Advance fee fraud

Advance fee frauds are a crime where a person is promised a sum of money, goods to be delivered or receive a prize once certain fees, charges, taxes or levies are paid in advance.

These frauds have been most commonly attributed to syndicates of Nigerian criminals; however, these crimes are now committed by people throughout the world. Criminal syndicates are known to target Australians, with the level of sophistication in which these crimes are being committed increasing.

There are many variations on the types of advance fee fraud, however they all share the same characteristic of the victim losing their money and the fraudster continually asking for more money to be sent to them or their associates. Whatever has been promised to the victim in exchange for the money never arrives.

The only money that genuinely exits in this fraud is the money that the victim sends to the fraudster they will never see again.

How does this work:

This is a particularly aggressive form of fraud with the fraudster still trying to obtain money from the target many months after the victim has had to sell their home to pay their debts.

The fraud may develop into a recovery fraud where a person pretends they are a police officer and have arrested a person suspected of having committed fraud against them. To assist the investigation, they are seeking funds from the victim to pay for the prosecution. This is a continuation of the fraud and the person contacting the victim is an associate of the original fraudster.

Fraudsters may work as a syndicate to induce the victim to send their money. People play different roles such as senior government officials, a barrister, a reverend, a doctor or a senior banker depending upon the fraud being operated. They each communicate and support each other, working to ensure the victim believes they are dealing with legitimate people.

Many people do not consider these types of fraud to be serious criminal offences, but they are known to destroy the lives of the victims and their families’ in the same way as more traditional forms of fraud. The penalty for the commission of these forms of fraud is up to 12 years’ imprisonment.

There are many forms of advance fee fraud and several examples are included in the section below. Whilst these are generic in description, the offenders use these as a template and are prepared to modify the details to fit the circumstances of the person they are attempting to defraud.

Investment opportunity

A person is contacted with a unique opportunity to invest in a project, usually in a foreign country. The offer is restricted with an immediate response required. The contact persons will usually hold very senior roles in financial institutions or Government departments and will assure their target that the project is low risk with very high returns. Alternatively, these frauds can be introduced to the victim by the person committing another version of advance fee fraud such as relationship fraud.

Up front payments are required to initiate or complete the project, with documentation included which gives the appearance of a professionally run project. Senior titles such as “Governor of the Reserve Bank”, “Barrister”, “President” or “Chief Executive” are used to instil a degree of confidence in the target. Many fraudsters use the title “Dr” to provide a further perception of seniority in their organisation.

The project will be delayed requiring many extra payments, and should it be completed, a new series of payments are required to ensure the money can leave the country. Common additional charges such as taxes, levies, anti- money laundering, anti-drug dealing and anti-terrorist certificates are required to ensure the funds are available to transfer.

Should the fraudster say the money has left the country, it will continually require additional payments as it gets held up in different countries. Fake documentation is produced to support their argument, with the victim now so financially desperate to get their money back, they make the additional payments as requested, often borrowing money from friends/family.

The funds never arrive, and the victim never recovers their investment money.

Request to use a bank account to deposit a large sum of money

This fraud requests the victim to allow them to use their bank account so a large sum of money may be deposited into it. Initial contact with the victim is made by a mass-produced email.

The money offered may be from a secret bank account, unexpected inheritance, overpaid Government contract or a “forgotten sum of money” left in a bank account.  The wording of the approach often provides very strong indications that the sender is seeking a person to assist them in fraud and money laundering, however many people still seek to obtain a share of the funds. Victims often state they were concerned as to the legality of their actions, however after speaking to the “Barrister” introduced by their contact, were assured that their actions were legal.

In each instance, before the money is placed into the victims’ bank account, a series of fees and charges are required to be paid before the money can be released. These charges include:

• Taxes
• Levies
• Legal fees
• Payments to corrupt officials
• Money transfer charges

 

Despite the victim making numerous payments to individuals in different countries, there are always delays which prevent the money being sent and require a further payment to be made. Different government agencies are introduced into the fraud, each requiring funds to ensure the payment is made or else the money will be confiscated. Should the money leave the country, it is unexpectedly held up in another country requiring a new series of payments to be made by the victim. There are many examples known of victims making payments to the fraudsters more than ten years after they had made the first “Final Payment.”

