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 West Virginia, advance fee frauds are considered illegal under both state and federal law. These schemes, where individuals are asked to pay an upfront fee with the promise of receiving a larger amount of money or valuable goods later, often do not result in the promised delivery and are a form of financial fraud. The West Virginia Securities Act, along with federal securities laws, prohibits fraudulent activities related to the sale of securities. Additionally, the West Virginia Consumer Credit and Protection Act provides protections against deceptive practices, which would include advance fee schemes. Victims of such frauds can report the matter to the West Virginia Securities Commission or the Attorney General's Consumer Protection Division. It is important for investors to be wary of unsolicited offers, especially those requiring an advance fee, and to conduct thorough due diligence before making any payments. Consulting with an attorney before engaging in any investment that seems suspicious is also advisable.