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Department of Insurance, Securities and Banking
 

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Advance Fee Scams

The District of Columbia Department of Insurance, Securities and Banking is warning District consumers to be on the alert for advance fee scams. Advance fee scams solicit investors to pay a fee up front—in advance of receiving proceeds, money, stock or warranties—to complete a deal or transaction. The advance payment may be described as a fee, tax, commission or incidental expense that will be repaid later.

For example, the Department received an online complaint about a scam being conducted by individuals claiming to be representative of the fictitious US Government Agency named the Department of Financial Regulators. The fictitious agency is purportedly located in the District of Columbia. In one instance, the perpetrators wanted the consumer, a British citizen, to pay $12,000 for shares in a company; it was not disclosed that the company was being liquidated.

Some advance fee schemes target investors who purchased underperforming securities; the investors are offered the opportunity to sell those securities if an advance fee is paid. The perpetrators also target investors who have already lost money in investment schemes.

Advance fee scammers may pose as legitimate US agents or firms and offer to help investors recover their stock market losses by exchanging worthless stock. However, they will require investors to pay an upfront security deposit or post an insurance or performance bond. They often direct investors to wire advance fees to so-called escrow agents or lawyers to give investors a level of comfort and to lend the appearance of legitimacy to their schemes.

Advance fee scammers also use official-sounding websites and email addresses to trick investors. Once the investor wires the advance fees into the designated account, it is then quickly wired to another account at an off-shore bank where the money trail disappears.

If you are contacted by an organization claiming to be the Department of Financial Regulators, or any potential scammer, you should note the time and date of the call, the name of the caller, the caller ID information and what the caller says. You should not provide the caller with your personal information. Instruct them not to call you again and hang up the phone.

If you believe you have been a victim of an advance fee scam, another type of financial scam or have questions, please contact the Enforcement and Consumer Protection Division of the District of Columbia Department of Insurance, Securities and Banking at (202) 727-8000.