Computer Crime Research Center

U.S. warns Nigeria over online fraud schemes
(By Gideon F)

Online schemes operating out of Nigeria that have defrauded victims out of tens of millions of dollars have become so pervasive that the U.S. government has given the West African country until November to take steps to decrease such crimes or face sanctions.

Financial fraud is now reportedly one of the three largest industries in Nigeria, where the anonymity of the Internet is being used to give crime syndicates a windfall. One oft-used form of fraud is known as "419," a reference to Article 419 of the Nigerian criminal code, and involves scam artists sending an unsolicited e-mail, fax or letter proposing either an illegal or a legal business deal that requires the victim to pay an advance fee, transfer tax or performance bond or to allow credit to the sender of the message.

Victims who pay the fees are then informed that complications have arisen and are asked to send more payments, according to The 419 Coalition Web site, which explains the scam, offers rules for doing business with Nigerian companies and individuals and provides specific instructions for recourse to residents of Canada, the U.S., the U.K. and South Africa.

The global scam, which has been going on since the early 1980s, had defrauded victims out of $5 billion as of 1996, according to the coalition.

The 419 scams and other online fraud are causing damage to the budding Internet markets of West Africa because consumers are wary of doing business with Nigerian companies and those in neighboring countries. Europeans have been victimized more by the fake online investment deals than have others, according to government and media reports.

The U.K. National Crime Intelligence Service has counted more than 78,000 letters linked to online schemes sent to London residents. The letters have defrauded residents there out of more than $37.2 million.

Some of the criminals are full-time professionals who have set up sophisticated but bogus e-commerce fronts with high-class Web sites, according to Emmanuel Akutu of Softrail Nigerias.

The online criminal activity has spread to other countries, including Ghana, Liberia, Togo and the Ivory Coast, where technology literacy is improving rapidly with government aid. Of all these nations, only Ghana has a viable Computer Crime Act, which was one of the first in the world.

The Nigerian government has set up a special fraud unit. Its members come from a range of agencies, including the State Security Service and the Nigeria Intelligence Agency. The fraud unit has made many arrests, but no one has been successfully prosecuted, according to news reports.


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