Is paying an advance fee always a scam?

In regular trade and transactions, an invoice is prepared and products are delivered. Depending on the terms of the agreement and the products or services being sold, payment before delivery is quite common. From this perspective an advance fee, prepayment or even full payment before delivery is conventional practice. Yet, the legitimate side of business activities is sometimes overshadowed by obscure market players providing no service whatsoever whilst having charged an upfront fee. Such advance fee fraud appears in distinct areas and caution is therefore advised.

Services that are vulnerable for advance fee fraud are the provision of difficult to obtain loans and credit cards, fake diplomas and degrees, global licenses, the removal of public records, payment arrears, or the improvement of credit history, and other products and services that are under normal circumstances difficult to obtain. Fraudsters who advance fees dive into the dreams and positive expectations of their victims. Examples are the advanced sweepstake lotteries and winnings that need prepayment of several different fees before collection takes place, dating scams where foreign nationals eventually ask for financial assistance, and the notorious ‘African’ beg letters and 419 fraud.

Small business owners and sole traders do not always have a constant flow of income and may need to purchase materials and tools prior to the start of their assignment. This does not only apply to brick and mortar businesses but also counts for example for webdesigners who need a domain name, CSM system and visuals, or event organizers that build up an environment for a full-service party. When it comes to fast moving consumer goods, low priced stock and products with a high turnover are often held at the premises of the seller. This natural way of product sales and the customer experience is utilized by conmen and advance fee fraudsters to convince their victims to send their money.

Advance fee fraud is not a stable business for the fraudster. Income goes up and down where recruitment of new victims is a numbers game. The more people who get contacted the more people who get lured into sending money. Since the income is often spend for personal expenses, it is often difficult to recover prepaid fees and other advance payments. Therefore caution is always recommended and when an offer appears too good to be true, it mostly is.