List of Scams

By Wesley Morales,2014-11-21 20:38
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List of Scams

    List of Scams


Advance Fee Fraud/Nigerian Letter

    Promoters of these scams ask their victims to participate in the transfer of overseas funds, often out of African countries such as Nigeria, South Africa and Côte d'Ivoire. However, these scams are now originating from many other countries and continents, especially Asia. All of these scams tell fictitious stories, explaining that due to some misfortune in the promoter's country, they wish to discreetly transfer large amounts of funds overseas. The promoters of these scams usually ask their victims for their bank account details to store the money. Consumers who provide their account details then find that money goes out of, not into, their accounts.

    Advance fee fraud scam recipients may be contacted by email, fax or letter, but email has helped these scams to proliferate globally in recent years and is by far the most common method used to promote this type of fraud

Chain Letters/Pyramid Schemes

Pyramid Selling Schemes - The main characteristic of a pyramid selling scheme is that

    earning money and gaining promotion within the scheme depends primarily on recruiting people into the operation, rather than by selling a legitimate product or providing a service. Often, the goods or services involved have little or no value outside the scheme. In a typical pyramid scheme, people are often induced to pay a substantial fee to join, and then recruit others into the operation who must also pay to join the scheme. The only way that these new members can recover their money is by recruiting more people into the operation.

    Promoters at the top of the pyramid profit from having people join the scheme because they pocket the payments made by those who join under them. The incentive is that once members have recruited a certain number of people the payments they will receive will be greater than their initial outlay. Therefore, the people who originate the scheme have a large advantage over those who join later. Ultimately, however, pyramid schemes are doomed to collapse because there is a limit to the number of people who can join and participants lose their money. For everyone to profit there would have to be an endless supply of newcomers.

    Chain Letter - Chain letters that request the recipient to send money to people on a list, then to add their own name to the list and forward it to several friends (or other people) with the same instructions are a common form of pyramid selling. Chain letters often claim that the recipient could 'become a millionaire within six months' by posting the letters. This type of scheme is illegal under the pyramid selling provisions of the Fair

    Trading Act 1990.

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Computer Prediction Software

    Consumers are misled into purchasing products such as horse-betting prediction software with claims that they could be earning thousands of dollars per month with the aid of this piece of software. In some cases, consumers have paid thousands of dollars for computer predictions software. The problem with this software is that contrary to what marketers tell consumers it is a gambling, not an investment program.

Employment Schemes

    Also known as 'Work From Home', envelope stuffing scheme, pyramid scheme, advance fee fraud

    Advertisements in self-employment opportunities columns of local papers offer work ‘stuffing envelopes’. Consumers are required to pay some money up front for work that never eventuates. Once they have paid their money, consumers often discover that there are no envelopes to stuff. All that they generally receive is a set of instructions on how to lure other people into the scheme. Some self-employment schemes ask their victims to work from home using their computer, but this ends up costing them money instead of making them money and they are often, in effect, pyramid schemes.

Fax Back

    Unsolicited fax back scams come in a range of guises. This type of fax may advertise diet programmes, employment opportunities, publications, and modelling or acting work. Consumers respond by completing and returning the fax to a 1900 number. But there is a catch - it contains large amounts of black ink, which takes time to transmit (sometimes at a rate of $5.50 per minute). The fax can often take up to 10 minutes to complete so some consumers may receive telephone bills for $55 - a costly exercise and a clever ploy by the marketers.

Investment and Financial

    Investment and financial scams are promoted by people who claim to be financial advisers. These scam promoters often claim to be stockbrokers or portfolio managers offering victims high returns for their money. Scammers generally offer share, mortgage or real estate 'investments' and 'high return' schemes, and they may also encourage their victims to trade in foreign currency. You may find that the majority of these scam promoters operate from overseas countries, as most of their activities are illegal in Australia.

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    Real Estate - Real estate scam promoters inflate the value of investment properties and attempt to sell them, typically to potentially buyers who do not reside locally, at prices that are well above fair market rates. When victims decide to sell their investment property they discover that they will suffer enormous losses on their original purchase. Scam promoters bank on their victims not knowing the value of real estate in the area that they are marketing, and often promote their offers as 'once-in-a-lifetime' opportunities.

Misleading Share Promotion - The scam promoter claims that the stock being offered

    will soon increase in value, but victims of these scams are always left with a loss since they always pay more for the shares than they are really worth. While such investment scams are not new they are increasingly international in scope. Scam promoters falsely claim to be large international brokers offering shares in overseas companies to Australian consumers. The promoters make false promises about the investments and use fake documentation to convince investors of their legitimacy.

    The activity of the scam promoters is illegal as they perpetrate fraud on investors. Victims of these scams receive near worthless and/or restricted shares, or no shares at all. Once investors' money leaves Australia, it is almost impossible to recover. Many of these scams are promoted via uninvited email messages. The operators are elusive, using 'virtual offices' to mask their true size.

Itinerant Traders/Door-to-Door Scams

    Itinerant Traders - Itinerant traders generally pose as professional handy men. These door-to-door hustlers often target the elderly, who are more vulnerable to their use of intimidation and pressure tactics to secure a job. The quotes given are generally exceptionally low and the work done, if any, is usually shoddy or incomplete. The most common complaints relate to paths and driveways, fencing services, painting, carpet cleaning, hot water servicing, roof treatments, and guttering repairs. These 'tradesmen' also solicit work from businesses. For example, these scammers have been known to turn up unexpectedly with bitumen, asphalt or concrete, offering to pave driveways, car parks and pathways.

