ECONOMIC EFFECT OF ADVANCED FREE FRAUD IN BANKING SYSTEM
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ECONOMIC EFFECT OF ADVANCED FREE FRAUD IN BANKING SYSTEM
Chapter One
INTRODUCTION
1.1 Background to the study
An advance-free fraud is a confidence trick in which the victim is convinced to advance huge quantities of money in the hope of making a considerably larger profit.
The Nigerian Letter (also known as the 419 fraud, Nigerian scam, Nigerian bank scam, or Nigerian money offer), the Spanish Prisoner, the Black money scam, and the Russian/Ukrainian scam are all variations of this type of scam.
Both the so-called Russian and Nigerian scams represent vastly different organised crime traditions, and they thus employ entirely different approaches.
The 419 scam began in the early 1980s, when Nigeria’s oil-based economy was in decline. Several unemployed university students first used this scam to trick business visitors interested in shady deals in Nigeria’s oil sector, before moving on to businessmen in the West and, eventually, the general public.
In the early to mid 1990s, scammers targeted businesses by sending scam messages via letter, fax, or telex. The widespread use of email and easy access to email harvesting software significantly reduced the cost of sending scam letters via the internet.
In the 2000s, the 419 scam inspired imitations in Africa, Asia, and Eastern Europe, as well as more recently in North America, Western Europe (primarily the United Kingdom), and Australia.
The number ‘419’ refers to an article in the Nigerian criminal code (part of chapter 38: “obtaining property by false pretences; cheating”) that deals with fraud. According to the American Dialect Society, the term “419 fraud” first appeared in 1992.
The advance-free hoax is comparable to a far older swindle known as the Spanish Prisoner scam, in which the trickster would convince the victim that a (fictitious) rich prisoner had offered to share (non-existent) treasure with the victim in exchange for money to bribe jail guards.
According to Insa Nolte, a lecturer in the African Studies department at the University of Birmingham, “the availability of e-mail helped to transform a local form of fraud into one of Nigeria’s most important export industries”.
Embassies and other organisations warn travellers to several nations about 419. Nigeria, Ghana, Benin, Cote d’Ivoire (Ivory Coast), Togo, Senegal, and Burkina Faso are among the West African countries that have issued warnings. South Africa, Spain, and the Netherlands are among the countries outside of West Africa who have received 419 alerts.
This scam typically begins with a letter or e-mail supposedly delivered to a specific person but actually distributed to many, offering an offer that would eventually result in a significant payout for the intended victim.
The subject line of an e-mail frequently reads “from the desk of Mr. (Name)” or “Your assistance is required,” among other things. The specifics vary, but the common theme is that a person, generally a government or bank official, is aware of a substantial sum of unclaimed money or gold that he is unable to access directly, usually because he has no right to it.
Such people, who may be real but impersonated people or fictitious characters played by the scammer, could include the wife or son of a deposed African or Indonesian leader or dictator who has amassed a stolen fortune
or a bank employee who knows of a terminally ill wealthy person with no relatives, or a wealthy foreigner who had deposited money in the bank just before dying in a plane crash (leaving no will or known next of kin), a US soldier who has stumbled upon a The money could take the shape of gold bullion, gold dust, money in a bank account, so-called “blood diamonds,” a series of checks or bank drafts, and so on.
The quantities involved are normally in the millions of dollars, and the investor is offered a big part, typically ten to forty percent, provided they aid the scammer in reclaiming the funds.
While the vast majority of receivers do not respond to these emails, a small minority do, which makes the fraud worthwhile because millions of messages can be sent.
Invariably, big sums of money are reported to be required in advance for bribes, fees, and so on – this is the money stolen from the victim, who believes he is investing to make a large profit.
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