How To Avoid The Asset Recovery Scam

People can be susceptible to falling for scams for a variety of reasons. Here are some common factors that make people vulnerable to scams:

Trust: Scammers often use tactics to create a false sense of trust with their victims. For example, they might pose as a legitimate company or authority figure and use official-looking logos or documents to make themselves seem more credible.
Fear: Scammers may create a sense of urgency or fear in their victims to pressure them into making a hasty decision. For example, they might threaten legal action or use scare tactics to convince the victim to act quickly.
Desperation: Scammers often target people who are in a vulnerable financial situation, such as those who are struggling to make ends meet. These individuals may be more willing to take risks and overlook warning signs in the hopes of finding a way out of their difficult situation.
Lack of knowledge: Many people are simply not aware of the various types of scams that exist, how they work, and what warning signs to look out for. This can make it easier for scammers to deceive them.
Overconfidence: Some people may believe that they are too savvy or too smart to fall for a scam. However, this overconfidence can actually make them more vulnerable, as they may not take the necessary precautions to protect themselves.

Say that you have lost money in some private investment that hooked a lot of other people, such as a Ponzi scheme or some crypto deal. You’ve lost quite a bit of money, perhaps your life’s savings, and you’d do anything to get it back. Then, one day somebody e-mails you out of the blue and promises that they have a way to get your money back for you. Or may you will see somebody post on Twitter or wherever that somebody has this ability. When you contact them, they will not say how, exactly, but they will imply that they have inside information which will allow you to be made whole. For a fee, of course.

Welcome to the asset recovery scam, or sometimes just the recovery scam for short. The scam is actually pretty simple: The scam artist finds a victim who has already been scammed, and promises to track down their lost moneys and recoup their moneys ― in exchange for which the victim will pay a fee. The promise is, of course, quite false and the victim is essentially re-victimized a second time when they pay the recovery scam artist.

Essentially, the asset recovery scam takes advantage of several unfortunate traits of human nature. The first of these is that some folks really don’t learn from their mistakes, and having been scammed the first time, they don’t catch on that they are being scammed a second time. These folks are essentially “recidivist victims” who will continue to lose money so long as they have it to lose. The second trait is that desperate people will do desperate things. If somebody has lost their life savings, well then of course they are going to try to pay even more money to try to get it back, no matter how long the odds are of that happening, or even if those odds are realistically zero.

The third trait is financial naivete, being a fundamental lack of knowledge about how real commercial and investment transactions are conducted, which is usually a leading reason why these victims were scammed in the first place. A financially savvy person would recognize that if the recovery agent really had an ability to recover the funds, that person should be more than willing to have the recovered funds placed into an escrow account until their fees were paid. Contrast that with a financially ignorant person who pays the agent a fee in advance, which is then immediately lost.

Asset recovery scams are also known as advance fee fraud because the scam artist is charging an up-front fee for something that will never happen. There are many varietals of advance fee fraud, far too many to even attempt to list here. The most common example is the well-known Nigerian 4-1-9 scam (named after the section of the Nigerian penal code which addresses this particular scam), where the Nigerian princess has $30 million held in account that she needs to get out of the country, and you can have 30% of it by advancing some cash so that she can pay bribes to get her money outside of Nigeria. When the victim pays the cash, the victim has been scammed, and the only thing the victim will thereafter get is a long list of excuses why the victim’s share has not materialized, until the scammer finally disappears.

Recovery scam artists find their victims in a number of ways. Often, the recovery scammers were insiders who assisted with the first scam and so have contact information for the victims and may also know enough personal information to more easily sell their service. Other times, the recovery scammers are those who have purchased a list of victims from the first scammer, and then set out to contact them one by one. Another way for recovery scammers to find victims is for themselves to set up internet discussion boards which purport to be for the benefit of victims, but instead are just collecting victim’s e-mail addresses so that they may be privately contacted. Then there are those recovery scammers who advertise on social media, such as posting responses to victims that have the tenor of “Joe Blow can unfreeze your crypto account for you, contact him at such and such. He did it for me!”

Once a recovery scammers has its hooks in a victim, they will then try to milk as much money as possible out of the victim. This includes not just the original fee, but the recovery scammers will make up expenses that need to be paid, all the while telling victims that they are just about to get the victims’ money back. Nothing is further from the truth, however, but sometimes these victims will keep paying money to the recovery scammers for literally years and years. In the meantime, victims will be spoon-fed story after story about how they are just about to get their money back, but there has been one holdout or another.

The asset recovery scammers also often assist, intentionally or unintentionally, the original scammers by keeping victims from make a criminal complaint to the appropriate authorities. The recovery scammers will tell the victims something to the effect that the involvement of law enforcement will simply it harder to get their money back, so they should stay as quiet as possible. By the time the victims figure out what has happened, if ever, the trail for law enforcement to follow will have gone cold.

With the larger scams, usually victims do not need to hire an asset recovery specialist for the reason that regulatory agencies will step in to freeze the original scammer’s accounts and other assets, and then a receiver will be appointed to make distributions of whatever can be liquidated to victims. This may not net 100 cents on the dollar, but there is also no extra cost to victims for the recovery effort. With smaller scams, victims should instead hire an attorney or licensed private investigator to look into possible recovery.

Are all asset recovery companies scammers? Well, let’s put it this way: The odds of an investment fraud victim finding a bona fide asset recovery specialist amongst all the recovery scammers is probably on the order of something like 500:1. There are a few good asset recovery specialists out there, typically former law enforcement types, but they are very few and very far between, and those usually stay busy working for law enforcement agencies and court-appointed receivers. Indeed, a hallmark of a real asset recovery specialists is that they will usually tell victims to go file a criminal complaint right away, and also to hire a lawyer to look into the prospects for civil recovery. The asset recovery scammers will almost never do that. Also, the real asset recovery specialists will either be paid a percentage or collections ― but only after money is actually collected ― or paid by the hour and not on a lump-sum basis. The real asset recovery specialists will also be able to give a list of well-known people who will give them references, whereas the recovery scammers (if they give references at all) will usually name some folks who themselves have less than stellar backgrounds.

The real key, though, is to simply refuse to pay any money up from for asset recovery services. If the alleged asset recovery specialist will not wait to be paid until there is an actual recovery, that should tell you everything that you need to know about their own confidence in obtaining a recovery. Don’t pay an advance fee, and don’t be a victim, again.