DEFINITION of 'Nigerian Scam'

A scam where the sender requests help in facilitating the transfer of a substantial sum of money, generally in the form of an email. In return, the sender offers a commission, usually in the range of several million dollars. The scammers then request that money be sent to pay for some of the costs associated with the transfer. If money is sent to the scammers, they will either disappear immediately or try to get more money with claims of continued problems with the transfer.

Also known as "advance fee fraud" and the "419 fraud."

BREAKING DOWN 'Nigerian Scam'

This specific type of scam is generally referred to as the Nigerian scam because of its prevalence in the region, particularly during the 1990s. There is also a section of the Nigerian criminal code, Section 419, that makes this type of fraud illegal. However, this scam is not limited to Nigeria and is also perpetrated by many organizations in many different countries around the world. The origins of this scam are widely debated with some suggesting it started in Nigeria during the 1970s, while others suggest its origins go back hundreds of years to other confidence scams such as the Spanish prisoner scam.

The scammers hope that the commission offered will be enticing enough to compel the recipient to take the risk of sending thousands of dollars to a stranger. The reasons given for the transfer can differ from a government freezing an account to the existence of an account with no beneficial owner. When it comes to this type of request, however, it is important to remember that if anything sounds too good to be true - it usually is.

Warnings signs of a Nigerian scam include a U.S. currency account in a foreign country, odd spelling and language in the body of the email and a promise of substantial compensation for little effort.

RELATED TERMS
  1. Reloaded

    A slang term meaning that a consumer who was previously defrauded ...
  2. Bottom-Dollar Scam

    Fraudulent claims by swindlers or con artists who prey on job ...
  3. Email Money Transfer - EMT

    A retail banking service that allows users to transfer funds ...
  4. Cross-Firing Scam

    A type of scam in which a business transfers money between its ...
  5. Mock Auction

    A scam in which con artists work as a team to sell low-quality ...
  6. Telegraphic Transfer - TT

    An electronic method of transferring funds. Telegraphic Transfers ...
Related Articles
  1. Small Business

    Watch Out For These Top Internet Scams

    The Internet had make it easier than ever for scammers to trick people into giving away their money and personal information. These are the scams to avoid.
  2. Investing

    CEO Email Scams Cost $2 billion

    CEO email scams cost a pretty packet, according to the FBI.
  3. Small Business

    Stop Scams In Their Tracks

    Find out how to protect yourself and your loved ones from financial fraudsters.
  4. Taxes

    Tax Imposter Scams on the Rise This Tax Season

    A growing scam is the tax impostor one, according to the Better Business Bureau.
  5. Financial Advisor

    Avoid These 5 Scams Targeting Senior Citizens

    Unfortunately, many scam artists try to prey on people whom they perceive as particularly vulnerable, especially seniors.
  6. Financial Advisor

    Affinity Fraud: No Safety In Numbers

    Ponzi schemes are just one example of this type of scam; learn how to avoid becoming a victim.
  7. Trading

    Spotting A Forex Scam

    Forex scams are more common than you think. We tell you how to spot them.
  8. Personal Finance

    6 Common Penny Stock Scams to Watch Out For

    Learn about the seven most common penny stock scams, and how to avoid them.
  9. Financial Advisor

    How Advisors Can Help Clients Spot Elder Scams

    Financial crimes against the elderly are on the upswing. Here's what financial advisors can do to help protect their most vulnerable clients.
  10. Financial Advisor

    How to Avoid the Top Financial Advisor Scams

    Investors need to be wary of financial advisor scams. Here are the most common and how you can protected yourself.
RELATED FAQS
  1. What are the top Social Security scams targeted at the elderly?

    Prevent Social Security scams by learning to recognize the most common types of scams that target senior citizens receiving ... Read Answer >>
  2. What are the most common scams regarding Social Security benefits?

    Learn about some of the most common Social Security scams that occur by phone, email and direct mail, and how to recognize ... Read Answer >>
  3. What are the warning signs of online hotel / travel booking scams?

    Learn more about travel booking scams and how to avoid them. Explore warning signs of possible booking scams, and find out ... Read Answer >>
  4. How does a pump and dump scam work?

    A pump and dump scam is the illegal act of an investor or group of investors promoting a stock they hold and selling once ... Read Answer >>
  5. Can I make money advertising on my car, or is it a scam?

    Are car wrap advertising companies legitimate? Some companies are scams, but some car wrap companies offer legitimate ways ... Read Answer >>
  6. What is the doctor advisory scam?

    U.S. securities law provides certain exemptions that allow privately owned companies to issue shares of unregistered stock ... Read Answer >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center