Advance Fee Fraud – What Everyone Should Know

Started in the 80’s this scam has run per normal post, fax and per telephone and now in our internet age only increasing the number of victims. Stolen funds are subjects to a very low rate of recovery.

Organized thieves are scamming people from all over the world. Many online schemes promise you the moon, only to take away your hard-earned money. Variations of advanced fee fraud are countless and can appear in new fashionable ways daily.

“I’ve learned that when a man with money meets a man with experience, the man with experience ends up with the money and the man with the money ends up with experience.”

– H. Jackson Brown Jr.

Exploiting Fake Hopes: What Are Advance Fee Scams?

What are advance fee scams

What is advance fee fraud? How does it work? Where does it take place, what’s the risk, and how can you protect yourself?

In simple terms, it’s a confidence trick. It’s a person trying to convince someone to give them money with promises. The black money scam is one example of this confidence trick.

This scheme is plain and common, yet many people fall into it. It comes in all forms and shapes, disguising in the most simple things people overlook.

Unfortunately, these con artists keep finding new ways to mislead victims. It happens in e-commerce, brokerage, loan firms, freelancing, government, lottery, even romance.

What’s The Risk Of Advance Fee Scams?

Whats the risk of advance fee scams

Your suspicions are right. Advance fee frauds are widespread around the world. They can use any format, from phone calls to emails.

But the risk is on the target, not the method. Like businesses, scammers have an “ideal customer.”

  • Need. Fraudsters look for people who are desperate for money. The favorite targets are borrowers, freelancers, and lottery players.
  • Interest. You may not need the money and still, be curious about the offer. If the reward is big enough, wouldn’t you want to try it?

When a scammer reaches out a victim, he looks to raise these emotions: hope, love, greed, or fear. It’s the hook they use to attract people into this trap. A fraudster will only show you what they want you to see. If a person is too lazy to question and find objections, they become a perfect scam target.

Scammers like people with little knowledge and awareness. After they pay the “advance fee” they invent another one. The game continues until the victim realizes the trick or runs out of money.

If they cannot pay them, the scammer claims to create a check to “refund” their fee. This claim motivates people to borrow money and pay for it, hoping to get the reward.

Needless to say, the victims never get anything in return. The fraudster can vanish from the Internet whenever they want.

The advance fee fraud is so common that the authorities don’t give it much significance. It depends on the amount of money lost and the data available. Remember, scammers prefer to get the big money. A big reward is essential to justify the risks.

How To Recognize Advance Fee Fraud?

How to recognize advance fee fraud

Unlike other tricky methods, advance frauds are easy to spot with business principles. Some facts are obvious, while others require you to investigate.

As a basic rule, question everything you don’t understand. All the victims eventually find out the uncomfortable truth. If it happens to you, how can you find out before it’s too late?

If you don’t know where to start, ask yourself what a good business would do. Scammers use to follow the opposite patterns. Here are some you can use to recognize them.

Limited Information

No matter the risk, fraudsters never reveal the whole picture. If you ask them something they hadn’t planned, they’ll find and excuse to hide it, dodge the question or steer the conversation in another direction.

A legitimate business is transparent with customers. It’s there to answer your questions whenever you need them.

Before even suspecting, try this simple exercise. Can that “professional” answer your questions? How do they react whenever you question their advice?

Online Reputation

Who is this person? Do they have some form of brand identity?

It’s not enough to have an email, phone number, or social media account. If their program really works, you should be able to find references online.

Do they have a website with reviews? What do others think of them?

Of course, an online presence isn’t enough to be safe. Many marketers fake their social proof to appear trustworthy. But it’s a good way to start your analysis.

Urgent Action

In their messages, scammers use a tone that warns victims to act quickly. They constantly remind you to move forward and look impatient whenever you delay their plans.

They have less chance to get caught when the process runs smoothly. If they email thousands of people, they’ll work with the easiest people to mislead.

Money-Back Guarantee

If you ask them for any money-back guarantees, they’ll likely say it is available. But how can they prove it? Once they steal the money, they can usually disappear rather easily.

Although fraudsters talk about how they can “help you” all the time, they rarely mention what they’d do if things go wrong. When you look at real businesses, it’s the opposite: free trials, demos, thirty-day guarantees.

Real businesses may give value upfront. Scammers ask you for it.

Examples Of Advance Fee Fraud

Examples of advance fee fraud

Advance fee scams don’t always involve a prize. Some schemes make the victim believe they are paying for something or someone else. Take a look at these six examples.

Unclaimed Funds

Victims are chosen randomly or by a closer examination of your personal information. The thief may contact you and tell you that he received a notification from an offshore bank. His “dead relative” left him an extraordinary amount of cash, but he himself can for some reason not claim it.

Therefore he needs your help and for that he will give you a percentage of the amount. However, before you can receive this amount you need to pay some “legal” or “logistical” fees first. And this is how money is taken from you in advance. You will of course not receive anything in return.

Advance Loan Fee Fraud

Loan fee scams occur when you are asked to make an upfront payment on a loan that you will never receive. Scammers don’t only want big returns when lending money. They want to attract as many people as possible for their scheme.

Example Advertisment

Borrow up to $10,000 even with a bad credit score!

If you have limited access to conventional credit, have a lower income or a lower loan rate, you are more likely to be the target of loan lending scammers.

Fraudsters will try to convince you that you can make an advance fee payment on a loan that you will never receive.

Loan scammers invent fees to justify access to those funds. How? Through brokerage fees, transaction costs, insurance, and management expenses. Anything that sounds professional could do the trick.

