What Are Advance Fee Schemes?

Advance fee schemes are when the victim pays money to a scammer in the hopes of receiving something of higher value – such as a contract, loan, gift, or investment – and then gets nothing or little in return.

How Do Advance Fee Schemes Work?

Advance fee schemes may entail the sale of services or products, the offering of found money, lottery winnings, investments, or any other such opportunities. Scammers performing advance fee schemes might:

• Offer popular financial instruments such as old corporate or government bonds, bank guarantees, long or medium-term notes, blocked funds programs, standby letters of credit, “seasoned” or “fresh cut” paper, and proof of funds,
• Offer to find financing arrangements for people who pay a “finder’s fee” in advance.
• Pretend to be legit U.S. firms or brokers and offer to assist investors to make up for their stock market losses by trading worthless stock but asking investors to pay an advance “security deposit.”

How to Avoid Advanced Fee Schemes?

• If the offer of an “opportunity” sounds too good to be true, it possibly is.
• Be careful of who you deal with. If you intend to do business with an unfamiliar company or person, make sure you get information about them.
• Properly understand any business agreement that you sign.
• Steer clear of businesses that don’t have a street address.