A key ingredient of this fraud is the victim is required to keep the money transfer secret. This is to prevent them seeking advice from others who may be able to convince the victim that they are dealing with fraudsters.

This fraud has been in existence more than 50 years and no person has ever received the money promised despite hundreds of thousands of individuals worldwide taking up the fraudsters offer.

Victims have historically been very reluctant to report there being defrauded in this manner to the Police as the ingredients of their actions may constitute the offence of money laundering.

• Payment to insure the funds transfer.
• Payment for an “anti-terrorist certificate”, “anti-money laundering certificate” or “anti-drug dealer certificate” to verify the victim is not a terrorist, money launderer or international drug dealer. Each of these certificates are fake and should a person be asked to make a payment for any of these certificates, then that will be further money lost. 

Business opportunity

Like the investment opportunity, a business or individual may receive a request from a person posing as a public official offering the opportunity to become involved in a large commercial operation being undertaken in a foreign country. The most common example involves projects in the Nigerian oil industry although other examples have been identified in the telecommunications or construction industry.

The offer will involve very large financial returns and will require the victim to finance a portion of the Nigerian contract.

All payments will be required to be forwarded via money transfer agencies such as Western Union in amounts between $5,000.00 and $10,000.00. Examples of the requests for money include:

• Pay for the business project
• Pay legal fees
• Pay project fees
• Pay company registration costs
• Pay corruption fees
• Pay taxes.
• Pay money transfer fees.
• Payment for an “anti-terrorist certificate” to verify the victim is not a terrorist.
• Pay to insure the funds transfer.

In each instance, the money will be required to be sent to numerous individuals in different countries such as Benin, Togo, Cote d’Ivore (Ivory Coast), United Arab Emirates, Malaysia and the United Kingdom.

The fraudster seeks to make the investment as attractive as possible and creates a sense of urgency. They identify this as a unique opportunity and that it is risk free. Supporting members of the fraud syndicate play the role of Barrister, Government Minister, Chief Financial Officer etc to create the image that the investment is legitimate and risk free. Each of these people are in fact professional fraudsters very experienced in playing their designated role and are aware of the roles other syndicate members are playing.

Documentation prepared and supplied may look very professional, and is often produced on very high quality printers. The documents are individualised to the name of the victim and may incorporate a watermark. The documents are supported by the testimony of persons playing the role of senior government officials.

A common example is to be involved in the production of an oil pipeline or refinery in a country such as Nigeria and they require external investors to assist in the funding of this project in return for a large financial return. Nigeria has been a member of the Organisation of Petroleum Exporting Countries (OPEC) since 1971 and does not require the involvement of individual investors to pay for their oil infrastructure.

The Nigerian High Commission in Canberra has strongly recommended any person considering undertaking a business opportunity in their country to contact themselves for advice on how to safely conduct business in Nigeria.

Relationship fraud

Online relationship frauds are also a form of Advance Fee Fraud. These crimes seek persons looking for a partner online through a dating agency, social media platforms, web group etc. and attempting to develop a personal relationship. After a period of grooming, the fraudster seeking money from their target to help them travel to Australia, pay for a medical emergency, pay taxes, a business venture they need to finalise or any other costs which involves their target sending money to them.

The relationship fraud may develop into an investment or inheritance fraud where the person needs money to pay taxes etc to release funds owing to the so they can bring the money to Australia. 

Despite the large sums of money sent, the person never arrives in Australia with many victims spending hours at the airport waiting for their new partner to arrive. Excuses for not arriving in Australia includes being detained at Customs, family refusing to allow them to leave the country, medical emergency, Government intervention or unexpected taxes to be paid.

