U.S. Warns Nigeria Over Net Fraud

Online schemes operating out of Nigeria that have defrauded victims 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 crime syndicates are using the anonymity of the Internet to reap a windfall. One often-used form of fraud is known as "419"--a reference to Article 419 of the Nigerian criminal code--and involves scam artists sending unsolicited e-mail, faxes, or letters 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 they 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 United States, the United Kingdom, and South Africa. The global scam began in the early 1980s and had defrauded victims of $5 billion as of 1996, according to the Web site.

Europe Hit Hard

The 419 scams and other forms of online fraud are damaging the budding Internet markets of West Africa because consumers have grown wary of doing business with Nigerian companies and those in neighboring countries. Europeans have been victimized more than have others by the fake online investment deals, 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 of more than £24 million ($37.2 million).

Scams Spreading

Some practitioners of online fraud are full-time professionals who have set up sophisticated but bogus e-commerce shop 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 technological literacy is improving rapidly with government aid. Of these nations, only Ghana has a viable computer crime act on the books. The Nigerian government has set up a special fraud unit staffed by people from a range of agencies including the State Security Service and the Nigeria Intelligence Agency. The fraud unit has made many arrests, but as yet no one has been successfully prosecuted, according to news accounts.