Letter of credit or prime bank fraud

This occurs when a person pays a portion of money to receive in exchange a bigger amount or a thing of bigger value. Oftentimes, it requires victims to sign contracts agreeing to pay a certain bond or fee in anticipation of a financing plan that the perpetrator promises to provide. After paying the fee stipulated in the contract, the victim will then be told days after that he did not meet the requirements to qualify for the financing scheme. The fees paid are non-refundable. (Common fraud schemes, nd) Because of the internet, it is easy to endorse this scheme to unsuspecting victims. It is likewise hard to identify real loans with the not.

Advance fee schemes often take the form of a loan. The suspect entices the victim to sign up for a pre-approved or an easy-term financing option. Insurances can be prey to internet criminals too. There have been cases of companies charging the plan with medical equipment and supplies that were never really bought or delivered in the first place. Fake tests and tests which never really happened also proliferate. Medicare can also be a target when criminals find their way into senior citizen’s Medicare numbers and forge signatures and doctor recommendations to withdraw money from the plan.

(Common fraud schemes, nd) More than 500 convictions were made in 2006 out of 2,400 cases of alleged Medicare fraud reported; 54 cases of insurance fraud has been closed with convictions out of 233 reports. (Financial Crimes, 2007) A special concern here is less privacy caused by the openness of internet access. While this is also an individual concern, this is more of a problem of the insurance companies as well. With a million people served by insurance benefits, governmental or private, it is doubly difficult to check identities one by one and to verify signatures and claims especially those filed online.

Thus, many suspects get away with this activity. Criminals may send emails that sell or solicit money in exchange of high yields or goods. Often, these yields are non-existent and good may be inferior or brought out of fake documentation. Banks and individuals are often asked by these types of criminals to deposit money into an account which the criminal can then launder. (Common fraud schemes, nd) Letters of credit are issued by banks to people who have established enough and authentic documentation that they have shipped something of value to the country where the bank is.

It usually involves international transactions. In a fraudulent scheme, the documentation will either be falsified. In this case there is no real shipping. In case there is a real shipping, it usually involves good of inferior quality, which value is far lower than the amount declared for credit in the letter. It is easy to do this with the internet because of online filing and difficulty of verification of online transactions. It is often difficult to single out this type of fraud with legal transactions but still detectable with keen observation. Ponzi and pyramid scheme

Ponzi and pyramid scams occur when a principal recruits downlines and asks money to be invested in the company. Each investment will then be deposited into an account and yield regularly. In the beginning, the Ponzi scheme really pays off. Thus, senior downlines are encouraged to recruit more new downlines. The problem occurs when the main principal flees with all the invested money and the premiums, or when the pyramid collapses because there are no new recruits to sustain the group and the fees that have to be paid to each. (Common fraud schemes, nd)

The pyramid scheme is also known as franchising scam as it often disguises as a franchising opportunity for a business or selling of several products. However, the income that one can generate in this business is not through the sale of the products. The products are often hard to sell, inferior in quality, or super-priced, and so no one would be interested to buy them. The real money, so to speak, in the scheme comes from recruitments, where principals earn hefty percentages for every recruit of recruit, and all other recruits from there onwards.

The internet is a landmine of these scams. Despite restrictions, there exist many websites that offer these recruitment and franchising plans. Sadly, despite many victims, there are also many new ones that fall to the trap. Other fraudulent internet schemes There are many other schemes that occur in the internet on a daily basis. Auctions have been a popular playground for many perpetrators. They post products up for bidding in legal auction sites such as eBay and outbid their own products to increase the bidding prices.

Some merchants will also post products for auction but never delivers them to the winning bidders. Another form of fraud online is the proliferation of fake lotteries and raffles which tell unsuspecting email recipients that they pre-qualified for lottery or raffle tickets that they can pay at a lesser price than that offered to the general public. Some may also include testimonials of past winners. They are often graphically represented with a check worth thousands or even millions of dollars, and that the check can be encashed when their lottery or raffle ticket won.

Of course, there is no raffle or lottery… the suspects getaway with the money they accumulate from their ticket buyers. Lastly, there is phishing. It is characterized by a mail, often with request for reply or a web link. The web link will then direct to your bank website, but this is actually a fake clone site. The site will prompt you to log in (for verification) and voila! The thieves now have your username, password, and accounts. Some perpetrators can withdraw as much as 100% of the money, depending on the current balance and the bank, in a matter of minutes.