Based on data from law enforcement and regulatory authorities such as the Internet Crime Complaint Center and the Federal Trade Commission mass-marketing fraud schemes generally fall into three main categories: (1) advance-fee fraud schemes; (2) bank and financial account schemes; and (3) investment opportunities.
Advance-Fee Fraud Schemes. This type of scheme is based on the concept that a victim will be promised a substantial benefit – such as a million-dollar prize, lottery winnings, a substantial inheritance, or some other item of value – but must pay in advance some purported fee or series of fees before the victim can receive that benefit. While there are almost endless variations on the basic scheme, here are some of the more frequent substantial types:
Auction and Retail Schemes. According to data from law enforcement and consumer protection organizations,fraudulent schemes appearing on online auction websites are among the most frequently reported form of mass-marketing fraud. These schemes, and similar schemes involving online retail sites, typically purport to offer high-value items - ranging from high-priced watches to computers to collectibles- that are likely to attract many consumers. These schemes induce their victims to send money for the promised items, but then deliver nothing or only an item far less valuable than what was promised (e.g., counterfeit or altered goods). In some cases, fraudsters email prospective victims to say that they have additional quantities of the items that had been up for auction, but persuade them to go to other websites that do not offer the consumer protections found on legitimate auction sites.
Business Opportunity/"Work-at-Home" Schemes Online. Fraudulent schemes often contact people to advertise purported business opportunities that supposedly allow individuals to earn thousands of dollars a month in "work-at-home" ventures. These schemes typically require the individuals to pay anywhere from several dozens to several hundreds of dollars (or more), but fail to deliver the materials or information that would be needed to make the work-at-home opportunity a potentially viable business.
Credit-Card Interest Reduction Schemes. Some fraudulent schemes contact individuals and offer to help them lower their credit-card interest rates, but charge fees without effecting actual reductions in the cardholders' interest rates.
Inheritance Schemes. Some fraudulent schemes contact prospective victims representing that the people contacted are in a position to receive a substantial inheritance from a family member or from an individual who has died without heirs. The person contacted is then subjected to a series of demands for advance payment of various nonexistent fees before the inheritance can be transferred.
Lottery/Prize/Sweepstakes Schemes. Operating from a growing number of countries, such as Costa Rica, the Dominican Republic, Jamaica, the Netherlands, Nigeria, and Spain, fraudulent schemes falsely represent that the person contacted has just won a substantial lottery prize or other sweepstakes or prize contest, but must pay what proves to be a growing number of nonexistent "fees" or "taxes" before he or she can receive the prize.
Online Sales Schemes. Some schemes operate by contacting people who use Websites to advertise large items they are selling, such as cars. The people who contact the prospective seller represent that they want to buy the item, but then send the seller a check for more than the purchase price. The fraudulent "buyer" instructs the seller to use money-transfer businesses to wire the funds in excess of the purchase price to the "buyer." Invariably, after depositing the check into his account, the seller soon finds that the check is counterfeit. This means that the seller not only loses the funds that he wired abroad, but will also be required by the bank into which the check was deposited that he is liable for the full face value of the counterfeit check.
"Romance" Schemes. Some schemes send out masses of emails, in which the senders pretend to be men or women interested in romantic relationships. People who respond to such emails may be subjected to a lengthy stream of emails or even phone calls professing love and affection. In fact, when the responses come exclusively by email, the persons sending the emails to the victims typically are not even the gender or age that they falsely tell their victims. Eventually, the victims may be persuaded to send substantial amounts of money to their "true loves," who lie about needing money to travel or to meet other unexpected expenses. In some cases, victims are even talked into performing tasks that directly further the scheme, such as receiving and redistributing counterfeit checks to be sent to other victims or receiving funds from other victims.
Bank and Financial Account Schemes. Some mass-marketing fraud schemes also involve mass contacts with individuals to trick them into providing their bank or financial account data, so that participants in the scheme can gain unauthorized access to those accounts and siphon off funds or charge goods to the victims' cards. These types of schemes involve not only fraud but also identity theft - the wrongful obtaining and using of someone else's personal data in some way that involves fraud or deception, typically for economic gain.
"Phishing". For example, some schemes engage in "phishing," the use of emails and websites that falsely purport to be associated with legitimate banks, financial institutions, or companies, but that manipulate Internet users into disclosing personal and financial data.
"Vishing". Some schemes also engage in "vishing," the telephone equivalent of phishing. In vishing schemes, fraudsters often call prospective victims, pretending to be officials with the victim's bank and seeking to trick the persona called into disclosing banking details during the call.
Investment Opportunities. As enforcement actions by the Securities and Exchange Commission and criminal prosecutions indicate, there are two basic types of investment criminals are using two basic methods for trying to manipulate securities markets for their personal profit.
"Pump-and-Dump" Schemes. These schemes typically disseminate false and fraudulent information in an effort to cause dramatic price increases in thinly traded stocks or stocks of shell companies (the "pump"), then immediately sell off their holdings of those stocks (the "dump") to realize substantial profits before the stock price falls back to its usual low level. Any other buyers of the stock who are unaware of the falsity of the information become victims of the scheme once the price falls.
Short-Selling ("Scalping") Schemes. These schemes take a similar approach, by disseminating false or fraudulent information in an effort to cause price decreases in a particular company's stock.
Other investment schemes involve direct solicitation of prospective investors through "cold calls" (i.e., calls to people whom the fraud scheme has not previously contacted) or Internet or phone contacts based on lists of people who previously were previously contacted by fraud schemes. These include schemes that simply fail to invest the investors’ money as promised, as well as "Ponzi" schemes (i.e., schemes that recruit multiple would-be investors, but use a portion of the funds received from later investors to pay "dividends" to earlier investors to enhance the appearance of the scheme"s legitimacy).