People around the world continue to be duped by advance-fee frauds, with one Dutch private investigation company estimating the highest ever annual losses occurred in 2009.
Victims lost at least US$9.3 billion last year, up from $6.3 billion in 2008, said Frank Engelsman of Ultrascan, a Dutch company that investigates advance-fee frauds (AFFs) and other types of crime. Ultrascan will release a complete report on Friday on its Web site.
AFFs are also known as 419 scams, named after a Nigerian criminal code statute. Scams originating in Nigeria were so pervasive that the country’s Economic and Financial Crimes Commission stepped up law enforcement efforts in recent years to crack down on scammers.
The scams take many forms but essentially involve tricking a victim into sending money with the false promise of some greater reward. While most people identify and ignore the scams, a fraction of people are hooked and can end up losing big, lured into believing that the more money they send, the more they will eventually receive. Ultrascan calls AFF schemes the world’s most successful scams.
Ultrascan collects its figures based on cases it has analyzed. In 2009, Ultrascan reviewed 8,503 AFF complaints coming from 152 countries. Engelsman called 2009 “the worst year yet.”
The reason is that organized AFF gangs are expanding their operations to not only target people in Western Europe and the U.S. but also in countries such as India, China, Indonesia, Malaysia and Thailand, Engelsman said.
The majority of perpetrators are still Nigerian, who find local partners to help them send fraudulent e-mail and other tasks, Engelsman said. Organized AFF gangs are also aligning with other gangs in order to launder money, cash fake checks and in some cases move into areas such as drug smuggling, he said.
The toll on victims is heavy. Engelsman said many of the victims that Ultrascan had contact with had given so much money to the scammers that their home was either repossessed or in danger of being taken by a bank.
“We have found evidence of scammers being proud by the number of victims that lost their homes because of the skill of the scammer responsible,” Ultrascan’s report said.
The top three countries for AFF losses in 2009 were the U.S. at $2.1 billion, U.K. at $1.2 billion and China at $936 million. Engelsman cautioned that the figures are merely based on Ultrascan’s limited investigations, as the true figures are likely many times higher.