Lesson: Advance Fee Fraud

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Lesson Objective

things you should know about advance fee fraud

Lesson Plan

In advance fee scams, investors are asked to pay a fee in advance - before receiving any proceeds, money, shares or warrants - in order for the deal to go through. The upfront payment can be referred to as a fee, tax, commission or incidental expenses, which is later repaid. Some advance fee schemes are targeted at investors who have already bought securities that have underperformed and offer to sell these securities if an "advance fee" is paid, or are targeted at investors who have already lost money through investment programmes. Fraudsters often instruct investors to pay advance fees to trustees or lawyers to comfort investors and give their programs a touch of legitimacy. Fraudsters can also try to trick investors with official-sounding websites and email addresses. 

For more information on the types of advance fraud, please see our blog posting explaining the details of the advance fraud examples.

One factor that is common in many confidence scams is that the perpetrator targets a vulnerable victim. It is therefore a determining factor in the severity of this type of fraud. An offender is more culpable if he or she deliberately targets a victim who is vulnerable because of his or her age, youth or disability, and there is more serious harm than usual if the victim is particularly vulnerable. The losses resulting from advance fraud can be high, and the emotional and psychological costs can be even higher.

Lesson Resources

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