The consequences to these crimes are very serious with victims defrauded emotionally as well as financially. Numerous instances have been recorded of Australians becoming victim to this fraud and losing a large percentage of their wealth if not all they own. A further consequence is the victim loses their network of friends and family as the fraudster encourages the victim to refuse their advice

Australian citizen in overseas hospital

A common scenario begins with the victim chatting online with an Australian citizen or friend living overseas. Communication suddenly stops until contact is made by a “doctor” saying their friend has been in a car crash and needs money to pay for urgent surgery. The victim wishing to help their friend commences sending money overseas via a money transfer facility such as Western Union and as each sum of money is forwarded, a further request for more funds is made.

These approaches are often linked to relationship fraud.

Fraudulent cheque/ credit card fraud

This fraud targets small business owners.

In this example, the fraudster requests goods be sent to them overseas and sends a bank cheque to pay for the goods. The cheque is usually from a foreign bank and is for an amount more than the value of the goods and freight forwarding charges.

When the cheque is deposited into the victims’ bank account in Australia, depending on the quality of the forgery, it may initially be cleared by the bank. This provides the victim with the assurance the cheque is of good value as represented and they send the goods to the fraudster. Several weeks later, the cheque is identified as being fraudulent by the overseas bank and the victim ends up bearing the cost of the whole transaction being the goods sent overseas, freight costs and depending upon the bank, cheque dishonour fees.

The credit card fraud involves the fraudsters contacting Australian businesses and requesting the purchase of goods or services. The orders often are significantly higher than that the business would usually receive and appears to be a financial windfall for the business owner. Accommodation providers are regularly asked to provide quotes for foreign representatives seeking to attend Queensland for businesses reasons and wishing to book accommodation and conference facilities.

Once the quote is provided, the fraudster provides a series of credit cards for the payment to be made from. If a card is not active, then alternative credit card numbers are supplied.

Once the payment has been made, the fraudster cancels the accommodation and conference and requests the funds be refunded via a money transfer service such as Western Union.

Once the business has refunded the excess payment to the fraudster, they may be notified by the credit card company the transactions were fraudulent and the business must refund the money. Subsequently the company loses the value of the funds sent via money transfer service and must refund the credit card chargeback.

Charity fraud

The charity fraud differs to the other examples of fraud as victims are not seeking anything in return.

The fraudsters seek victims amongst Church related web sites and chat rooms seeking persons to make regular donations to themselves to run a specific charity. The fraudster represents themselves to be a “Reverend” or “Pastor” who operates an orphanage or Church and is desperately seeking funds. There are no means provided to identify whether the charity exists or whether the person seeking the funds is who they represent themselves to be.

Black money fraud

In this fraud, the victim is lead to believe they are eligible to obtain payment for an opportunity such as an investment with the funds being in cash deposited in a security facility. The funds have been covered in a black powder to heighten the level of security and a “special solution” is required to remove the powder and reveal the legal currency.

They will be shown a series of notes with the powder on and treated with the special solution which removes the powder revealing the legal tender. The notes at the top of the box are legal tender with a substance such as Vaseline covering the note and black powder placed on top. The solution removes the powder revealing the note.

The remainder of the box is newspaper covered with black powder or black photocopy paper cut into the shape of currency. The victim makes many payments to obtain the powder and identifies they have been defrauded.

How to protect yourself:

• Do not send money to any person you meet on the internet.
• Understand when communicating with people you meet online; you only know what they want you to know about them.
• Identity theft is very common on the internet and the person you think you are communicating with may be using a stolen identity to deceive you.
• No-one you meet online is going to make you rich!
• You cannot win a lottery you did not buy a ticket in.
• If doing business with a people in a foreign country, seek expert independent advice from a specialist lawyer, financiers, Department of Foreign Affairs and/or the embassy/consulate of the country you are looking to do business with.
• Do not check references from those supplied. They are often friends of the fraudster. Make your own independent inquiries.
• Advance fee fraudsters understand the human vulnerabilities online and how to exploit them after building up your hopes.
• Refer to the ABCs of fraud protection