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?
An advance fee scheme occurs when the victim pays money to someone in anticipation of receiving something of greater value, such as a loan, contract, investment, or gift, and then receives little or nothing in return.
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.
Some scammers offer to find financing arrangements for their clients if they'll pay a "finder's fee" in advance. They have their clients sign contracts in which they agree to pay the fee when they are introduced to the financing source. Victims often learn that they are ineligible for financing only after they have paid the "finder" according to the contract.
Such agreements may be legal unless it can be shown that the "finder" never had the intention or the ability to provide financing for the victims.
Some Tips to Avoid Advanced Fee Schemes:
- If something seems too good to be true, it probably is. Follow common business practice. For example, legitimate business is rarely conducted in cash on a street corner.
- Know who you are dealing with. If you have not heard of a person or company that you intend to do business with, learn more about them. Depending on the amount of money that you intend to spend, you may want to visit the business location, check with the Better Business Bureau, or consult with your bank, an attorney, or the police.
- Make sure you fully understand any business agreement that you enter into. If the terms are complex, have them reviewed by a competent attorney.
- Be wary of businesses that operate out of post office boxes or mail drops and do not have a street address, or of dealing with persons who do not have a direct telephone line, who are never "in" when you call, but always return your call later.
- Be wary of business deals that require you to sign nondisclosure or noncircumvention agreements that are designed to prevent you from independently verifying the bona fides of the people with whom you intend to do business. Con artists often use noncircumvention agreements to threaten their victims with civil suit if they report their losses to law enforcement.
