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 Georgia, advance fee frauds are considered illegal and are covered under various state and federal laws. The Georgia Fair Business Practices Act (FBPA) prohibits deceptive business practices, which would include advance fee schemes. Under this act, it is unlawful for any person to engage in any unfair or deceptive acts or practices in the conduct of consumer transactions and trade. Additionally, the Georgia Securities Act of 1973 regulates securities transactions in the state and prohibits fraudulent and other dishonest dealings. At the federal level, the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC) also combat advance fee frauds. The SEC oversees securities transactions, protects investors, and maintains the integrity of the securities markets, while the FTC protects consumers from deceptive and unfair business practices. Victims of advance fee frauds in Georgia can report the fraud to the Georgia Attorney General's Office, the SEC, or the FTC. It is advisable for individuals approached with such offers to seek guidance from an attorney before proceeding with any transactions that require an advance fee.