use Encode;  # add this if you don't have it already

if ( param('select') )  {   #If User selected an item from the drop down menu
   my $selected_file = decode('utf8', param('select'));
   unless ( grep { $_ eq $selected_file } @display_files ) 
      #If User Selection doesn't match one of the passages then its a Fraud!
   {
      ...