Advance Fee Fraud (AFF), a prevalent scamming technique I have investigated for decades, preys upon individuals’ aspirations for sudden gains (usually social status). It involves soliciting money upfront with promises of extraordinary returns that are never fulfilled. In recent times, Tesla has come under scrutiny for being nothing more than an elaborate AFF scheme. This post aims to examine the nature of advance fee fraud, outline its key characteristics, and analyze the validity of allegations against Tesla.

AFF is a deceptive practice wherein perpetrators exploit victims’ desire for any kind of abrupt and simple gain, by requesting an upfront payment. Targets are enticed with promises of unusually great returns, often through investment opportunities or lucrative business ventures into “easy” gains (e.g. too good to be true).

However, once the payment is made, the fraudsters demand more money and more loyalty to people hooked on the scams, ultimately failing to deliver on their promises, which increasingly become described as “difficult”.

There are three major characteristics to look for when assessing AFF:

1. Advance payment: of course as the name suggests, there is a requirement for payment in advance. Victims are typically lured into believing the payment is a key to cross a velvet rope for a special waiting position, necessary to unlock promised gain. Tesla has for example asked each owner to pay an additional $15K for “full self driving” capability that they claim both eliminates the need for a driver, while also warning it doesn’t eliminate the need for a driver. Or it took nearly 2 million payments for a concept car. It displayed a “survival truck” and promised delivery soon after. Instead it repeatedly fails basic safety tests for serious design flaws (panels don’t fit, brakes don’t work, suspension is flawed) and has no delivery years later. Safety inspectors have rated the latest attempts as un-drivable because so highly likely to crash and occupants highly unlikely to survive.
2. Unbelievable promise: future visions, persuasive tactics, highlighting lucrative investment opportunities or exclusive deals that appear too good to resist. Allegations against Tesla accurately point out that the company offers grand promises without delivering. Some point out little has changed at the company since 2012, even though every year for a decade they’ve repeatedly asked for advance fees to deliver “driverless this year” without accountability.
3. Elusiveness: as in any criminal enterprise, avoiding legal consequences takes on many faces. Tesla is legendary for hiring huge teams of lawyers to dispute common sense, gaslight and argue against any regulations at all, while grossly violating safety standards left and right. Multiple broad investigations tying up taxpayer money (SEC, OSHA, NHTSA, California Department of Fair Employment and Housing, etc) have been chasing the elusive Tesla.

Some would counter that Tesla has indeed delivered a lot of physical cars to the road.

Unfortunately, a reported high percentage of them are sent straight to the junkyard with less than 10K miles due to known design flaws. Worse, another percentage of them are involved in fatal crashes due to known design flaws, some within their first 1K miles.

Experts have described the Tesla “premium” brand as equivalent to the dangerously low-quality 1990s Kia, worth 1/20 of asking price. Is a low quality vehicle highly likely to fail, injuring occupants or worse, really delivering something of value to those believing promises for something entirely different?

Experts also point out Tesla innovation apparently stopped in 2012, both hardware and software progressing almost not at all, despite being changed constantly (churned). Owners complain on message boards their earlier cars were preferred to the newest ones, calling generation 3 nothing different from generation 1 despite Tesla demands for higher fees.

Some would counter that Tesla has indeed attracted significant investments from reputable people.

We sadly see this in AFF all the time. Intelligence, success, even at institutional scale, are no antidote to fraud. One of the reasons is lack of domain expertise or a claimed “domain shift”. The attacker targets those who understand least what is being claimed.

Tesla falsely has been emphasizing “new technology” as a domain shift when in fact it’s based on a 1997 design and a 2003 engineering effort, which are related to electric cars developed in the 1950s and popularized in the 1990s. Even its “driverless” claims are not much different from 1950s engineering discussions (promised to be delivered by 1975). But by claiming entirely “new” status, it touches a cognitive bias that turns off normal skepticism and defenses of its victims.

Already without much trouble we see Tesla has hallmarks of AFF, a fraudulent scheme that preys on individuals’ aspirations for rushed gains. While social status of owning a Tesla may have worked initially based on false promises of helping the planet, even that has worn off now as the Tesla CEO has been accused widely of environmental harms, labor abuse, extreme racism and homophobia.

Allegations have emerged linking Tesla to AFF because under careful examination of the characteristics the case becomes rather clear. Tesla’s reputation for missed delivery, lack of technological advancement since 2012 (after they copied the Mercedes W211), and over-focus on using confidence from its victims as proof of its viability, stand as evidence for the claim that it is nothing more than an AFF.

As consumers, and especially as fraud investigators, it is crucial to remain vigilant and discerning, noting such substantial evidence of fraud.