Advance Fee Schemes
What Are They?
Advance fee schemes generally occur when victims pay an advance fee with the expectation of receiving something of greater value at a later date and then receive nothing in return.
There are many variations of advance fee schemes. In one such scheme, a company claims to be able to clean up your credit report and offers to do so in exchange for an advance fee. Another common variation of this scam is the Nigerian Advance Fee Scheme, also known internationally as a 419 fraud. Despite repeated warnings, it continues to draw in many victims.
How Do They Work?
In the example of the Nigerian Advance Fee Scheme, a company or individual typically receives an unsolicited letter or email from a sender claiming to be a senior civil servant representing the Central Bank of Nigeria or the Nigerian government.
In the letter, the sender informs the recipient that the sender is seeking a reputable foreign company or individual whose bank account can be used, for a substantial fee, to facilitate a large financial transaction. The transaction would allow the deposit of "millions of dollars." The goal is to lure targets into thinking that they have been selected to participate in a lucrative arrangement.
The target company or individual receives numerous documents with official-looking stamps, seals, and logos, which appear to testify to the authenticity of the proposal.
Once engaged in the scheme, the target is told to:
- Travel overseas to complete the transaction.
- Provide blank company letterhead forms, banking account information, and telephone and fax numbers.
- Pay advance fees for various taxes, attorney fees, transaction fees, or bribes to Nigerian officials.
The scam is complete when the promised money transfer doesn't take place. The fraudsters rely on the fact that by the time the victims realize the offer is a ruse, they may have sent thousands of dollars of their own money to the fraudster.
How Can You Potentially Avoid Them?
Use common sense and if the offer of an "opportunity" appears too good to be true, it probably is. Remember, for example, that legitimate business is rarely conducted in cash or money orders.
- Know the individuals or parties with whom you are dealing. Don't enter into an agreement with strangers if you did not initiate the contact.
- Be wary of businesses that operate from post office boxes or mail drops and do not have a street address.