(abridged) The dust content of the universe is primarily explored via its interaction with stellar photons, producing interstellar extinction. However, owing to the physical extension of the observing beam, observations may detect scattered photons, resulting in a change in the observed (or effective) extinction, depending on the spatial distribution of the dust and the resolution of the instrument. We investigate the influence of clumpy dust distributions on effective extinction toward embedded sources and those in the diffuse ISM. We use Monte Carlo radiative transfer to examine effective extinction for various geometries. By varying the number, optical depth and volume-filling factor of clumps in models of spherical shells and the diffuse ISM, we explore the evolution of extinction. Depending on the number of scattering events in the beam, the extinction curve steepens in homogeneous media and flattens in clumpy media. As a result, clumpy dust distributions can to reproduce extinction curves with arbitrary R_v, the effective ratio of total-to-selective extinction. The flattening `washes out' the 2175 \AA bump and shifts the peak to shorter wavelengths. The mean R_v of a shell correlates with the optical depth of an individual clump and the wavelength at which a clump becomes optically thick. Similar behaviour is seen for edge-on discs or tori. However, at grazing inclinations the combination of extinction and strong forward scattering results in chaotic behaviour. Caution is therefore advised when measuring extinction in, for example, AGN tori or toward SNIa or GRB afterglows. In face-on discs, the shape of the scattered continuum changes with clumpiness, however, unlike absorption features, individual features in the scattering cross-sections are preserved. Finally, we show that diffuse interstellar extinction is not modified by scattering on scales of a few kpc.