The Anatomy of Scams and How to Stay Safe — Advance Fee Scam

With many variations, people — poor and rich, smart, and successful — still fall for it!

By now all of us have heard about the decade-old Nigerian prince scam. Many of us unfortunately still receive emails from fraudsters claiming to make you rich for free. But if you thought it is too old a trick to fall for, think again. People — poor and rich, smart, and successful — still fall for it!

Look at the scale of just one of these scams: Nigerian prince scams still rake in over $700,000 a year (cnbc.com)

Incidentally, the trigger for this article is that someone randomly contacted me on WhatsApp and wants to strike a friendship. Smell something? I wanted to document the inner working of the scam and present it to the readers, but before that; we go over some basic and useful info in this article.

These types of scams are known as an “Advance-fee Scam”

“An advance-fee scam is a form of fraud and one of the most common types of confidence tricks. The scam typically involves promising the victim a significant share of a large sum of money, in return for a small up-front payment, which the fraudster claims will be used to obtain the large sum. If a victim makes the payment, the fraudster either invents a series of further fees for the victim or simply disappears.” — Wikipedia.org

There is hardly any technology or advanced methods of play, unlike a hack, malware, credit card fraud, identity theft, etc.

The fraudsters thrive on the greed of people or specifically target gullible people like the old. These scams purely rely on earning and exploiting your trust and are not complicated.

See this news article from this week, on the biggest ever phone scam. Can you believe it? — Thirty-Two Million Dollars!!!

I read daily about people getting duped. Even with constant news reports on such scams, people still fall for them. I too get emails and calls from people who want to make me rich. Luckily, I have read enough about these frauds that I can stay away from them. For the benefit of the readers, here’s are some notes to keep yourself and your hard-earned money safe.

There are several spin-offs of the Advance-fee fraud, some e.g. are:

• An Expensive gift — A stranger whom you ‘know’ for a few days sends you free money or ‘gifts’. You are then contacted by someone else to pay courier fees.
• IRS Scam — Fraudsters posing as IRS (Tax) officials threaten you to make overdue tax payments and threaten you with jail or fines.
• Customs Scam — You get a call from customs officials as you have a courier from a friend (Dollars, Gold, or other rare and expensive items). Now you must pay customs duty and other fees, they tell you the fee is refundable.
• Immigration Scam — The immigration department official calls and threatens to deport you. They say you provided incorrect information in your application. You must pay huge fees to correct it and make your stay legal.
• Lucky Lottery — You are being contacted as you won a lottery or lucky draw. Earlier this was only an email scam, a new twist ties it up with a local mall or business where the probability of a person visiting is high. Now to collect the winnings you need to pay fees and taxes.
• The visiting girlfriend (Honeypot)— The girl/boy of your dreams whom you met on the internet wants to visit you. You must pay for the airfare (outdated). Wait, she is already in your country and officials are holding her back. She might be carrying money or gifts for you. You must transfer money online to let her free — ah, you the prince charming!

There are many more, but you get the idea.

The fraudsters create new flavors every time. How can you identify these scams and stay protected?

Here are some tips to stay alert and away from fraudsters:

• If it's too good to be true, it ain’t.
• There are no free lunches. Your friend cringes when asked for a loan, why would a random ‘prince’ share his wealth with you or send you gifts?
• Don't be greedy. Fraudsters feed off people's greed.
• Don't be pressurized into making a transaction NOW. Stall and apply common sense on the offer/situation.
• Consult a friend or family member if you have the slightest doubt or if the situation is out of the ordinary.
• Don't share OTP (One Time Password) with ANYONE.
• Never share your Bank Details (PIN, credit card number, etc.) with anyone over the phone/email.
• A Govt. department (IRS, Immigration, Customs etc.) will not call and threaten you with jail or hefty fines. They will send a letter. Always wait for a formal notification irrespective of how precarious the situation is made out to be.
• If you are asked to pay fees or charges several times under various heads, it’s likely a scam. The first time is a mistake, the second time curiosity, the third time you are being really stupid and fraudster will take you for a ride. So, stop at one, if you ever fall for it.
• Do not give control of PC or Laptop to anyone, especially when dealing with banking transactions.
• Practice what you tell your kids — stay wary of strangers.

Stay aware, stay safe.

In the following articles, I will cover:

• Technologically more advanced but common types of scams.
• The Anatomy of a scam as it happens (Live series on how a fraudster tries his tricks with me)