Phony phone scam

Brent Finnegan -- December 15th, 2008

Today an hburgnews reader emailed this report of a scam phone call he received in Harrisonburg:

I got a phone call from a company claiming to be Verizon, our business provider, trying to right a switch back from an “error” with the account. The “representative” claimed our business account was switched to residential for 10 days and they were calling to switch that back. This verification would include a “third party” where I’d have to give yes or no answers to verify our account.

I hung up, called Verizon directly, and the Verizon rep confirmed it was a scam happening in “all four of our states.” Not sure how widespread this is, but there could be more of these calls in our community.

According to Verizon’s website, this is called the Social Engineering Scam:

A classic example is a scam Verizon saw a few years ago, involving a person who calls your home and claims to be a Verizon representative. The person says you overpaid your last phone bill and they need some information from you — which might include your Social Security number — to process a refund check.

On December 8, the HPD sent out a financial crimes report. While the police report does not include the Verizon scam, it does detail several online scams; the sort that sound so fishy, you have to wonder how people fall for them.

3 Responses to “Phony phone scam”

  1. Grant Penrod says:

    Unfortunately, these scams are common and very often successful. I worked with quite a few victims in the 3 years I was at Blue Ridge Legal Services and know one person who was contacted by a scammer but was too smart to fall for it.

    The scams all involve a check or money order that is delivered to the victim to deposit in their bank account (although in at least one case the scammer actually deposited the money in the victim’s account directly). The scammer then has some reason why a portion of the money needs to be returned or forwarded somewhere else – taxes, mistaken overpayment, a co-beneficiary, etc.

    Every victim I talked to was smart enough to be suspicious, and asked their bank if the check was good when presenting it for deposit. The bank runs the check, finds nothing wrong, and clears the funds for use by the victim. The victim sends the requested money back to the scammer and usually (but not always) spends the rest. Days later the bank discovers that the scammer’s check was no good, pulls the money back out of the victim’s account, and more likely than not charges the victim with the resulting overdraft fees.

    So how does this work? When the victim presents the check to the bank and asks if it is good, the bank “provisionally clears” the check and releases the funds. This essentially means that the bank thinks it is good but don’t have the money yet, and release the funds to the victim anyway. Under the banking laws, the victim is still responsible for the deposited check until it “finally clears,” so when the check turns out to be bad the victim is left holding the bag. Most banks do not explain the difference between the check being “provisionally cleared” and “finally cleared” so the victim has no reason to suspect the check is no good once the bank releases the funds to the victim.

    Unfortunately, legal challenges arguing that the bank should be at least partly responsible for telling the victim the check had cleared are uphill battles due to the way the banking laws are written. Some banks have been willing to work with the victims and not leave them holding the whole bag, others have not. Due to the magic of the Internet the scammer is long gone and virtually untraceable.

    People fall for the scam for a combination of reasons – they trust the bank’s word that the check is good, some are at least a little bit greedy and want the free money, and all are honest enough to send part of the money back as requested by the scammer. Someone who was really greedy would just keep all of the money for themselves and send nothing back.

  2. Thanks for the insight, Grant. I’ve fallen for one scam in my life (it wasn’t online) which has made me eternally suspicious of just about everything claiming that it/they can make me easy money.

  3. Grant Penrod says:

    Thanks for bringing it to people’s attention. You do good reporting.

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