Preying upon the innocent: money mule fraud increasingly common

Money mule activity is on the rise, as revealed by the latest figures from CIFAS – the UK’s Fraud Prevention Service. Of all the fraud types during the first ten months of 2011, the most disconcerting rise is in misuse of facility fraud, which has seen a 12% increase compared with the same period in 2010. Although misuse of facility fraud is where an account, policy or other facility has been legitimately obtained but is later used fraudulently, a large proportion of the frauds display the hallmarks of ‘money mule’ activity; where a fraudster recruits another (often innocent) party and uses his or her account to launder money on their behalf. A rise of 7.5% in the misuse of bank accounts (of which 6% is an increase in the misuse of personal current accounts) during the first 10 months of 2011 demonstrates the scale of the rise.

‘I was left to carry the can’: the personal cost

Unfortunately, many of the frauds bear the hallmarks of ‘money mule’ activity – where fraudsters recruit accomplices.  Such accomplices can include those who know exactly what they are getting into, but also those who are innocently duped individuals. Then, under the guise of offering employment, seeking a personal favour, or through internet shopping sites and so on, the recruits are persuaded into receiving what are essentially fraudulent payments and then passing funds on.  Frequently, a small ‘thank you’ or incentive is offered in the form of a payment for the service/costs/inconvenience incurred. Such was the opportunity offered to JB – a second year student – who saw a ‘working from home’ offer advertised on a popular website:

“Obviously, extra amounts of money for only a few hours work per week from home seemed ideal. I never questioned it, as there seemed nothing untoward: I would be a sales and delivery agent for some legitimate goods, working for a small company. For arranging some ‘sales’ and sending the goods, I’d receive a cheque for pay and costs, and then forward money to my ‘employer’. The first few months were fine when – after a very successful month – I got a phone call from my bank saying that the cheque for my pay and costs that had just been paid in was fraudulent, and investigations had proved that the account from which it was drawn was fraudulent too. I was out of pocket and suspected of being “in on it” of course.”

This kind of confidence trick is one example of a money mule recruitment scam: making an apparently legitimate offer, allowing things to progress smoothly to begin with (so that the money mule unwittingly assists in the movement of criminal funds) and then robbing the victim.

“I feel kind of foolish” says JB. “In many ways, I should have suspected something, or maybe done more research – but after a few months with no problems, you’re convinced. In the end, I was left to carry the can for a criminal and had to demonstrate to my bank how I had been duped.”

‘They’re using my hard work as a shield’: the business’ cost

Money mule activity, however, has begun to take on a new disguise; by making use of another company’s name to mask criminal activities. This is what happened to Lisa Pearson, Managing Director of a well established travel company: who was horrified to be asked by a concerned stranger whether an email purporting to be from a personnel manager at the company was genuine.

“I was really alarmed. In many ways it was obvious – the name of the ‘manager’ was spelled differently in the subject line and the body of the text, and the email would never have passed a simple proof reading exercise. But it might still dupe people, especially busy ones who skim-read emails quickly. The worst thing, of course, was that they were trying to hide behind my company name and my company website, and using my hard work as a shield. It’s disgusting. Although they’re using my corporate and not my personal details to defraud another company, the situation is practically identical: duping others into acting criminally under the pretence of working for me. All, of course, using the internet – making it even harder to track the culprits down and stop them.”

This approach, once again, bears all the hallmarks of money mule activity – documents may be badly written, with grammatical and spelling errors, (this has the potential to make those with a different first language more vulnerable as such errors can be harder to spot), ease of process, requests to send money and receive money and tricks designed to instil a sense of ‘this cannot be fake’ in the victim. This case, however, adds insult to injury by victimising both a company and the unwittingly recruited mule.

Warnings from CIFAS

CIFAS Communication Manager, Richard Hurley, comments: “Whether they are referred to as scams or frauds, the effect is the same: people are duped into committing fraud. This often leaves the innocent victim who acted as the mule needing to prove that they were duped. This can be a truly traumatic experience for the mule victim: committing fraud can have some very serious consequences, as businesses have a regulatory and commercial requirement to suspend or close accounts that are involved in fraud.

“As a result, our advice would be that, if you receive an offer that seems too good to be true, or where there is no reason why you in particular have been approached, apply a reality check. Being asked to receive and then pay monies while keeping a fee for your services – whether for an individual or company – will almost always prove to be nothing more than a scam designed to use your good name and financial records to mask someone else’s criminal greed. And it is the mules (even the innocent ones), not the fraudsters, who are left to sort out the consequences.”

Notes to Editors:

1.   CIFAS is the UK's Fraud Prevention Service with over 260 Member organisations spread across banking, credit cards, asset finance, retail credit, mail order, insurance, investment management, telecommunications, factoring and share dealing and the public sector.  Members share information on identified frauds in the fight to prevent further fraud.  CIFAS is unique and was the first data sharing scheme of its type in the world.  Other schemes modelled on CIFAS have been set up in Southern Africa and Germany.

2.   Common examples misuse of facility fraud include, but are not limited to: using an account to pay in counterfeit or stolen cheques or fraudulent electronic payments, claiming unauthorised withdrawal claims from accounts that are subsequently demonstrated to be fraudulent, and setting up fraudulent direct debits or standing orders.

3.  The following table shows a summary of the misuse of facility frauds recorded by CIFAS Members, broken down by product type.

4. Case studies and victims’ details have been anonymised at their request.

5. Examples of further email recruitment scams are available upon request. Information and a variety of other historic money mule scam emails can be found online:  http://www.banksafeonline.org.uk/moneymule_examples.html

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