Yellowknife (Jan 12/05) - Police are warning Yellowknife businesses to beware of fraud after Internet scammers tried to bilk a city bed and breakfast out of more than $2,000.

"People should use extra caution when being contacted to provide services over the Internet," said Const. Glen Demmon, with the RCMP's commercial crime section.

"There are hundreds of illegal operations out there designed to take advantage of unsuspecting businesses."

In this case, a Los Angeles-based scam ring sent a $3,000 cheque to the bed and breakfast in November as a room deposit. In mid-December, the scammers cancelled the reservation and asked the business to refund their money, less a commission, via a wire transfer to Nigeria.

Already suspicious, the business owner went to the RCMP. Investigators quickly discovered the cheque - purportedly from a bank in Missouri, was counterfeit.

The con-artists were hoping their "deposit" would be wire-transferred to Nigeria before the bank realized the cheque was phony, leaving the bed and breakfast owner responsible for the tab, Demmon said.

"Luckily though, aside from the lost revenue from the room, the business owner didn't lose any money," he said.

The plot was a variation of the "Nigerian" or "advanced fee" scam, Demmon said. In that-well known Internet ploy, con-artists promise their target a hefty commission for helping a wealthy businessman, government official or royal personage to transfer millions of dollars from their country.

Inevitably, scammers will tell their targets there is a problem with the transfer, Demmon said. They will ask for money - an advanced fee - to cover paperwork costs or bribe corrupt government officials. The commission money, however, never arrives.

According to estimates, the scam has bilked North Americans and Europeans out of hundreds of millions of dollars. It is so widespread, the Nigerian government has a section of its Web site devoted to the fraud, though scammers have been using names of other countries for years.

Tracking advanced-fee scams is extremely difficult, Demmon said. Some con-artists send the fictitious emails from Internet cafes, so they cannot be traced.

More sophisticated operations will pirate computer signals - known as IP addresses - from unsuspecting users, masking their actual location.

Investigators were able to trace the source of the scam that targeted the Yellowknife bed and breakfast to Los Angeles, but Demmon said "it is hard to say if they will be caught."

The evidence gathered by Yellowknife commercial crime unit was transferred to Phonebusters - a joint operation between the RCMP and the Ontario Provincial Police that compiles information on internet and telephone scams.

Investigators comb the massive database searching for common traits and tracking new schemes.

But because the con-artists are so difficult to track, police often have to wait until criminals "slip up" by re-using an IP address or transfer location, Demmon said.

"Sooner or later though, they usually make a mistake," Demmon said.

* Use common sense. A promise of a lucrative award for minimal effort on your part is probably too good to be true. Don't even respond to the email.

* Avoid transferring money to far-flung locations through wire services like Western Union. Scammers often collect the money using fake identification and disappear.

* Business should be wary of cheques. Never offer a refund of a deposit until the cheque has been cleared by the bank. This can take 3-5 days.

* When dealing with unknown companies, ask for their business license to verify they exist.

* Report any suspicious financial requests to the RCMP or Phonebusters at www.phonebusters.com.