Fraud Tip of the Day - February 15
How to Avoid Advance Fee Scams
Learn to recognize and avoid advance fee scams where you are tricked into paying money up front in order to receive something of greater value.
What are Advance Fee Scams?
Advance fee schemes describe a situation when a victim agrees to pay money up front with the expectation they will receive something of great value (a loan, contract, investment, or gift), but then receives little to nothing in return for their "investment".
Advanced fee schemes come in many shapes and sizes, limited only by the imagination of the criminals offering them. They could involve the sale of products or services, investment opportunities, lottery winnings, or "found money" to name a few.
Scammers have been known to offer finding financing arrangements for their potential victims, if the victim agrees to pay a "finder's fee" in advance. The deal is usually sealed with a contract including language that the victim will agree to pay the fee when they are introduced to the financing source. Only after signing the contract and paying the "finder", do victims learn they are disqualified for the financing.
The victim in this case can only get remuneration if they can show that the "finder" never had the ability or intended to provide the financing. Without that, these contracts are considered valid and legal.
Some Guidelines on How to Avoid Advanced Fee Schemes:
- Follow the saying, "If something seems too good to be true, then it probably is". Stick to common business practices. Never consider business being carried out on the street corner in cash as legitimate.
- Be sure you know who you're trading with. If you aren't familiar with the person or company you plan to do business with, learn more about them. Ask a lot of questions. Visit their location, do your homework, look them up with the Better Business Bureau and/or consult with family, friends or an attorney.
- Money spent up front to pay an attorney to review complex business agreements can save you even more money in the long run. If you don't understand the terms of the business 100%, have them examined by a knowledgeable and recommended attorney.
- Businesses that operate out of post office boxes, mail drops and/or don't have a street address should be dealt with suspicion. Also be wary of those who don't have a direct phone line, can't be reached and must always return your call at a later date and time.
- Be cautious of business deals requiring you to sign nondisclosure or non-circumvention agreements. These agreements can prevent you from verifying the legitimacy of those doing business with you. Scammers use these agreements as a threat of civil suits to victims if they report their losses and business activity to law enforcement agencies.
