Nigerian Scam

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. Email Money Transfer - EMT

    A retail banking service that allows users to transfer funds ...
  3. Mock Auction

    A scam in which con artists work as a team to sell low-quality ...
  4. NGN (Nigerian Naira)

    The currency abbreviation for the Nigerian naira (NGN), the currency ...
  5. Honorary International Investors ...

    An organization of prominent investors from around the world ...
  6. Excess Crude Account

    A Nigerian government account used to save oil revenues above ...
Related Articles
  1. Investing News

    CEO Email Scams Cost $2 billion

    CEO email scams cost a pretty packet, according to the FBI.
  2. Personal Finance

    Protecting The Elderly From Scams

    Here are some of the more common scams aimed at seniors and tips on how to avoid these frauds.
  3. Entrepreneurship

    Stop Scams In Their Tracks

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

    Investment Scams: Conclusion

    Now that you're familiar with the various kinds of online investment scams, we hope you'll be prepared for anything the fraudsters throw at you. We'll be happy if this tutorial saves one person ...
  5. Personal Finance

    Common Scams Targeted At Teens

    Teens should be aware of these scams, which include scholarship frauds and fraudulent investments.
  6. Retirement

    Avoid These 5 Scams Targeting Senior Citizens

    Unfortunately, many scam artists try to prey on people whom they perceive as particularly vulnerable, especially seniors.
  7. Taxes

    Avoiding Tax Scams

    These schemes can lead to fines - and even jail time - for both the scammer and his victims.
  8. Investing

    What Is Phishing?

    Find out more about this scam and how to avoid it.
  9. Financial Advisors

    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. Personal Finance

    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 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 >>
  3. 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 >>
  4. 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 >>
  5. What is a "phishing scam" and how can they be avoided?

    The term phishing (as in fishing for confidential information) refers to a scam that fraudulently obtains and uses an individual's ... Read Answer >>
  6. What documents I need to transfer an IRA/SEP/SIMPLE to a Traditional IRA?

    Most firms require that you complete their account transfer request form, which they use to request the transfer of assets ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center