There are hundreds - even thousands - of ways to commit fraud. From counterfeiting to "fixed" games of chance, from stock market "pump and dumps" to telephone scams, the schemes are too numerous to list here. Set out below are the main categories of fraud you could encounter. These categories are not mutually exclusive and often overlap. Furthermore, the fraudulent schemes may be more elaborate than the basic descriptions provided here. But do not be fooled by a professional looking office or glossy, well-designed investment prospectuses. In each case, the fraudster disappears with most of the "invested" money.

Affinity Fraud

The first task that the successful fraudster must face is gaining his victim's trust. After trust is established, he then presents the scheme in whatever form it takes. It may be as simple as a request for a loan to him or a third party.

In most cases, the fraudster lacks any legitimate credentials or real experience on which he can build the basis for trust. Instead, a common way to gain trust is for the fraudster to cite some connection - ancestry, religion, race or common experience - shared with you. Not too surprisingly, the con artist has no hesitation in fabricating whatever facts are needed to establish these "links".

"Ponzi" Scheme or Bubble Scheme

Here, the fraudster promotes an investment opportunity that offers huge returns in a "can't-lose" scheme - such as investments in gold mines, oil and gas leases, finance companies, or cosmetics or whatever is the current popular trend in legitimate investments. He may even go so far as to prepare glossy brochures with graphs and charts outlining the expected returns.

In fact, there is no investment (or a worthless one). Profits are not derived from the investment; instead money from later investors is diverted to pay off earlier investors. These early investors often tend to reinvest their money. Having just received a huge return on their investments, they can innocently become recruiters for other participants with "look how it worked for me" testimonials. As the inflow of new investors slows, it becomes impossible to pay out the earlier investors at the rates of return promised, and the Ponzi Scheme collapses.

Pyramid Scheme

A close relative of the Ponzi scheme, this time the fraudster peddles a scheme that is based on investing in a business enterprise that the investor/victim can buy into and run.

Typically, victims are given the opportunity to sell a product which, on a closer look, is of poor quality (although some schemes dispense with having a product entirely!). What is important to this scheme is that new investors are charged a membership fee or must make an initial up-front investment of some kind. They are then encouraged or expected to recruit new investors from whom they will earn commissions or a finder's fee.

Because investors must find several investors before any substantial return is realized, the pressure to keep recruiting is significant. But many investors learn only after they've put up their money that product support or quality is so low and sales so insignificant that the only way to make any money is to recruit other distributors.

Like the Ponzi Scheme, the money does not come from the underlying business opportunity. Up-front investment money from later investors is diverted to pay off the recruitment commissions for earlier investors. And like the Ponzi Scheme, the Pyramid Scheme must collapse when the pool of new investors dries up (and it will) since to keep going, and for everyone, particularly new members, to make money, there must be a never-ending supply of recruits.

Business Opportunity Fraud

In this scheme, con artists capitalize on the typical franchising model: A franchisee pays fees in exchange for licenses to a recognized company or product name, training and on-site assistance, and an established product supply. But while he's quick to collect the fees, the fraudster fails to provide the services in return.

The most common hook is earnings misrepresentation: investor/victims are told that they will realize a certain return within a given timeframe. Not surprisingly, the claims are not matched by reality. Examples include vending machines or rack displays put in low traffic areas.

Another method is training claims. Most investors welcome the opportunity to gain training relevant to the start-up and maintenance of the intended franchise business or to gain access to an ongoing support network. The fraudsters collect the training "fees" and then disappear, or provide worthless training.

Advance Fee Fraud

This kind of fraud is based on the promise of providing a service or a product for a fee which must be paid beforehand. This particular scam has hundreds of variations with just as many kinds of services promised: processing loans, forwarding special or "inside" information, finding lost bank accounts, providing lists of scholarships. Sometimes, the fee is not requested up front, but only required after the victim is involved and the fraudster sees a real opportunity to make money. The common element: the product or service is never delivered or is worthless.

Perhaps the best example is the Nigerian Fraud, or 419 Scam (named after the section of the applicable Nigerian Criminal Code) which itself involves a number of different forms.

Typically, a "Nigerian official" contacts the victim with a story about finding overpayments or secret profits from a government agency or contractor. The official says he needs your help to move the money out of the country - and suggests he deposit money in your bank account in return for a 30 per cent "commission." At first, he needs no money from you, but once you're committed, the problems suddenly crop up. He needs money to cover certain expenses (i.e. bribes, processing fees, etc.). He will even go to great lengths to show how he is putting up his own money.

This is what makes it an advance fee fraud. You are now expected to pay money before you will get a return.

Many people who encounter a description of the Nigerian Fraud deem it unlikely of success. However, it is estimated that it collects over $1 million per day within the United States and is the subject of special federal legislation there. People in Canada have also been victims and several large losses involving lawyers, accountants, bankers and brokers are known.

Recovery Room Scam

This is perhaps the most mean-spirited kind of fraud. In essence, the fraudster contacts someone who is known to have been the victim of a fraud and offers to try and recover some of the loss, or at least assess the likelihood of recovery. Another version involves the fraudster offering to run the worthless business opportunity for a fee.

The end result is that nothing is ever recovered for the victim after what can be very elaborate - and costly - efforts by the fraudster. Note that this fraudster is often working as a team with the original fraudster.