Inside a Wine Scam, Part I: How the Wine Scam Works

This isn't the first time a wine blogger or reporter has written about the Nigerian wine scam.  There's a pretty funny riff on the 419 'advance fee' scam, written by Jack at Fork & Bottle and published by Alder Yarrow at Vinography. Ric at TORBWine holds the evil Nigerian forces at bay even though they want to order Dom Perignon.

Nigeria is a poor country, but you've got to give them credit for hard work.   FraudWatchers offers internet chat forums for victims and fraud watchers, but the moderators there also have a separate forum for scammers who post there.  The subforum heading reads, "This forum is where all posts made on this board by criminal scammers (yes, they really are *that* stupid!!) are placed for the search engines."  I got a kick out of  Another Genius Scammer.

So why are people still victimized?  Who is taken in by these offers?  Intelligent, professional people.  An AP news wire documents the case of a county treasurer in the Lake Huron area of Michigan who embezzled $186,500 from county tax payers for a Nigerian scam.  Greed and ego are often a big part of the game, as illustrated by The New Yorker in an article about a Christian psychotherapist who got involved in a 419 scheme.  But retirees who have never gotten comfortable with the internet are also prime targets.  Some professionals work behind corporate or government firewalls which protect them at work . . . leaving them innocent and untutored when it comes to their personal internet time.  The same thing goes for professionals who spend their days at a desk job, on a sales floor, or in a wine cellar. 

And the scammers make it seem so easy and risk-free.  "I have an American credit card," they say.  "I just want to order some wine, and I'll have my own shipper pick it up."

And that's the point of the whole scam . . . the shipping fees.

First, the scamster orders wine from the winery or retailer.  But there's a problem.  He lives out of the country.  He knows this is inconvenient for you, so he'll ask a shipping firm he's used before to pick up your wine, and take care of all the export documentation.  All you need to do is charge his credit card for the sale and the shipper's fees, and then wire the transportation fees to the shipper, as they are not set up to take credit cards.  How easy is that?  Cha-ching, cha-ching.

Because the wine is being shipped overseas, the cost of shipping is high--maybe $200 a case.  An order for 10 cases of wine would involve $2,000 in transport fees; a pallet of wine would be about $11,000.

Credit cards are the preferred method, because all the numbers are stolen.  Sometimes they offer a money order instead.  Few people know that although a bank may report that a money order has cleared and you have access to the funds, the order can still be voided. 

There's a growing problem with credit card fraud, however, and that's the increasing use of Fraud Alert programs.  Fraud Alert will trigger an alarm whenever there is 'unusual activity' on an account.  To get around that, fraudsters will ask that you split the transaction between 4 or more cards. 

Once the charge has 'cleared' you are asked to forward those nice fat shipping fees to their shipping company's "US representative."  This may involve a wire transfer to a bank, but frequently it involves an internet MoneyGram or Western Union transfer.  Most of these scams originate in the educated but economically devastated region of Lagos, Nigeria.  The US 'representative' who receives the funds takes a commission on the fraudulent sale and then forwards the rest of the money to the originators in Africa. 

Sometimes the bogus shipping company will actually pick up the wine, in which case the retailer will be out the money and the wine.  However, this involves a face-to-face encounter that most scammers are anxious to avoid.  According to a California police detective who asked not to be named, it is rare that the wine order is actually picked up.  Wine is difficult to sell or unload.  It also means that the scammers will have to use a front man in your region, and they would really prefer to use someone several states away from you.  Unknown brands will probably not be picked up as the scammers are really after the shipping fees, although the officer did relate finding cases and cases of expensive wines in wood boxes in one search.

In our next post, we will actually talk to a scammer and find out what he wants us to do.

Comments

[Kevin Rupy]

Mary: We encountered this scam a few weeks back. Fortunately, when I typed in "John Nelson" "Seoul" and "wine" into Google, your blog entry came up. I was immediately suspicious when I first received the e-mail (for many of the reasons you mentioned), but your blog entry just confirmed my suspicions.

Great blog by the way!

Regards, Kevin

[Mary B.]

Kevin, thank you for your comments! It is always good to hear that our series helped to confirm one's suspicions regarding these fraudulent orders.

[tv bracket]

That is scary! I thought the nigerian scam only work in form of lotteries and similar stuffs. I didn't know they would do it like a real honest business.