There are usually plenty of different “charge fee names “. Each of them is adding up a small percentage to make it look more realistic.

Cloned E-commerce Stores

Have you ever paid for an item that never arrived? You may have landed in a fake online store or a clone of platforms such as Amazon, eBay, or Etsy.

A person gets an email from a fake address pretending to be an online store. It could be an email showing you the latest deals from a sports shop, for example.

The victim clicks a link that redirects to a fake online store. Here, the person creates an account, enters personal data, and places a false order.

The buyer never gets any product because he didn’t spend money on the actual product. The client transferred money to the scammer.

In e-com frauds, you never meet the other person. There’s no communication, which would make the job of investigating a little bit easier. You may also be at risk of phishing.

Impersonating The Government

Few people would ignore an email from an authority. Unfortunately, others may steal this credibility for their interest.

Imagine you received a notice from a “National Taxation Office”. Scammers can make up some “tax refunds” that the victim should claim.

Not without an endless list of payment steps, of course. If the government asks you for an upfront payment, most people wouldn’t be suspicious.

Work-From-Home Promises

People who need money fall into this type of advance fee fraud. Some think of borrowing while others look to make money online.

Since the second group is already generating income, scammers prefer this target group. They use countless tactics to bait them, from subscriptions to pay-to-work schemes.

A website may promise freelancers to make them $500 a day but requires investment. You may need to pay a monthly subscription to have a platform account. It could be that each application costs money.

Some smarter ones may use rating systems. They will ask you for excessive test gigs to prove your quality. And if you wanted to skip that, you buy a pricey fast-track program.

Again, it’s up to the scammers’ creativity. Freelancers are wasting their time and money.

Romance Scams

Most schemes make victims feel greed or hope for the reward. Others use love and compassion.

Romance scams are harder to spot because the person has usually already built trust with you. We are not used to question the authenticity of what our family and friends tell us.

You can be asked to transfer money to prevent the death of a child, poor person or someone who has been involved in a terrible car accident. More than often once funds have been sent various “complications” occur and you have to send more money.

The scam could use any story imaginable:

  • A plane ticket to visit their “loved one”, the victim.
  • Financial help to cure a chronical illness
  • A donation to a charity
  • Pay for an expensive operation to save someone from death
  • He or she wants to recover from a failed business

Excuses and more excuses, you may think. But when emotions get over people, it’s not so easy to think clearly.

Lottery Fee Fraud

Congratulations! You are the visitor #1.000.000!

Please claim your prize of 100.000$ but first pay the fees that have occurred. Or was it insurance costs?

The victim finds such a message informing about a lottery price. Although this trick is harder to masquerade, the plan is usually the same. The fake-lottery winner has to fill up his information, pay for imaginary fees, or both at the same time.

The victim loses their money and the scammer gets the big price. Who’s the winner now?

How To Identify Legit Advance Charges

How to identify legit advance fee charges

The fastest solution is to…never pay in advance?

No. Many legit companies use charge upfront for their services. It’s a usual method to protect the seller from charge-backs and fake purchases. When should you pay upfront?

By law, businesses must refund your upfront costs if they fail to deliver. It’s a customer’s right to have a money-back guarantee for advance payments.

A scammer could however fake this claim.

In order to identify if an advance fee is real, the best thing you can do is that you lookup the company or individual you are dealing with. If there are no reports, they might be new in business and you should be precautions.

If they operate for a longer period of time and you still can not find any reports, that might actually be a good sign. People tend to post negative reviews really fast and do not bother too much about positive feedback. They are satisfied with their product or service and forget about it.

How To Protect Against Advance Fee Scams

How to protect against advance fee scams

Who can you trust? Remember, no matter how well you prepare, any upfront charges always involve risk.

Because of that, the #1 rule is to make good decisions. What’s the upside and the downside of your decision?

Minimize The Risk

The best investors follow this rule, but it applies to everything. Always look to minimize the risk before looking for wins.

No, wins don’t justify the risk. The problem is, it takes more time to recover from a loss than it is to reduce risk. People who need money usually feel motivated by emotions like hope. If you approach the opportunity with logic, scammers will have much less power to control you.

Know Your Dealer

Who is this person, and what results has he produced? Have you ever seen anything similar?

If the product or service you are interested in looks attractive, learn about it as much as you can. In doing so, you may have an idea about what to expect.

When you know your dealer, you can communicate with more confidence and understand how they react. If there’s anything suspicious, you’ll catch them fast.

The fact you are learning right now already gives you an advantage. Most people don’t educate themselves because they never realize others are scamming them!

Basic Financial Education

Some people look at personal finances as a career while it should be a habit. We prepare our whole life to make money with a career, yet they don’t teach us how money works.

If you don’t want to learn it the hard way, be responsible with your finances today. The biggest advantage scammers have is ignorance. When you understand these concepts, however, they cannot mislead you.

Are they asking you for a fee you never heard of? Do some research. Legitimate companies will explain these terms and never ask for unusual forms of payment.

Closing Thoughts

Regardless of the measures, advance fees always involve risk. Before looking at the opportunity, make sure the down payment is either low enough to be safe or that you have minimized your risks with other measures.

Before you work with a new company, learn as much as possible about them. Professional businesses do show all their information and will reply to your questions.

Only pay upfront if you trust the company and only when it makes sense. Avoid upfront charges when possible and look for money-back guarantees. Use payment methods with buyer-protection features to avoid fraud.

Remember, knowledge is your best friend and scammers hate smart and informed targets. You don’t need to experience a loss to get the experience. Educate yourself and protect your finances today.

Share it
Notify of

Oldest Most Voted
Inline Feedbacks
View all comments