New Fraud Tactics in the Mineral Trade

 

By Tony Nikischer

Excalibur Mineral Corp.

 

While mineral collectors as a group are probably among the most honest of individuals, new fraud tactics have slowly crept into the mineral trade, much a result of the instantaneous nature of the internet age. Whenever and wherever money is to be made, there will always be unscrupulous individuals who will try to make it, take it, or just plain steal it, without regard to right, fairness or legitimate ownership. And this seems to be occurring now in our hobby, from a dealer’s perspective, with alarming and widespread regularity.

 

As a mineral seller for more than thirty-five years, I can attest to the generally reliable and honest nature of the vast majority of collectors and dealers. I can count on one hand the number of bad checks and disappearing customers who have successfully made off with the spoils of mineral theft from my firm during that time. There were, certainly, a good number of scoundrels to be dealt with from both sides of the table, but in our small community, it was easy to spot them, and their names were soon known to all. Loose organizations like the Species Mineral Dealers’ Association in the early 1980’s were good vehicles for identifying collector miscreants, and they were quickly shunned by the selling community as a whole. Likewise, dealers who doctored labels, misrepresented specimens or knowingly sold specimens with significant, undisclosed repairs became quickly ostracized.

 

Beginning in 2003 and perhaps earlier, as the internet crept into the corners of many third-world countries, new scams assailed email users by the carload! “I will give you a share in the $5,000,000 my uncle, a deposed general, hid from the ruling junta before he died, if you can advance me the $4,700 I need to secure it and bring it out of the country. I’ll come and pick it up as soon as you can have it ready.” Or how about: “You’ve won $175,000 in our lottery, all we need is your social security number and bank info so that we can transfer it into your account right away!” A modern favorite: “Your Pay Pal account has been compromised; click here to unlock your account and set up new security passwords.” Really!

 

While it was fun to spot the obvious crooks and sometimes string them along (notifying the Nigerian embassy, the FBI, the local gendarmes etc. was useless, of course), their efforts were often crude and unconvincing for most. (I recall suggesting to one faker that I knew he was holding out on me, because his brother was offering me twice as much from the hidden gold cache he was describing. Imagine my delight when he confessed to doing so, and now he was willing to let me have it all as a measure of his goodwill!)

 

Recently, however, it has become clear that a new breed of thief has infiltrated the mineral market from the customer side, often facilitated by the speed of communication and commerce that typifies today’s internet-driven markets. It is also clear, however, that many of these modern thieves often have little interest in minerals; it is still just plain old money that drives them. But now, their targets are more frequently directed to small, internet-based merchants that so typify many of today’s mineral dealers.

 

As early as 2006, the use of completely fraudulent checks and money orders began to appear with some regularity in the mineral trade. Many were exceptionally well done, a credit to the printer’s art of counterfeiting (see illustrations - Editor). The typical scam would go something like this:

 

An email arrives from a “new customer” who wants to know what the dealer has available in XXXXXXXX. The dealer dutifully responds with a quote, perhaps some photographs, perhaps a few links. The “customer” writes back via email that he will pay by bank check (or money order, or certified check), and he wants ten (10) of that item – and the money is already on the way- can you ship them immediately?

 

Well, no one in their right mind ships expensive merchandise to unknown clients these days without seeing the money first, and besides, you only have one of these, not ten! You advise the “customer” by email accordingly, and he says, “No problem, prepare it for shipment, but the money is already on the way.” Lo and behold, the bank check/money order/certified check arrives shortly thereafter, made out for ten times the value of what you can ship.

 

 

 

 

 

 

 

 

 

 

 

 

 

Within a day, the “customer” calls or emails, saying, “Just ship the one you have now (immediately by Express Mail, by FedEx etc..) to my office in London; I trust you, so just send me a refund check for the difference.” If your alarm bells haven’t gone off by now, you will lose it all, as the check/money order is, naturally, a complete fake. You have shipped the piece, deposited the check, and the check has bounced (of course). Your refund check has already been cashed; you lose! Variations include the “customer” came to pick up his merchandise, walks away with your refund check (assuming you weren’t robbed outright by the intruder), and the result is the same: you lose.

 

Perhaps you accept credit card payments, as most dealers do these days. You should immediately be wary when a “new customer” emails you, asking if you accept credit cards, and do you ship to YYYYYYYYY (where “Y” can be Texas, Hong Kong, Australia or anywhere else in the world). Also, they want you to include your website address so that they can make a proper selection from what you have in stock. Why the questions?

 

Well, here’s someone who has probably secured thousands of email addresses using a web crawler, and they have sent that same message to those thousands of merchant email addresses. If they were a legitimate mineral collector, they would likely know your web address, what you sell, and, in all likelihood, what forms of payment you accept, where you ship to, how you ship, etc. They are setting you up for a fraudulent credit card transaction, using a stolen or bogus credit card. Should a dealer ship an expensive item, only to discover the card was stolen, it becomes a major undertaking to attempt reimbursement either through the card processor, your bank or through private insurance. Your material is gone regardless, most likely soon to be sold off elsewhere.

 

Another scam now emerging with some regularity is what I call “the one time customer double bill”, a take off of the old “I never received your package” scam. Unfortunately, some of these perpetrators appear to be genuine mineral collectors who are just trying to steal specimens for their collections. They often disappear after their first “buy”, and you’ll recognize them after the fact. Their scenario usually works like this:

 

A “new customer” makes a few inquiries, eventually settles on a sizeable order, and pays with a debit card. Within a day or two of shipping the items, you get a frantic telephone call and a couple of emails stating that you double-billed their card, and they want you to immediately credit one of the double billings to their account. As proof, they send you an email copy of their “on-line banking statement” (less account numbers and other pertinent info) that shows your transaction posting twice to their account. On top of everything else, they are not happy with the order and are filled with complaints about the material you shipped.

 

Mistakes do happen, but if you don’t check thoroughly at your end, you are about to lose the specimens and the credit/debit card deposit if you issue an immediate refund. Quite simply, there is no double billing. The statement they have emailed you is an electronic fake, carefully composed for your benefit. In your haste to mollify a seemingly and rightfully irate and unhappy customer, you may simply issue the credit/refund without due diligence. You may even forget about it once it is buried with other transactions of the day. The customer will probably never be back, nor will you have any success in getting your money or material back. You have lost once again. The lesson: be patient, investigate with your own bank and card processor before succumbing to the double billing ploy.

 

I have started to build a small collection of bogus financial devices like those illustrated in this article. Some are well-executed, some are crude, all are dangerous to the unwary dealer.

The unfortunate caveat to dealers: be suspicious of large transactions from unknown customers that require you to ship immediately or have picked up at your place of business. Be especially wary of large overpayments or supposed billing errors that require immediate and substantial refunds. Use your bank or credit card processor’s fraud detection capabilities before processing such payments and refunds. No one in authority will be interested in aggressively pursuing these thieves once you have been stuck, so be careful! Dealers who would like to learn of assorted, satisfying vengeance tactics against these predators, please email me for some harmless but immensely annoying scams of your own that can be directed back to the source of your pain….