Securing Our Communities: Advance Fee Fraud

Updated: Jul 17, 2019

Each week, the NTIC Cyber Center highlights a different social engineering scam impacting individuals and communities within the National Capital Region. We encourage everyone to share this information with friends, colleagues, and loved ones to help reduce their risk of becoming a victim of financial fraud and identity theft.

Advance fee fraud, also known as an upfront fee fraud, is a social engineering scheme in which perpetrators try to elicit money from victims through a fraudulent business proposition. Scammers may propose an investment, offer a loan, or present a lucrative business opportunity with the “promise” of delivering a benefit or compensation in the future. Scammers sometimes claim that victims are entitled to a large amount of unclaimed money or lottery winnings. To lend credence to their schemes, perpetrators often masquerade as representatives of legitimate companies or direct victims to official-looking websites. They claim that victims need to pay a tax, finder’s fee, security deposit, or other processing fee to secure the arrangement, requiring the payment to be made via cash, gift cards, or wire transfer. If victims pay, the perpetrators will either flee with the money or request additional payments, citing unforeseen circumstances or complications. In ongoing schemes, the perpetrators may even return a small amount of money to make the schemes believable and encourage victims to continue investing. Scammers target victims using email, social media, websites, voice messaging services, crowd funding platforms, and even in person.

While advance fee fraud is not a new type of scam, advances in technology have led to an increase in the prevalence and variations of these schemes. For example, in July 2019, technology news site The Next Web reported that a couple lost more than $30,000 investing in a fraudulent cryptocurrency scheme that was introduced to them in a Facebook group. Although the couple’s initial investments appeared to produce returns, the bogus company began to impose fees and restrict access to the account, preventing the couple from withdrawing their money. The couple finally learned that they had been duped after the fraudsters sent them a text message admitting to the scam.

The NTIC Cyber Center provides the following tips to help protect our readers from advance fee fraud:

  • Be wary of any unsolicited communication that promises expensive prizes or large sums of money in return for a fee. This is typically the first sign that the offer in question is a scam because legitimate contests and companies will never ask for money from prize-winners.

  • Scrutinize any investment opportunity that seems too good to be true or offers unrealistic returns, especially urgent investment requests that trick you into acting quickly without thinking.

  • Research investments and other wealth-generating opportunities thoroughly. Be sure to look for customer or client reviews posted on legitimate review websites and visit the Better Business Bureau’s website to see if any complaints have been filed. Consider having an independent lawyer review documentation provided by the investment company to ensure the terms and conditions are valid.

  • Since scammers can pose as legitimate investment firms by copying logos or using similar names in online or printed correspondence, verify associated business addresses and phone numbers to help determine the legitimacy of the organization.

  • Be cautious when asked to sign non-disclosure or non-circumvent agreements as these may be a pretext to prevent you from verifying a person or organization’s legitimacy and possibly expose you to the risk of a civil lawsuit if you file a report with law enforcement.

Report all advance fee scam attempts to your local police department, the US Federal Trade Commission, and the FBI’s Internet Crime Complaint Center.

The NTIC is governed by a privacy, civil rights, and civil liberties protection policy to promote conduct that complies with applicable federal, state, and local laws. The NTIC does not seek or retain any information about individuals or organizations solely on the basis of their religious, political or social views or activities; their participation in a particular noncriminal organization or lawful event; or their race, ethnicities, citizenships, places of origin, ages, disabilities, genders, or sexual orientations. No information is gathered or collected by the NTIC in violation of federal or state laws or regulations.