PRIMER ON FRAUD PREVENTION – Lesson #2

If you are following this Primer, you have learned the following tricks to avoid fraud:

(1) Is the deal too good to be true? If so, walk away.

(2) Are you being pressured to act now? If so, walk away.

(3) Are you being asked to make an advance payment? If so, the warning lights are going off. Are you being told the payment must precede the benefit? If so, walk away.

(4) Are you required to pay by: cash, postal money order, wire transfer, Green Dot MoneyPaks, or any other method that is untraceable and irreversible? If so, walk away.

(5) Finally, when in doubt, walk away.

Advance Fee Schemes

Today we will focus on a traditional “oldie, but nasty” scam, the “Advance Fee Scheme”.

The Setup

The scheme usually starts with a story. Someone tells you that they are in a dilemma, and they need your help. They are in a situation in which they control a massive sum of money in a foreign country, but cannot personally access the funds for some official reason beyond their control. That is where you come in. They need to send the funds to you as a third party. Once you have the funds, you will be permitted to retain a large percentage of the money, sending the difference to them, or to some other third party.

The Proof

The story always includes a substantial amount of impressive documentation, signed by important and highly placed people, sealed with official seals, on government letterhead, with bank statements showing massive bank balances, contracts, promissory notes, letters from major corporations, bills of lading, trade agreements, wire transfers, and irrevocable letters of credit. Of course, all the documents are fraudulent.

The Hook

You will be notified that all of the money has been wired to you, but that it got held up at a major bank, usually in New York. There is a snag that must be overcome to have the money released to you. There is a small transfer fee, or duty, or an import tax that must be paid in order to obtain final release of the funds. In addition, they need additional information from you for tax reporting and identification purposes, such as account numbers, routing numbers, social security numbers, date of birth, or your mother’s maiden name. The bank, after all, must forward appropriate forms to you.

The Sting

Having given over all of your personal information, and having paid whatever sums were required to have the vast sums of fictitious money released to you, you have just become another victim. The thieves are long gone, with your money in their pockets, and a smile on their faces.

How can I avoid the scam?

The only way to avoid the scam is to see it for what it is long before the thieves set the hook. Apply the rules shown above.

(1) Is the deal too good to be true? The first notice will invariably attempt to suck you in by the huge pot of gold at the end of the rainbow. It is always too good to be true.

(2) Are you being pressured to act now? Usually, the pressure to act does not occur until the alleged funds are in transit to you. If hundreds of millions of dollars are waiting for you, and the only thing holding them up is your $80,000 check, if the thieves do not pressure you, you will undoubtedly impose pressure on yourself to get the deal done.

(3) Are you being asked to make an advance payment? There will always be money you must pay, or the deal goes away. The smarter crooks will save the hook for the very end.

(4) Are you required to pay by: cash, postal money order, wire transfer, Green Dot MoneyPaks, or any other method that is untraceable and irreversible? Thieves will invariably require that money be sent in irrevocable and untraceable form. They, in turn, will hide behind national boundaries, preferably with countries that have no trade agreements with the United States. Your efforts to undo what was done will always be futile.

(5) When in doubt, walk away. Reasons for doubt always exist in the first communication. When you receive such offers, do not respond.

For those prudent enough to follow this counsel, congratulations. You win!

Copyright © Gregory D. Lucas 2014