    Consumers are usually asked to pay for the job up front in cash and are often rushed into making on-the-spot decisions after being told that the 'special' offer is valid only for that day as another customer has cancelled. The sham 'tradesmen' have even driven their victims to a bank to force payment for their shoddy work, then have disappeared without a trace as soon as the money was handed over, leaving an unfinished or sub-standard job. The bogus tradespeople often ask their victims for money to purchase 'materials' and then never return.

    Door-to-Door - Door-to-door scams involve promoting real or false goods or services, such as a roof repair, home or garden maintenance, and telephone services. Sometimes 'door-knockers' pretend to conduct a survey. Door-to-door sales are normally uninvited and fail to show adequate personal identification and contact details. Even in the case of

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    genuine businesses and products, unscrupulous operators can still act illegally to the detriment of other people.

    Door-to-door scammers will not give consumers value for their money. Their money-back guarantees will turn out to be useless. Scammers will ask for either a deposit or full payment, in cash or by credit card. They seldom accept cheques as they can be easily cancelled later. Door-to-door scammers also fail to tell consumers about their legal rights, including the cooling-off period for door-to-door sales.


    Typical examples of these scams are claims that the recipient has won a sweepstakes or lottery, but that up front 'processing fees' must be paid before the winnings can be forwarded. Consumers are usually told that they have won millions of dollars in the lottery, and a number of people will send the processing fees even though they don't remember entering the lottery. One notorious example of this scam claims affiliation with the genuine El Gordo Spanish Lottery.

    As is the case with prize award scams, consumers as lured by the promise of gains greater than the initial outlay. Consumers may react by thinking ‘This is unexpected but what have I got to lose? All I have to pay is a processing fee of $39.95 and I'll win $1.5 million dollars.’

Medical, Health and Weight Loss Schemes

    Unsolicited mail order scams, spam or Internet sites offering weight loss products and miracle cures for illnesses such as cancer and HIV/AIDS. For example, scam promoters might claim that a 'slimming capsule' will allow the recipient to quickly and effortlessly lose a large amount of weight, and the scam correspondence will make statements such as "…lose 30 kilos in 30 days", and "lose weight while you sleep". Testimonials from people who purport to have used the weight loss product may claim they lost 40 kilos in 40 days and were able to keep this weight off without exercising or altering their diets. Consumers who purchase such weight loss products find that they have spent a significant amount of money on a worthless product.

Prize Awards and Merchandise Offers

    Prize Awards - Consumers receive a confirmation notice alleging that they have won a prize, usually a cash prize of thousands or even millions of dollars. Recipients are required to pay a processing fee in order to claim their prize money.

Skill Contests and Games - Skill contest scams are variations of prize award scams and

    require the participant to perform tasks, such as solving puzzles of progressive difficulty,

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    to win cash prizes of thousands or, in some cases, millions of dollars. Points are awarded for correct solutions to puzzles, and scam victims are told that they will be competing with other contestants. The contestant with the highest points total is supposed to win the 'grand prize'. Scam recipients face disqualification from the contest if they don't reply or don't perform the required tasks. To enter the contest, scam recipients must provide an activation fee (e.g. $25), and are told that if they don't provide this fee as instructed they would lose their opportunity to use their skill to win the large cash prizes on offer.

Merchandise Offer - Unsolicited mail is received offering a diverse range of

    merchandise, which is usually worthless. Consumers who purchase these products find that they have wasted a significant amount of money or they may not even receive the goods they paid for and ordered from an overseas country (e.g. the Netherlands). Often, the consumer is told that these products are gifts, which will be delivered to them if they pay a mandatory fee (e.g. $50) to cover shipping, delivery, and administrative costs. Consumers may be asked to choose 'gifts' or products such as jewellery and motor vehicles from a catalogue. Of course, once this fee is paid the consumer doesn't receive the promised gift and is unable to contact the scammer to obtain a refund.

    Unclaimed Goods - Sometimes people actually purchase goods that they do not collect, and these items are referred to as 'unclaimed goods'. Scam victims receive a notice advising them that they ‘…are approved for an immediate claim’ on these commercial goods, such as computers and televisions or often motor vehicles (e.g. expensive, luxury European sedans). Recipients of this scam are required to provide an administration and processing fee (e.g. $49.95) before they are able to receive the goods.

Psychics, Clairvoyants and Fortune Tellers

    A supposedly 'personalized' letter asks recipients to send an initial amount of money to a postal address, typically something like $79.95 to a post office box, and to sign a form to release confidential and personal informational. Self-proclaimed clairvoyants might offer to perform a 'Grand Celestial Operation' to allow 'Feng Shui Cosmic Breath' to enter the recipient's life, enabling the recipient to win $100,000 in an unspecified lottery in one hit with five correct numbers, all for a fee of $79.95. Scam victims are then asked to send more money to receive 'special' clairvoyant products or services, which are either never supplied or are of little or no value. Sometimes, victims of clairvoyant scams may then be targeted by a lottery scam. Just as the psychic promised, a letter arrives saying they have indeed won the money and just need to pay a processing fee to collect it.

Unauthorised Advertising Blowers/Telefraud

    Blowers - These scammers are referred to as 'blowers' because they usually telephone their victims, posing as reputable publishers of magazines, directories or Internet sites and then sell advertising space or directory listings. Scammers repeatedly send invoices

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    and demand payment before they receive any signed authorisation for the advertisement to be placed in their publications.

    The usual modus operandi of 'blowers' includes promoting advertising or directory listings in publications, which do not exist and were never intended to exist. When a publication does exist it is usually of poor quality and low in circulation.


    All descriptions provided courtesy of the Consumer Affairs Victoria Resource Centre.

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