According to the Ministry of Economy and Finance, 560,000 SMEs currently operate in Cambodia. Many of these businesses have built websites or listed themselves online. Without proper laws to license and regulate online identity, or verify if indeed a business actually exists, shadow websites can be hosted from anywhere and exist for as long as the domain remains active. Hence, online fraud imposes a real risk for businesses and consumers in emerging markets like Cambodia. Criminals in developing markets are continuously creating new models to deceive businesses, steal assets and identities, and potential revenue. With no sign of online scams abating, here is a recent anecdote from the Kingdom.
When Peter Mewes, English solicitor and foreign client liaison for HBS Law, received a call from a Singaporean CEO in late January, he recalled being immediately skeptical.Law firms frequently receive cold callers seeking out general advice, but, as Mewes recalled, this time was different.
The Singaporean CEO was inquiring about a particular lawyer, who, according to his LinkedIn account was a former employee of HBS. It also stated that this ‘lawyer’ was a Member of the Bar Association representing ‘large manufacturers and their multi-million dollar investment projects.’
“[The Singaporean] initially said he was involved with a group of investors who were represented by two lawyers from this law firm,” Mewes said, adding that the investors were following up on a substantial amount of money in escrow after communication had abruptly ceased. “Smelling a rat,” the Singaporean was trying to locate the office of the dubious law firm.
Following a quick search, Mewes found no records linking this alledged lawyer to HBS, nor a member of the Bar Association—the sole arbiter for registered legal practitioners in the Kingdom.
A further Google search led Mewes to a polished clean website that offered free legal consultations. A tagline exclaimed ‘Our history speaks for itself—we have never lost a case!’
A click onto ‘Our Key People’ led to a profile that claimed that ‘the lawyer’ ‘brings a deep understanding of contemporary Cambodian law and practice, with access to a rich and varied network of local gatekeepers.’
Mewes recognized the photo. “It was of a well-regarded registered lawyer operating in Phnom Penh, but the name was fake,” he said. Additionally, he and the President of the Cambodian Bar Association recognized other photos—one of which was of a prominent Cambodian politician.
A further check into the website made it immediately clear that all the profiles had been stolen from local lawyers and government databases.
“Basically, they were stealing identities and pasting them on the web to scam people out of their money,” said Mewes, adding after the Singaporean landed, he lost contact.
Online scams are nothing new. The most famous viral scam dubbed the ‘Nigerian’ or 419 scam—an upfront payment or money transfer scheme that uses low-cost email aggregation software to flood inboxes with promises of transferring vast amounts of wealth—has reportedly cost victims untold millions.
But fake websites, masquerading as legitimate enterprises are particularly acute in Asia where public data and information has little to no safeguards to protect corporate or personal identities. According to the Singaporean Police Force’s annual crime briefing for last year, scams involving e-commerce rose by 225.3 per cent. Regional statistics on online scams are virtually non-existent.
Unlike the Nigerian 419 scam, fake websites wait for victims to come seek them out after finding them through a search engine. Because these websites can be hosted from anywhere in the world, it is difficult for governments to track their origin or prosecute individuals.
According to Mewes these websites can cost victims millions, but they “also adversely affect companies’ or individuals’ reputations” due to the fact that they often replicate established names and enterprises.
The uncovering of this scheme led to the Bar Association of Cambodia issuing a public warning on February 2 2015, stated that any consulting company or law firm or a legal adviser must have the permission of the Cambodian Bar Association or is otherwise illegal, as Voice of Democracy Cambodia reported.
Bun Honn, president of the Bar Association, said in the statement that this was the first known instance that Cambodian law firms had been targeted by online scams.
Mewes believes this underscores the importance of due diligence before undergoing “any project or transaction, whether that is for accountants, architects, engineers or lawyers,” he said.
“As far as lawyers are concerned, this is easy, and can be done by enquiring at the Cambodian Bar Association about whether a law office is registered and regulated by the Cambodian Bar Association,” he remarked.
Also, he advises the public that people should check with professional organizations to see if they are appropriately registered and regulated to give professional advice. And to “visit their offices to see if they are really there or whether it is just an empty shell,” he said.