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What is an advance fee scheme?

If you participate in an advance fee scheme, you're essentially offering someone something of great value for a fee upfront. The catch is that the person who pays you that fee is likely to get little or nothing as a result of the transaction.

There are many times when people gamble hoping to come out with more than they've put into a situation, but an advance fee scheme is different.

Is this a crime?

Not all advance fee schemes are crimes because of how they're arranged. For example, a clever person might call the fee a finder fee and use a binding contract that makes it legal to offer very little or to refuse to offer the buyer something in return. This releases the person from liability for the fee, even though lottery winnings, investments or other assets may have been offered.

The reality is that these schemes happen all the time. People often receive emails stating that they only have to send a few hundred dollars to receive millions or that by paying $50 now, they'll make $500 by tomorrow. It's clear to see that the likelihood of that happening is slim to none, or many more people would take up the opportunity.

Avoiding these schemes isn't always easy, but with some tips, people can. The main thing to look for is an offer that is too good to be true; if it seems unlikely that it will work, you're probably right. Know who you're dealing with, so you don't get caught off guard.

Not all fees you pay up front are a sign of advanced fee schemes. If you're accused of running one of these schemes but have a legitimate business, it's in your best interests to protect yourself quickly.

Source: Scams and safety, "Advance Fee Schemes," accessed April 26, 2018

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