How Do Advance Fee Frauds Work?

The anonymity of the World Wide Web has resulted in the surge of many scams and frauds. Cyberactors now leverage the speed of the internet, social media, and email to execute their dubious plans.

One of the many ways of defrauding people online is the advance fee fraud. This type of cyber fraud is designed to look genuine and enticing so that victims find it difficult to turn down. As reported by Vermontbiz.com, sweepstakes/lotteries, a type of advance fee fraud, were one of the top 10 online frauds of 2021.

The first step to counter any cyberattack is understanding what it is and how attackers execute the fraud. 

Before discussing advance fee fraud cases, let’s look at this kind of cyber fraud and how it works.

What is an Advance Fee Fraud and How Does it Work?

As a classic type of social engineering tactic, advance fee scammers convince their victims to make an upfront payment in exchange for an item, service, or loan. The Federal Bureau of Investigation states that an advance fee fraud occurs when a victim pays money to someone in exchange for the promise of something greater in value. 

These scammers design enticing offers to lure victims into their trap. The advance fee fraud has been around for many decades, and in the past, it has been referred to as 419, or the Nigerian Prince email fraud. 

The “Spanish Prisoner Letter” fraud was used over 100 years ago. Here, scammers sent letters to businessmen claiming that a wealthy individual was in prison. In exchange for a share of the fortune, they requested a fee from the victims. The fee was paid, and there was no prisoner or wealth shared.

Advance fee frauds work the same way. You can receive mail from an unknown individual seeking your service on a huge job offer. The scammer explains that the deal also involves a third party, which you’ll have to pay to get the job done. 

Advance Fee Fraud Example

Advance fee fraud comes in various forms, and identifying ways scammers use to execute this attack is key to mitigating the risks. Below are some common advance fee fraud examples. 

Ticket Scams

This is a popular advance fee fraud example. The scammer poses as a seller, offering tickets to big events like concerts, festival performances, or sports games. The victim pays for the ticket, which doesn’t materialize. In the end, the customer is left out of pocket with no ticket or a fake ticket, which is useless for the event. 

Job Opportunity or Work From Home Frauds

Another type of advance fee fraud is job opportunities or work-from-home frauds. These scammers advertise ways to make loads of money from an online business or working from home. The perpetrator entices their victims with benefits like flexible working hours and bonus incentives. The scammer then requests an advance fee to register or get a code to access the site. 

Career Opportunity Frauds

Career opportunity frauds are another variant of advance fee fraud. Here, attackers disguise themselves as model agencies, tech companies, or publishers, offering victims a bright and successful career launch. The victims are asked to attend a seminar or consultation section, which requires an upfront fee. Of course, the promises never materialize once the victim pays the fee.

Online Dating Frauds (Honey Traps)

Honey trap frauds are one of the most popular examples of advance fee frauds. Cybercriminals scout for victims via chat forums and online dating sites. They create a fake online profile (which often involves model pictures) and develop a romantic relationship with the victim. 

Once the criminal has built a deep romantic relationship with the target, they request urgent help, usually requiring money. For instance, the perpetrator may request money for a new phone for better communication or a visa to visit the victim. Scammers can also ask victims to perform sexual acts via webcam and then blackmail them for money. 

Why are Advance Fee Frauds Effective?

Now, we think you know how advance fee frauds work. But are they effective? Scammers try their best to make fee fraud look legit with irresistible benefits to entice their victims. The frauds are effective due to people’s greed for free things. If you take time to analyze an offer, you’ll be able to avoid this fraud type. 

This leaves us a good question: What are the red flags and tips to sidestep such an attack? Let’s talk about how to avoid advance fee fraud.

How to Avoid Advance Fee Frauds

Advance fee frauds have different variations, making it tricky to identify them at a glance. Below are some tips to help you avoid this online fee fraud. 

  • Never pay upfront for a credit or loan, especially to another country
  • Confirm the identity of the person you’re dealing with before taking any actions. You can search the company name online to read reviews from other customers. 
  • Don’t fall for a “guaranteed” loan. No reputable loan company will guarantee you a loan before the application process is complete.
  • Be careful of business contacts with no physical address or phone number that you can call. 
  • If the offer sounds too good to be true, it’s probably a sham. Be cautious. 
  • Don’t be fooled by lottery scams. You can’t win a lottery you didn’t participate in. 

Final Thoughts

Advance fee fraud is one of the prevalent internet-based scams that threaten both individual and business owners. Today, the forms of advance fee scams are limited only by the scammer that created them. 

While some fee frauds are easy to spot, others are well-crafted and complex. So business owners and individuals should understand how this fraud works and follow the tips we mentioned above. Remember, never pay upfront for a service or product without proper investigation.

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