One of the oldest scams is the book is the advance-fee fraud, more commonly known as Nigerian 419 scam after its huge use by Nigerians in the last decade or so (419 is the part of the Nigerian Criminal Code that covers this frime). It’s really a variation of the very old school Spanish Prisoner scam but the idea basic idea is the same – someone needs help and they’re willing to pay you a large sum of money, as long as you front a bit of the cost beforehand.

The old school Spanish Prisoner scam dates back to the 1800′s where a con man convinces the sucker that there’s a very wealthy prisoner locked up in a Spanish jail. The wealthy prisoner is locked up under a false identity and can’t communicate directly with the sucker, he has to go through the intermediary (con man). If the sucker has some money to help free the wealthy prisoner, the prisoner will gladly repay him and then some. If the sucker ponies up some cash, there are often other hitches and require more money, until the sucker realizes he’s been taken.

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You won the lottery! Just kidding… but you are very close. Wire $10,000 to my account in Estonia and the King of Prussia will authorize me to immediately transfer into your account a payment of 10.000.000.000! I need the wire transfer in order to get your bank information. So please send it soonest.

If you believed any of that (I hope you didn’t) then you definitely need to check out our series this week – Scam Week.

Scam Week will focus on some of the most popular financial scams on the Internet from the classics, Nigerian 419 and phishing scams, to the new, I barely know you on Facebook but I got mugged in England and need money; with tips on how to avoid falling for a scam or becoming the vehicle for scammers to rip off your friends.

Hopefully I’ll introduce a scam, or at least the history of a scam, that you haven’t seen before and can protect yourself against it!

(Photo: jepoirrier)

Do you know what happens when the bank makes an error in you favor? Only one thing – headaches.

If you ever check your balance and notice that you received a mysterious windfall, do yourself a favor and call your bank. Tell them that a mysterious deposit just appeared on your account and that it’s not yours, they need to investigate, and resolve it quickly. The last thing you should do is spend it despite the adage “possession is nine-tenths of the law,” the money isn’t yours. If you spend it and cannot repay it, you are still liable and must pay it back.

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Of course you have, we all have. Sometimes they’re small scams, like someone adding a little onto your bar tab, and sometimes they’re big scams, like someone skimming your credit card and going on a spending spree.

When I was in college, I would occasionally buy and sell stuff on eBay. I remember the days of scouring Fatwallet Hot Deals forums for deals I could sell on eBay. I was doing it so often that I wrote a program that would quickly scrape eBay auction results and give me average sales price, standard deviation, and other statistics so I knew whether something was worth the effort. My comfort with eBay as a seller made me comfortable as a buyer.

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Have you ever been given a check that just doesn’t sit right with you? Isn’t it unfair that your bank will charge you an exhorbitant fee when you deposit someone else’s bad check? However, sometimes you still need to take the risk by accepting as many forms of payment as possible, especially if you’re a business, and there are things you can do to protect yourself. These aren’t perfect solutions, in fact they are far from perfect, but by taking these steps you can reduce your risk significantly.

First things first, you need to trust the person giving you the check. If you don’t, ask for an alternate form of payment. A money order from the USPS costs only $1.10 to $1.50 (max of $1,000) and can be cashed at a bank or a Post Office. For larger payment amounts, have the buyer get a cashier’s or bank check. There’s a small fee but it should be nominal compared to the amount of the payment and just part of doing business.

If, however, you have no choice but to accept a personal check, there are a few things you can do to verify that the check is a good one. This comes in two steps – verifying the check itself is good and then verifying the associated account has the necessary funds.

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Last month, I went to a Trader Joe’s to buy a package of coffee filters. For whatever reason, their packages of unbleached cone filters are always remarkably cheaper than anywhere else, despite Trader Joe’s higher end reputation. On this particular trip, there was some sort of technical problem with the register. I would swipe my card, sign in the box, and then the system would skip the receipt printout step. Each time (this happened three times), the person working the counter would politely insist that charge didn’t go through and we’d have to swipe it again. We did this three times.

Unfortunately, the only technical problem was that a receipt wasn’t printed and it wasn’t until a week later that I saw I had three charges for one box of coffee filters. The tricky annoying part about all this was that the charges were for only $1.80 each, which meant I was only out $3.60. Part of me wished it was more like $360 so that be more worth my time to deal with it!

If you need to dispute a credit card charge, here’s what you should do:
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Last weekend, the Consumerist mentioned a story that fewer retailers were accepting personal checks this holiday season. They cited check fraud as the big reason for not accepting checks and I argue that check fraud is the big reason why many consumers should not write checks.

The personal check is one of the most insecure methods of payment.

Consider this test, I call it the internet safety test. If you took an image of a completely filled out of a check, how much of it would you have to black out before you’d feel comfortable posting it on the internet?

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Finjan, an internet security firm, has discovered a new Trojan horse virus that steals money from your account. Your typical phishing or virus will steal your login credentials and send it to a thief, who either sells it or empties your account. This new virus, called URLZone, will steal your credentials but also steal money from your account, all the while displaying a fake balance when you login. How much it steals depends on your much is available, it only steals enough not to trigger a bank’s fraud detection systems.

At the moment, URLZone can only infect Windows systems using Firefox, Internet Explorer 6, 7 & 8, or Opera web browsers. Computers are infected when you open an e-mail, click on a website distributing malware, or visit an infected website using one of those browsers. When you visit a targeted bank, and it’s thus far been limited to German banks, the trojan transfers money without you even knowing.

This is the first Trojan Finjan has come across that hijacks a victim’s browser session, steals the money while the victim is doing online banking, and then covers its tracks by modifying information displayed to the victim, all in real time, Ben-Itzhak [chief technology officer at Finjan] said.

This is scary.

Banking Trojan steals money from under your nose [CNet News]

(Photo: hendricksphotos)