ADVANCE FEE SCHEMES

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.

The variety of advance fee schemes is limited only by the imagination of the con artists who offer them. They may involve the sale of products or services, the offering of investments, lottery winnings, “found money,” or many other “opportunities.” Clever con artists will offer to find financing arrangements for their clients who pay a “finder’s fee” in advance. They require their clients to 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.

Tips for Avoiding Advanced Fee Schemes:

  • If the offer of an “opportunity” appears 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 plan on spending, 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.  Also be suspicious when dealing with persons who do not have a direct telephone line and 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 non-circumvention 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 non-circumvention agreements to threaten their victims with civil suit if they report their losses to law enforcement.

BUSINESS FRAUD

Business fraud consists of dishonest and illegal activities perpetrated by individuals or companies in order to provide an advantageous financial outcome to those persons or establishments. Also known as corporate fraud, these schemes often appear under the guise of legitimate business practices. An array of crimes fall under business fraud, including the following:

  • Charity fraud: Using deception to get money from individuals believing they are making donations to legitimate charity organizations, especially charities representing victims of natural disasters shortly after the incident occurs.
  • Internet auction fraud: A fraudulent transaction or exchange that occurs in the context of an online auction site.
  • Non-delivery of merchandise: Fraud occurring when a payment is sent but the goods and services ordered are never received.
  • Non-payment of funds: Fraud occurring when goods and services are shipped or rendered but payment for them is never received.
  • Overpayment scheme: An individual is sent a payment significantly higher than an owed amount and is instructed to deposit the money in their bank account and wire transfer the excess funds back to the bank of the individual or company that sent it. The sender’s bank is usually located overseas, in Eastern Europe for example, and the initial payment is found to be fraudulent, often after the wire transfer has occurred.

Tips for Avoiding Business Fraud:

  • Purchase merchandise from reputable dealers or establishments.
  • Obtain a physical address rather than simply a post office box and a telephone number, and call the seller to see if the telephone number is correct and working.
  • Send an e-mail to the seller to make sure the e-mail address is active, and be wary of those that utilize free e-mail services where a credit card wasn’t required to open the account.
  • Consider not purchasing from sellers who won’t provide you with this type of information.
  • Purchase merchandise directly from the individual/company that holds the trademark, copyright, or patent.

CREDIT CARD FRAUD

Credit card fraud is the unauthorized use of a credit or debit card, or similar payment tool (ACH, EFT, recurring charge, etc.), to fraudulently obtain money or property. Credit and debit card numbers can be stolen from unsecured websites or can be obtained in an identity theft scheme.

Tips for Avoiding Credit Card Fraud:

  • Don’t give out your credit card number online unless the site is secure and reputable. Sometimes a tiny icon of a padlock appears to symbolize a higher level of security to transmit data. This icon is not a guarantee of a secure site, but provides some assurance.
  • Don’t trust a site just because it claims to be secure.
  • Before using the site, check out the security/encryption software it uses.
  • Make sure you are purchasing merchandise from a reputable source.
  • Do your homework on the individual or company to ensure that they are legitimate.
  • Obtain a physical address rather than simply a post office box and a telephone number, and call the seller to see if the telephone number is correct and working.
  • Send an e-mail to the seller to make sure the e-mail address is active, and be wary of those that utilize free e-mail services where a credit card wasn’t required to open the account.
  • Consider not purchasing from sellers who won’t provide you with this type of information.
  • Check with the Better Business Bureau from the seller’s area.
  • Check out other websites regarding this person/company.
  • Don’t judge a person or company by their website; flashy websites can be set up quickly.
  • Be cautious when responding to special investment offers, especially through unsolicited e-mail.
  • Be cautious when dealing with individuals/companies from outside your own country.
  • If possible, purchase items online using your credit card. You can often dispute the charges if something goes wrong.
  • Make sure the transaction is secure when you electronically send your credit card number.
  • Keep a list of all your credit cards and account information along with the card issuer’s contact information. If anything looks suspicious or you lose your credit card(s), contact the card issuer immediately.

