Advance fee frauds ask investors to pay a fee up front—in advance of receiving any proceeds, money, stock, or warrants—in order for the deal to go through. The advance payment may be described as a fee, tax, commission, or incidental expense that will be repaid later.

Some advance fee schemes target investors who already purchased underperforming securities and will offer to sell those securities if an advance fee is paid—or target investors who have already lost money in investment schemes. Fraudsters often direct investors to wire advance fees to escrow agents or lawyers to give investors comfort and to lend an air of legitimacy to their schemes. Fraudsters may also try to fool investors with official-sounding websites and e-mail addresses.

Advance fee frauds may involve the sale of products or services, the offering of investments, lottery winnings, found money, or many other so-called opportunities. Fraudsters carrying out advance fee schemes may:

• Offer common financial instruments such as bank guarantees, old government or corporate bonds, medium or long term notes, stand-by letters of credit, blocked funds programs, fresh cut or seasoned paper, and proofs of funds;

• Offer to find financing arrangements for clients who pay a finder’s fee in advance; or

• Pose as legitimate U.S. brokers or firms and offer to help investors recover their stock market losses by exchanging worthless stock—but requiring investors to pay an upfront security deposit or post an insurance or performance bond.

In Florida, advance fee frauds are illegal and are considered a form of financial fraud or theft. These schemes violate both state and federal laws. Under Florida law, specifically the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), it is unlawful to engage in deceptive, unfair, or unconscionable trade practices, which would include advance fee schemes. Perpetrators can be prosecuted under this act and face both civil and criminal penalties. Additionally, federal laws such as the Federal Trade Commission Act and various securities laws, including the Securities Exchange Act of 1934, also prohibit fraudulent activities related to advance fees and investments. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) may also pursue enforcement actions against individuals and entities involved in advance fee fraud. Victims of such schemes in Florida can report the fraud to the Florida Attorney General's Office, the SEC, or the CFTC. It is advisable for individuals to consult with an attorney if they believe they have been targeted by an advance fee fraud scheme.