Scams that promise money, gifts, or prizes

• Advance fee fraud scams
• Stock tips in e-mail and text messages

Advance fee fraud scams

An advance fee fraud is a scam that hooks you with the false promise of large sums of money for little or no effort on your part.

After you're deeply involved in the scam, you're asked to pay certain amounts of money to expedite the process. You end up not making a dime, losing your money, and perhaps turning over your personal information to fraudsters.

The most common form of advance fee fraud is an e-mail message that claims that you have won a large sum of money, or that a person will pay you a large sum of money for little or no work on your part.

Advance fee fraud is also known as the Nigerian Letter or the 419 scam, because the scammer often claims to be from Nigeria and 419 is the Nigerian criminal code that this scam violates.

Here are a few examples of the most popular advance fee frauds:

• A foreign government official would like your assistance in transferring funds and will pay you a hefty commission if you agree.
• You stand to inherit millions of dollars from a relative you don't remember.
• You've won a prize or a lottery (perhaps one from a foreign country) that you don't remember entering.

Stock tips in e-mail and text messages

The pump-and-dump stock scam is a common form of spam these days. According to the United States Security and Exchange Commission (SEC), spammers send 100 million of these e-mail messages per week! See examples of stock spam on the SEC Web site.

How pump-and-dump scams work
Scammers buy stock in a small company, often with stock prices of only a few dollars per share. Then they send out millions of e-mail or text messages across the globe to encourage recipients to buy that stock. These messages can even be disguised as confidential information that was sent to the recipient by mistake.

When enough people buy the stock, the price of the stock goes up. When the price is high enough, the spammers sell their shares. The price goes back down, and people who purchased the stock as a result of the tip suffer.

It can be difficult to find out who's behind pump-and-dump e-mail scams. That’s because spammers can take control of large numbers of computers and turn them into zombies that can work together as powerful 'botnets' to send the spam messages out.

Help avoid advance fee fraud scams

• Use spam filtering technology. For more information, see Help keep unwanted e-mail out of your inbox.
• Don't make investment decisions based on anonymous e-mail or text messages you receive.
• Don't open attachments in unsolicited e-mails. Stock spam usually is sent as an image or as a PDF attachment.
• Use an Internet service provider (ISP) or e-mail provider that has implemented Sender ID Framework, a technical solution to detect and block spoofed e-mail. All of the latest versions of Microsoft e-mail software support this technology.

Where to go for more information

In the United States, advance fee frauds are investigated by the United States Secret Service. For more information, visit the Advance Fee Fraud Advisory page.

To learn more about Internet hoaxes and scams in general, check the Urban Legends Reference Pages.