Tuesday January 15, 2013
Watch that fraud
By ALLAN KOAY
A fraud expert gives the lowdown on criminals who capitalise on people’s gullibility and greed.
JEFFREY Robinson, a fraud expert, was once a victim of fraud. It sounds like a bad joke, but unfortunately, it did happen. Out of sheer carelessness, he let his credit card out of his sight when paying for dinner at a restaurant one night, and the next thing he knew, he received a call from the credit card company asking him about some big purchases on his card.
So, yes, it is true - never, ever let the waiter, or anyone, take your card out of your sight.
In Robinson’s case, he walked into the police precinct the next day to report the crime. Not only that, he even told the police he had done the investigation for them and knew who the culprit was.
Robinson, who was in Kuala Lumpur to give a talk at RHB Bank’s Fraud Awareness Week, has been exposing fraudsters and their unscrupulous methods for years. He is probably their worst nightmare. Once, when a fraudster in the Netherlands published a book on money-laundering, the content of which was stolen word-for-word from Robinson’s own famous tome, The Laundrymen, he went after the fraudster and his publisher relentlessly. Robinson, of course, won the case.
I asked Robinson if, because of the nature of his work, he has ever gotten threats to his life.
The white-haired native of New York replied: “I don’t actually look like this. It’s a disguise. You think I would walk around with a face like this?”
On a more serious note, he replied that he has been threatened before. Not surprising, since this is the man who wrote one of the authoritative books on money-laundering.
Robinson, known as “the world’s leading financial crime author”, has written 27 books, including six works of fiction, and also several screenplays. He started out exploring money-laundering in The Laundrymen, which naturally brought him into the world of fraud.
“I’m a storyteller, I like great stories,” said Robinson. “And the money-laundering stories were fantastic. And fraud became an offshoot of that. I was interested in how money was moved. And if you look at the way criminals deal with money, you frequently see other crimes, because they commit crimes against themselves. They’re completely untrustworthy! That’s why the drug trafficker doesn’t want cash, because his best friend will steal it from him!”
He said when it comes to fraud, the problem is simple – fraudsters go where the money is, namely financial institutions and their customers.
“And the fraudsters are better organised than the good guys, and in many instances better funded than the good guys,” he said.
There is the famous Nigerian 419 fraud, named after the clause in the Nigerian Criminal Code Act, perpetrated via e-mail, which claims to offer easy money, often asking the victim to act as a third party to help wire money to a bogus company.
Robinson related a case in Tennessee in which a woman with a disabled spouse was almost a victim of one such scam. The fraudster sent her an e-mail claiming to be the manager of a textile company in Britain, and that the company needed someone in the United States to collect money for them. The company’s client sent the victim a cheque, and all the victim had to do was deposit it into her account, wait until it cleared, then wire 90% of it to the company.
“As it goes, the victim would receive a cheque for US$5,000, and three days later the cheque would clear, or at least he thinks it has cleared because it has been credited into his account,” said Robinson. “He would then wire out US$4,500 to the Philippines. And he thinks he has made US$500 just by doing nothing.
“Three days later, the cheque would bounce. The money being credited into his account didn’t mean the cheque was cleared; the bank did it out of courtesy and with the view that the cheque would not bounce. So he would end up owing the bank US$4,500.”
The fraudster works with volume, sending out 13 million e-mails, looking for 13,000 gullible people in the 13 million. And if he could scam those 13,000 innocent people out of US$5,000 each, he would make a fortune.
And then there is also the kidnapping scam in Florida involving retirees. An elderly person would receive a phone call in the middle of the night from a young person claiming to be a grandchild in trouble somewhere far away and in need of money.
“The grandmother would get into a panic,” said Robinson. “The fraudster would usually put a time limit, saying the bail needs to be posted by such and such a time, and the grandmother needs to wire the money to a certain bank.”
But the banks in Florida have caught onto the fraudsters’ game.
“They are now saying to these (elderly folk) who show up in a panic to wire some money, ‘Let’s call your grandchild and find out where he or she is first’,” said Robinson. “As soon as they see a wire from an elderly person out of the country, they would stop it. And they would ask the client some questions.”
These are cases of personal fraud. There is also corporate fraud, which is normally perpetrated by insiders, and is oftentimes undetected for up to two years.
“Insiders in corporate fraud steal from the company because they feel entitled, because the company has done them wrong, or because they feel the company owes them,” said Robinson.
To avoid personal fraud, a person just has to step back for a minute and ask, “Why me?”
“Step back and look at it carefully, and say I’m not going to send you any money until I find out why I won this or why you need me,” said Robinson. “If somebody needs your bank account, it’s fraud. There is just no legitimate reason for doing so. If you didn’t buy a ticket, you wouldn’t win the lottery. It’s common sense.”
If you get a suspicious e-mail or phone call, just get on to Google and check what had been said or written about it.
“If somebody wants to put you in a very good deal but you have to say yes in the next 20 seconds, say no,” he added. “If it’s a really good deal, it’ll come around again. If it’s fraud, you just saved yourself a lot of grief.”
For corporate fraud, one of the ways to detect it is with a whistle-blower programme. Compared to audits, whistleblower programmes detect fraud four times more effectively, said Robinson.
“A good whistle-blower programme doesn’t turn every employee into the KGB,” he explained. “The trick is to look for anomalies, look for things that shouldn’t be there, or that aren’t there that should be. Or things that just don’t make sense.
“How does this guy who earns the same salary as you afford a summer home in Florida and a ski lodge in Switzerland? It doesn’t make sense. So maybe his wife inherited it from a rich uncle. But if you say something, at least they will look into it.”
Statistics show that one in nine Americans will lose money to fraud. The sad part, said Robinson, is that most of the fraudsters will never be arrested. And a majority of victims will not report the fraud because they are embarrassed. Companies won’t report because they don’t want the publicity.
Movies and TV have made fraudsters into glamorous thieves, and that could not be further from the truth.
“I know of a small British company that got hit by fraud and went bankrupt. Forty families lost their income. That’s what the movies don’t show you.”
The damage inflicted is what people should also be aware of – fake Red Cross websites scamming away money that could be used to assist victims of natural disasters, disabled people scammed out of their money which they need for medication, or a grandmother who lost her savings trying to help a grandchild she thought was in trouble.
“Fraud hurts the people who can least afford to be hurt,” said Robinson. “And people need to say, ‘I’m not going to be a victim, I’m going to say something.’ ”
RHB Banking Group has come out with a booklet, Fraud Awareness, to serve as a guide against fraud. It covers topics ranging from identity theft, skimming, cheque fraud, ponzi schemes, phishing and other methods employed by fraudsters to fool the unsuspecting. It also offers preventive measures on how to behave at the ATM machine, and what to do and what not to do in an online transaction. The booklet is available at all RHB branches.