How the Scheme Works:
- A law firm is contacted regarding representation in an alleged debt collection matter by what appears to be a legitimate prospective client (“the Creditor”).
- The law firm agrees to help and sends a demand letter to the alleged debtor (“Debtor”).
- The Debtor immediately agrees to pay the debt and sends what appears to be a valid cashier’s check to the law firm.
- The law firm deposits the check into their client trust account and transfers the value to the Creditor via wire, less any legal fees agreed upon.
- The law firm’s bank then discovers that the check is actually fraudulent and the trust account is charged back the value of the check.
- Because the wire has already been sent to the Creditor, the law firm is left to suffer the financial loss.
Variations of the Scheme
Though the structure of the scheme is primarily the same, there can be some variation regarding the reasoning for the debt and engagement of services as well as the types of fraudulent checks.
- In one common scenario, the subject alleges to be collecting a debt from a family member through marriage. The debtor’s name is usually something innocuous and common, likely to increase the chances of someone by that name residing in the victim’s area.
- In another variation, the alleged debtor is a business and the purported dispute is over a workplace injury complaint. The name of a legitimate global technology company is currently being used in this type of scheme. However, in these scenarios, the victim may be a genuine business who is themselves a victim, or a fraudulent business designed by the subject to facilitate the scheme.
- Many of the cashier’s checks involved in this counterfeit check scam are seemingly drawn from a genuine Canadian bank, likely increasing the time it takes to verify the validity of the check and available funds.
- The creditor is also often located internationally, which is used to assist the scheme by offering justification for delayed communication and/or other excuses the subject employs throughout the scheme.
Tips to Protect Yourself
- Be suspicious of requests or pressure to take action quickly. A number of potential victims were able to successfully identify the fraudulent check by adhering to policies which required a delay or hold on the funds until confirmation that the debtor’s check had indeed cleared into their client trust accounts.
- Consider additional financial security procedures, such as two-step verification or telephone calls (subjects tend to prefer written correspondence), to verify transaction details and identity information, prior to wiring funds.
- Contact your financial institution immediately and request that they contact the financial institution where any wire transfer was sent to determine if it is able to be recalled or the funds frozen in the deposit account.
The FBI requests victims of an internet crime file a complaint with the Internet Crime Complaint Center (IC3) at www.ic3.gov.
