer seeks to hire a lawyer to collect money owed to the scammer or the scammer's company. Typically, the attorney quickly succeeds in recovering some or all of the money owed. The fake creditor pays its debt to the attorney by check, the attorney deposits the check into the law firm trust account, and then the trust account cuts a smaller check to the scammer, with the attorney keeping its contingency fee. The only problem is that a few weeks later, the bank comes back to the law firm to announce that the check sent to the law firm by the alleged debtor is a fake and the law firm now has to compensate the bank for the loss. I have read of this happening to at least two law firms and I myself have been contacted at least ten times by lawyers asking me if a particular email is a scam. Every single time it has been. I have also been contacted at least twenty times by US companies asking me if my firm would be willing to go after what I have quickly determined to be a "Chinese" scam company to whom the US company has communicated with over the internet, sent money to, and then never received product. I put Chinese in quotes because many times there is no evidence even that the scammers are based in China. We even had a client who came close to sending around $8000 to an alleged investment bank in London, but ended up not doing so after we discovered it was a Blimpie's restaurant. We also represented a European client that sent nearly a million dollars to a "law firm" in Seattle that was actually just a warehouse. When we told the client this, based on our having determined there was no such law firm in Seattle, no such lawyer in Washington, and that our Googling of the address had revealed it was a warehouse and the photos of the building online confirmed this, our client still insisted we send someone to this address to make sure. We did and, of course, it was a warehouse. So how can you tell? First off, let me say it is usually not that difficult, so long as you are willing to spend five minutes doing so. Kuslan calls for applying the following three part test to the attorney email, but I would add that it is equally applicable to anyone you are dealing with strictly over the internet:

1) Review the content of the e-mail for suspect indicia; 2) Check the e-mail properties for clues as to origin; and, 3) Honestly look at your own motivation for wishing to believe in the purported validity of the e-mail received.

Kuslan's content review consists of the following:

The writer is purported to be an executive of a foreign company owed a substantial debt or, in a twist, and ex-spouse with outstanding custody payments. Generally, some kind of deal is offered that is profitable to the lawyer. Is this already sounding strange to you? Does the e-mail spend paragraphs describing the company, its business and the legal issue involved? If so, your delete finger should begin to itch. In fact, this is the setup, designed to create a sense of trust in the reader. Warning bells should ring when a stranger tells another confidential information over an unsecure method of communication. Is the legal issue proposed the collection of a debt? Virtually all scam e-mails I have read propose collection matters. In one common scam, the purported debtor -- in existence only for the scam and quite likely the ?client? himself -- pays up with a forged bank check. After attorney wires client the proceeds, the bank check comes back, unpaid, to haunt the attorney, who is now on the hook for the sum he wired plus bank fees for bounced check. Client and Debtor vanish into the night. Instead of agreeing to take a percentage, try proposing to this client an hourly basis with a hefty upfront retainer wired in cash. Better yet, don?t. You won't hear back. Does the writer compliment you? Here is an actual example: ?After a careful research, we have been able to establish that delinquents or past due accounts are settled when reputable and aggressive firm or professional(s) represents an organization in collection of debts or possible litigation that may arise thereof.? ?which is why we?ve chosen you! Your vanity meter should read off the scale. A compliment from a stranger may be genuine, but may also lay the groundwork for very subtle scheming. Redouble your suspicions! Is there extensive use of four and five syllable words, such as actualization, implementation, delinquency, and sentences that run on for 50 words or more? This is an attempt to appeal to those who inhabit the jungle of legal jargon. Business executives hardly write at all and when they do, they do so in bullet points of no more than 10 words of two syllables each. Your delete finger should now be hovering over the delete button. If the writer offers a substantial retainer, one can virtually disregard the rest of the e-mail immediately. Generally, clients do not wish to pay all. The delete finger should feel heavy now? Are you addressed by name? If you are addressed only by "Counsel," or not at all, the e-mail is intended for a mass audience. Hit the delete button. Does the e-mail purport to come from China? China is hot and ripe for scam-ploitation. Chinese rarely, if ever, reach out to people personally unknown, untouched and unseen for representation. Delete. Is the claim made that the writer came across the attorney's name in a directory in which the attorney isn't listed or doesn?t exist? Delete. Does the writer claim to have contacted the attorney once before, when there hasn't been prior contact? Delete. In a lengthy e-mail, are there significant errors of grammar and/or spelling? Delete

To which I would add the following questions I ask myself. Does the writer's English sound like someone from China, or does it sound like someone trying to sound like they are from China? Does the email address match the domain name? Oftentimes, the scammer will claim to work for a completely legitimate Chinese company and direct you to the website of that company. Well and good, but then why is the scammer's email address a yahoo account? Legitimate Chinese company or not, now is the time to run a Google search on the email address and the company name. I estimate that at least half the time when I have run such a search after we are contacted by someone who has been scammed, there are people on the internet who have already written about the scam. Kuslan next calls for reviewing the email properties. Why if the company is in Shanghai, does the email come from Singapore? Kuslan then calls for putting the address you are given into Google maps to see what comes up. He talks about once having discovered the London address of a fake company to have been a falafel restaurant. See my Blimpies and warehouse example above. I also once had a case involving many investors who invested millions in "Chinese" real estate by sending money to a company whose address was a vacant lot in a Chicago suburb (the funds were wired or sent to a PO Box). Kuslan then calls for you to look at the website's whois information. Absolutely. I did this once for a client and saw that the website of the company with whom he was thinking of investing was run by someone who was still operating under a Federal Consent Decree that required him to pay back $20 million he had stolen in an investment scam Kuslan then discusses "your own motivations." This is actually the most difficult area. My law firm has a Russian lawyer and a Russian paralegal and we do a lot of Russian work. You would be surprised how often we are called by wealthy sixty year old farmers from the Midwest who are asking us to check out the legitimacy of their incredibly beautiful 22 year old girlfriends who will soon be coming to remote Illinois to marry them. We then point out the following regarding their betrothed: 1. As far as we know, the airport authorities in Moscow have never required someone to deposit $8543 with them as a guarantee that they will return to Russia. Heck, the airport authorities do not even care if someone returns to Russia. 2. The address of their girlfriend is the same address as that used in 6 other girlfriend scams (as determined by an internet search, usually in English). 3. The life described by the girlfriend just does not make any sense at all. 4. What we do not ask is why they would think an incredibly beautiful 22 year old woman in Moscow would want to move to remote Illinois to marry a 60 year old man she has never met. But here's the strange part. Way too often, the client gets mad at us for what we have found and disputes our findings and says that Olga is different or, if she used to be that way, she clearly is not any more. At which point, we suggest that the client have us retain someone in Russia to confirm our findings, which offer the client nearly always declines. We have done maybe ten of these and I would say that in four of them the client has told us that he will be moving forward anyway. I have emailed some of those people later to see how things went and never heard back from a one of them. So I do not know if they were telling us they were going to go forward just to save face with us, or whether they really did go forward, but it is amazing how cognitive dissonance will cause people to believe what they want to believe and that is exactly what these scammers are counting on. I am glad Kuslan did his post now because December definitely seems like a prime month for scams and the last time I wrote on this, in a post, entitled, "China: Ipods For $50. PS3 For $75. Wii For $100. PS3s and Xboxes For $150. Who You Kidding?" it was December also. What indicia do you use to ferret out internet scams? Please go here and vote for China Law Blog.

Full post as published by China Law Blog on December 10, 2009 (boomark / email).