Topics Types of Bank Fraud 12 Most Common Types of Bank Fraud Account Takeover (ATO) Fraud Advance Fee Fraud Check Fraud ACH Fraud Real-time Payment Fraud First-Party Fraud Wire Fraud Zelle Fraud Types of Card Fraud Credit Card Fraud Debit Card Fraud Lost or Stolen Card Fraud Card Skimming Card Cloning Chargeback Fraud Card Not Present (CNP) Fraud Fraud Defenses Anti-Money Laundering (AML) Behavioral Biometrics Crowdsourced Abuse Reporting Device Fingerprinting Real-time monitoring Email Reputation Service IP Reputation Service SR 11-7 Compliance Supervised Machine Learning Suspicious Activity Reports (SARs) Tokenization Transaction Monitoring Two-Factor Authentication (2FA) Unsupervised Machine Learning Fraud Tactics Bot Attacks Call Center Scams Credential Stuffing Data Breaches Deepfakes Device Emulators GPS Spoofing Money Mule Scams P2P VPN Networks Phishing Attacks SIM Swap Fraud URL Shortener Spam Web Scraping Fraud Tech Anomaly Detection Device Intelligence Feature Engineering Generative AI Identity (ID) Graphing Network Analysis Natural Language Processing Fraud Types Application Fraud Transaction Fraud Payment Fraud Pump and Dump Scams Bust-Out Fraud Buyer-Seller Collusion Content Abuse Cryptocurrency Investment Scams Money Laundering Loan Stacking Romance Scams Rug Pull Scams SIM Swapping Synthetic Identity Theft Cryptocurrency Scams Pig Butchering Scams Advance Fee Fraud: Everything You Need to Know What is advance fee fraud? Advance fee fraud is a financial scam where the fraudster asks for payment upfront, or in advance, for a good or service that they never plan to deliver. Scammers start with a convincing story to get their victim to trust sending an advance payment. Common covers for these frauds include promising a return on an investment, sharing a business opportunity, or asking for help securing an inheritance or lottery winnings which the fraudster says the victim will receive part of. In many cases, the scammer claims to be a wealthy individual, a government official, or a relative of the victim. This not only helps build trust in their story, but explains where the funds would come from. To help solidify this false story, they may create fake websites, fake business pages, and even fabricate entire social media presences to appear legitimate. Once the victim makes the payment, the scammer disappears and the victim has no way to recover their money. Advance fee fraud examples 419/Nigerian prince scams Maybe the most classic example of an advance fee fraud. The scammer claims to be a Nigerian prince or a member of royalty who needs assistance in transferring a large sum of money out of the country. In exchange for the victim’s help, they promise a substantial reward. Lottery or prize scams Victims receive notifications claiming they have won a lottery, sweepstakes, or prize but need to pay fees or taxes upfront to claim their winnings. The promised reward is fake, and the scammers vanish after receiving the payment. Inheritance scams Scammers pose as lawyers or representatives of a deceased person with a substantial inheritance. The victim is told they are the beneficiary but must pay fees to facilitate the release of the funds. Business opportunity scams Victims are offered a lucrative business opportunity that requires an upfront payment for various expenses, such as licensing fees, permits, or legal costs. The promised business never materializes. Romance scams Scammers build romantic relationships with individuals online then create a crisis situation, such as a medical emergency or legal trouble. They request money to resolve the issue and may disappear once payment is made. These scams can also lead to money mule scams. Job offer scams Fraudulent job offers promise high-paying positions or work-from-home opportunities but require the victim to pay upfront for training materials, background checks, or other fictitious expenses. Rental scams Scammers pose as landlords for properties that may not exist or are not theirs to rent. They request a deposit or advance rent payment before disappearing with the victim’s money. Charity scams Scammers create fake charity organizations or claim to represent legitimate ones, asking for donations to support a cause. Victims are asked to make upfront payments, but the money is not used for any charitable purpose. Loan scams Fraudsters offer loans with favorable terms but require upfront fees or insurance payments. After the victim pays, the loan never materializes and the scammer drops all contact. Common tactics advance fee scammers use Urgency and pressure – Scammers create a sense of urgency or pressure to force victims to act quickly without evaluating the situation. Confidentiality – Scammers emphasize the need for secrecy and confidentiality, which builds trust by having the victim be “in the know” while keeping the fraud secret. This also aims to prevent victims from seeking advice or verification from friends, family, or authorities. Impersonation – Fraudsters pretend to represent trustworthy entities, like government offices, reputable businesses, or legitimate organizations. They use fake credentials, official-looking documents, or forged emails to lend credibility to their schemes. “Too good to be true” – Scammers often present offers that seem too good to be true, such as winning a large sum of money, receiving an inheritance, or securing a high-paying job without significant effort. Fake documents – Especially popular in investment scams, fraudsters send victims fake contracts, certificates, or legal papers to make their claims appear legitimate and create a false sense of security. Unsolicited communication – Advance fee scams typically begin with unsolicited communication via email, letters, or phone calls. Payment requests – Scammers request upfront payments for things like processing fees, taxes, legal costs, or administrative expenses. Using alternative payments/currencies – Victims are asked to send money via wire transfer, prepaid cards, cryptocurrency, or other untraceable methods. How to avoid advance fee fraud Be skeptical of unsolicited communications: Be cautious when receiving unexpected emails, letters, or messages from unknown individuals or organizations. Be especially cautious if the communication promises significant financial gains or involves urgent requests for assistance. Verify identities: Verify the identity of the person or organization contacting you. Use official contact information, such as phone numbers from official websites, to confirm legitimacy. Be skeptical of communications from individuals claiming to be government officials, business executives, or heirs to fortunes. Research and cross-check information: Conduct thorough research on the offer or proposal presented to you. Search for any information available about the individual or organization online. Cross-check details provided in the communication, such as names, addresses, and phone numbers, to ensure consistency. Avoid sharing personally identifiable information (PII): Refrain from sharing sensitive personal information, such as bank account details, Social Security numbers, or passport information, with unknown individuals or entities. Question unusual requests: Be cautious if you are asked to pay upfront fees, taxes, or expenses to receive a promised benefit. Legitimate transactions typically do not require such payments in advance. Consult with trusted contacts: Seek the advice of friends, family, or colleagues before making any financial decisions based on unsolicited offers. Use secure communication channels: Ensure that communications, especially those involving sensitive information, are conducted through secure and official channels. Avoid clicking on suspicious links or downloading attachments from unknown sources. Report suspicious activity: Report any instances of suspected fraud to relevant authorities, such as law enforcement agencies or consumer protection agencies. Stay informed: Be aware of the latest scams and share information with friends and family to collectively stay vigilant. How to prevent advance fee fraud Artificial Intelligence (AI) plays a significant role in preventing advance fee fraud by leveraging advanced machine learning technologies. Network analysis and anomaly detection help AI-powered fraud platforms analyze vast amounts of data and identify patterns associated with fraud schemes. Natural Language Processing (NLP) can be used to analyze the content of emails, messages, or documents to identify linguistic cues and patterns commonly associated with fraudulent communications. Behavioral biometrics, such as typing speed, mouse movements, or online session patterns, can be monitored for anomalies. Generative AI can automate rule tuning, suggests new rules, and help fraud investigators with scripting and documentation. Holistic fraud and risk platforms, like the DataVisor fraud platform, combine all these features plus unparalleled supervised and unsupervised machine learning.