Vardan Baghdasaryan,

Yerevan 2003

When in DOUBT, delete, or Internet Swindling

For some unknown reason, many people believe that a Web-based community would be one in which everyone gets along and the crime rate is low. Everyone knows e-commerce is hip and user-friendly. The thinking goes that this new cyber world is so much more intelligent that those street-level scammers would stay away. But any market place that deals in anything of value is a place where one predator will take from another. A fool and his cyber money, it seems, are soon parted. The number and mechanisms of scams on the Web are wide and their number increase permanently. This article doesn’t have a goal of describing all the scams, swindling and other crimes in the sphere of computer technologies. We will discuss only the most widespread ones and special attention will be paid to the so-called “swindling with advance payments.”

Hacking: This activity is directed on access to the computer information. In order to achieve their goal hackers can use different techniques of “evil”, fraud protection. They can steal and alter data, modify files, block the system or computer operation when they penetrate into the network. Sometimes they crack just for fun or for gaining the authority among hackers. But very often it happens with the purpose of getting rich and to do some criminal actions. As a rule, hackers are professional in the computer technology and have outstanding skills. So it’s very easy for them to manipulate computer systems at a distance (remote attacks in the Internet).

Cyber terrorism: Terrorist organizations started to use new informational technologies and Internet more often with criminal intentions to get rich, to carry out some propaganda or secret information transfer. Criminal groups such as Hizbollah, HAMAS, use computer files, e-mail to support their illegal activity. Though terrorists have not used their cyber weapon yet on purpose, they use new informational technologies and computer progress achievements, and this already is a serious threat. Cyber terrorism is used as a weapon, which is implemented to damage state major infrastructures (such as energetic, transport, governmental). It can become a real threat for the world’s highly developed countries’ national safety in the nearest future.

Commercial or industrial espionage: This is a type of crime, which is related with commercial and industrial information ravishment. Some foreign special services have used up-to-date computer technologies as one of the methods to get access to state secrets and confidential information of other state.

Internet Plagiarism or Academic Cheating: Of course the academic cheating is not so acute and not so dangerous as others, but it is worth to be told about. More and more students use Internet to download their assignments and they submit them without even changing a word. Survey results about the prevalence of cheating in high school taken by Who's Who Among American High School Students revealed that an alarming 89% of high school students thought cheating was common and 78% had cheated.
Thanks to the fact that the data in Armenian are not so widespread on the Web and our students have to at least translate them. Anyway, this is kind of a problem, which will result in incompetence of the specialists who graduate the higher education institutions.

Network swindling and scamming: Here is a short-list of some of the most web scams. They are all candidates of an online scam “Hall of Shame”, if the latter is ever defined. The Pyramid scheme - this scheme, as the term implies, involves recruiting a string of recruits to form an imaginary 3-dimensional pyramid where the persons on the upper part of the pyramid are "feeding" off the others below them. This "classical" scam is given a high-tech touch as swindlers now use simple e-mail, to convince Internet users to deposit certain amounts using their credit cards on the promise that they will earn if they invite others to do the same.

E-mail or chain letter scheme – this is how the scheme works - the swindler sends out an e-mail detailing a letter with a list of names on it, including his own at the bottom of the list. The recruiter then asks recruits to send money, via credit card or courier, to the person whose name appears at the top of the list and to add his or her name to the bottom. Money is passed on, as the list grows longer. In theory, the more the list grows the more money recruits will have. The truth is only a handful, including the swindler and his henchmen, will benefit from the chain.

Online auction fraud - the FBI reports that online auction fraud is the number one scam on the Internet. The auction rip-offs accounted for 64 percent of the complaints filed with the Internet Fraud Complaint Center. In one recent six-month period auction fraud was reported to total $4.6 million.

The three scams mentioned here are just some of the many scams on the Web.

The basic goals and motives for committing these crimes are: self-interest and greed, ruffian actions, revenge, commercial or industrial espionage. People with age from 30 to 45 years old prevail among the criminals. People from 16 to 30 years old (37,8%) go under this category too.

“Swindling with advance payments” is the core of this article, as a real experience dealing with such swindlers exists. The most well known scheme of such swindling is so-called “Afriscam”. Here is the way the scheme works - a long and detailed email is sent from an African source, often the Nigerian National Petroleum Corporation (NNPC) or someone claiming to be a relative of the late military dictator Sanni Abacha. They try to find a partner to help in the recovery and distribution
of "surplus" contract funds, which cannot be exported from the country because of their strict exchange control regulations. The amount staggering anywhere from 20-40 million dollars is common! You are offered 20-25% for acting as the dummy contractor and up to 10% will be allocated for expenses all of it claiming to be legal!!!!! When the time for payment comes closer, after your claim has been vetted and approved (by agencies such as the Ministry of Finance and Central Bank through the fraudulent practices of crooked employees) you will be told that in order to release the funds you will have to pay an exchange control tax and administrative charge amounting to more than US$ 10,000. A more recent scam of this scheme emerged on the web. As the special services of US claim, the e-mail users get a message from the Commando who is at the moment serving in Afghanistan and during patrolling has found 36million US dollars, which is the money of Talibs, got from drug-business. And he asks for help to get the money out of the country.

During the last year 2600 people were swindled by this scheme in the USA. 16 of the Americans lost 345 thousand USD, and two of them - 70 thousand. Every year swindlers extort several million dollars from their victims.