TELEMARKETING FRAUD FOR SENIORS

If you are age 60 or older—and especially if you are an older woman living alone—you may be a special target of people who sell bogus products and services by telephone. Telemarketing scams often involve offers of free prizes, low-cost vitamins and health care products, and inexpensive vacations.

DEBT ELIMINATION FRAUD

Unlike legitimate companies who work with debtors to help them responsibly repay their debts, debt elimination scammers promise to make you debt free in exchange for a modest upfront or membership fee that they simply pocket. Victims pulled in by these schemes will certainly lose that fee, but they may also lose property, incur additional debt, damage their credit rating, risk identity theft, or face legal action.

NIGERIAN FRAUD

This fraud combines identify theft and advance fee fraud. Scammers posing as government officials contact victims asking for help in transferring millions of dollars out of Nigeria in exchange for a percentage of the funds. They convince victims to provide their bank name and account numbers and other identifying information and to send checks to pay for bribes or legal fees. Perpetrators may also use the personal information received to drain victims’ accounts and credit cards. The Nigerian government is not sympathetic to victims who, by participating in this scheme, violate both Nigerian and U.S. law.

CASHIER’S CHECK FRAUD

Scammers take advantage of the trust people place in cashier’s checks to steal money from your account or to avoid paying you for goods and services. It is difficult to detect fraudulent cashier’s checks. When you deposit a fraudulent check into your account, the law requires your bank to make the funds available within a specific period of time even if the check has not yet cleared through the banking system. Once the check is returned unpaid, your bank, generally, can reverse the deposit to your account and collect the amount of the deposit from you.

INTERNET FRAUD

Internet fraud is the use of Internet services or software with Internet access to defraud victims or to otherwise take advantage of them. Internet crime schemes steal millions of dollars each year from victims and continue to plague the Internet through various methods. Several high-profile methods include the following:

  • Business E-Mail Compromise (BEC): A sophisticated scam targeting businesses working with foreign suppliers and companies that regularly perform wire transfer payments. The scam is carried out by compromising legitimate business e-mail accounts through social engineering or computer intrusion techniques to conduct unauthorized transfers of funds.
  • Data Breach: A leak or spill of data which is released from a secure location to an untrusted environment. Data breaches can occur at the personal and corporate levels and involve sensitive, protected, or confidential information that is copied, transmitted, viewed, stolen, or used by an individual unauthorized to do so.
  • Denial of Service: An interruption of an authorized user’s access to any system or network, typically one caused with malicious intent.
  • E-Mail Account Compromise (EAC): Similar to BEC, this scam targets the general public and professionals associated with, but not limited to, financial and lending institutions, real estate companies, and law firms. Perpetrators of EAC use compromised e-mails to request payments to fraudulent locations.
  • Malware/Scareware: Malicious software that is intended to damage or disable computers and computer systems. Sometimes scare tactics are used by the perpetrators to solicit funds from victims.
  • Phishing/Spoofing: Both terms deal with forged or faked electronic documents. Spoofing generally refers to the dissemination of e-mail which is forged to appear as though it was sent by someone other than the actual source. Phishing, also referred to as vishing, smishing, or pharming, is often used in conjunction with a spoofed e-mail. It is the act of sending an e-mail falsely claiming to be an established legitimate business in an attempt to deceive the unsuspecting recipient into divulging personal, sensitive information such as passwords, credit card numbers, and bank account information after directing the user to visit a specified website. The website, however, is not genuine and was set up only as an attempt to steal the user’s information.
  • Ransomware: A form of malware targeting both human and technical weaknesses in organizations and individual networks in an effort to deny the availability of critical data and/or systems. Ransomware is frequently delivered through spear phishing emails to end users, resulting in the rapid encryption of sensitive files on a corporate network. When the victim organization determines they are no longer able to access their data, the cyber perpetrator demands the payment of a ransom, typically in virtual currency such as Bitcoin, at which time the actor will purportedly provide an avenue to the victim to regain access to their data.