But the most perfect swindling with advance payments occured right here, in Yerevan, with ARLIAN Consulting and Training Company. Very detailed research in Internet and oppinions of experts prove that this scheme is unique and quite unknown to the Insternet users. Below follows very detailed description of the event and the very scheme of cheating.

ARLIAN received a message via Internet, which was inviting the Company to take part in the tender, organized by UNDP Thematic Trust Fund in Benin (Africa). The message was sent by ZMS Australia Company, which claimed to be the UNDP contractor and this Company would present ARLIAN’s interests during the Tender process (it is a common practice of such tenders organized by UNDP). The tender was organized for supplying different products for the Least Developed Countries of Africa. In this invitation to tender no money and nothing in general was demanded. ARLIAN had to send only a Letter of Intend, confirming its willingness to participate, which was immediately done. A few days later an Invitation to Tender Package was received where the list of supplying goods was indicated. “ARLIAN” found here some Companies which are producing and were able to make supplies of Clothing and Blankets. Information was forwarded to ZMS Australia and a few days later the Company got a message confirming participation in the Tender of Supplies of above-mentioned products, for total amount of fifteen million dollars for two years. During all this and the rest process of Tender ARLIAN was in intensive contacts both with Australia and with its representative in Benin.

At this stage ARLIAN had to prepare a Bid Package. During this preparation the Company found out that it would have to pay about 13000 USD, if it was awarded. This sum of money would be applied to payment for Certificate of Registration and Certificate of Incorporation. Generally, when supplying goods for UNDP a company must get the Certificate of Registration, it is like an ID indicating that the company is now eligible to make supplies for any Project. And the Certificate of Incorporation was necessary for supplying to West Africa, that’s African Governmental bodies issued it. But ARLIAN wasn’t awarded yet, so it was still early to talk about the transfer. Anyway Executive of the Company had a private talk with UNDP office here, in Yerevan, and they confirmed that these certificates are common in such programmes and they advised to check everything in any case.

And here comes the very day that ARLIAN was notified of being awarded to make supplies of Clothing and Blankets for 15 million dollars to Benin, Africa. But now the money for these Certificates had to be transferred. Everything was too good to be true; this made everyone in the Company suspect. At first it was decided to insure the transaction, but none of domestic Companies would agree, and the international office demanded more time, which ARLIAN didn’t have. From time to time messages came from Australia and Benin, reminding not to hesitate and to make the transfer, they asked to display “corporate responsibility” and to comply with the regulations of Thematic Trust Fund, UNDP. What stopped the Company to make the transfer? The answer is very simple. ARLIAN didn’t possess such a sum of cash at that time and it was risky to take a credit. The demands to make transfer were becoming more and more pressing which made everyone here more suspicious. It was decided to find some more information about ZMS Australia Company via Internet. ARLIAN asked the representative of ZMS of such information. The latter sent the Code of Incorporation, the Authority, which registered the Company and the History of the Company. At first sight everything was in order. But research in Internet didn't bring any ZMS or the Authority they claimed to be registered at. Now ARLIAN's executive decided to request for information from UNDP Yerevan officially. They promised to request such information from Benin UNDP office. A day later, the very day the payment was due, following official letter came from Benin:

Why didn't ARLIAN check earlier, why they didn't contact the Benin UNDP office? What made them believe and what made them to be suspicious. What was in this case of swindling unusual? - almost everything.

The causes that made Arlian believe: there was no initial money demand, all the documentation was complying with international norms and ZMS Australia acted as a professional in procurement business, too much work was done by them and the very initial payment demand was very little, they weren’t changing neither the terms nor the sum of reimbursement, they didn’t use bulk e-mail method as usually such swindlers do, the source of financing was absolutely legal.

The causes that made Arlian suspect: too large sum for such a small Company, why they chose ARLIAN, everything went too easy, no information about ZMS in Internet.

As you can judge more factors were leading the Company in wrong direction, but they managed to avoid the crush.

Now some tips how not to be swindled:

1. Any message received, where it is talked about great sums and your bank account, is cheating

2. If you have bumped into more complicated situation, like with ARLIAN, first of all check out if such a Company exists

3. If it does, research all the information concerning the business they are proposing you to do together and find some experts in that field

4. If you must make some preliminary payment and you have no guarantee whether it is real and no chance to insure the transaction, just give it up.

And there is another, easier way to avoid all that stuff, when in doubt, delete.

Information sources:

1. “Internet Scams – Afriscams” by Alan H. Armitage, February 6, 2002, www.eHomeOpportunities.com.

2. “Scamming the Scammers” by William J. Dorgan, www.mmsonline.com

3. “Cyber scamming” by Tom Walsh, www.newsreview.com

4. “Web scams, part II” by Joel Pinaroc, www.INQ7.net

5. “Watch out for Internet Swindling” by Gary McCollum, www.kykernel.com

6. “Government reports sharp cyber-crime rise” by Will Knight, www.zdnet.co.uk

7. “E-mail вымогательстo” by Green Lion, www.zlo.bajan.ru

8. “В интернете появилась новая мошенническая схема” www.bestcards.kiev.ua

9. “Criminological Crime Characteristic in the Sphere of Computer technology”, by Vladimir Golubev, Computer Crime Research Centre, www.crime-research.org

10. Official documentation of ARLIAN Consulting and Training Company regarding ZMS Australia case.