Money Transfer Scams: What They Are and How to Avoid Them

Updated on December 3, 2021

The dawn of the digital age has brought many great things, such as video streaming, smartphones, and ordering pizza with the tap of a button. But it’s also brought with it more sophisticated money transfer scams that prey on people’s trust to con them out of money.

Read below for tips on how to avoid money transfer scams, including how to spot them and a few of the most common ones in use right now.

What are Money Transfer Scams?

Money transfer scams occur when someone asks you to transfer money to them under fraudulent pretenses. To get you to comply, for example, they may tell you someone you love is in danger or demand payment in return for a fraudulent service they’re providing.

How to Spot a Money Transfer Scam

When someone asks you for money, you should always be wary, especially if it’s someone you don’t know. Look for these red flags. If you spot one, or something about the interaction seems suspicious, do not continue with the transaction.

• Being asked to use a wire service to make a payment or send money to someone you don’t know.
• Receiving a message that includes grammatical errors and spelling mistakes and claims to be from a large company asking for money.
• Receiving a message from someone overseas asking for money in return for services.
• Being offered an overpayment for a product or service with a request to wire the extra funds back to the sender.

Common Money Transfer Scams to Avoid

While scammers initiate new deceptions every day, there are some scams that criminals return to again and again because they’ve worked successfully before. Here are some you should avoid and how they typically play out.

1. Relative in Trouble Scams

Someone contacts you claiming your grandson, great aunt, or distant cousin has been put in jail. They say you need to wire money for bail right away. The caller will have an elaborate story about why you can’t talk to the person in trouble.

Hang up the phone and directly call the person supposedly in trouble. They can reassure you they’re OK, and that you shouldn’t send the money.

2. Computer Repair Scams

You get a call from someone who claims they work for a well-known software company, stating that your computer has been hacked and offering to fix it for you. They convince you that viruses and malware have been installed on your computer and request for you to allow them to take control of your PC in order to start the repairs.

Once granted access, they’ll search through your files looking for personal information and make it appear like they’re cleaning your PC. You’ll then be asked for payment.

These scammers aren’t cleaning your computer, but hacking it and attempting to gain as much of your personal and financial information as possible to commit fraud. They’ll seem legitimate and could become pushy. Always remember to never allow anyone to take remote control of your devices.

3. Online Job Scams

You see ads for “easy work-from-home” jobs that advertise making quick money from the comfort of your own home. These advertisements are scams if the first thing your new “boss” wants you to do is deposit a check that they gave you into your own personal bank account.

If the deposited check is fraudulent – either drawn on a compromised account or completely made up – this check will ultimately not be paid, and as a result, the funds will be removed from your account. If you follow through with a request from them to deduct those funds from your account as cash or make a purchase, this could result in a negative balance in your account that you now owe, and you’ll become a victim of the fraudster’s scheme, as they’ll no longer return any of your attempted communications.

4. Romance Scams

You find yourself falling in love with someone online, even though you’ve never met them in person. Your significant other will seem legitimate, but will actually be sending you pictures of another person they’re pretending to be. Over time, they begin asking for money for reasons such as returning to the U.S. after working overseas in the military or on an oil rig, helping a sick relative, or paying off debts in order to return home to you. They’ll find reasons why you’re unable to send the funds directly to them and instead need to go through a third party.

In a situation like this, you should never send money to anyone you haven’t met in person for any reason.

Protect Yourself Against Money Transfer Scams

Unfortunately, even the savviest people can fall prey to money transfer scams. It helps to stay educated about new schemes so you can be aware of how scammers may contact you. You should also take these precautions.

• Don’t send or give your Social Security number or financial information, such as bank account numbers or online banking credentials, to anyone.
• Never send money to someone you haven’t met.
• Only use trusted money transfer services.
• Be aware that caller ID, emails, and social media profiles can be spoofed. Scammers have sophisticated technology that can make these methods of communication seem legitimate, even when they’re not.
• Check information online when you can and see if anyone else has been bilked by a similar scheme. Talk with a trusted family member, friend, or even your financial institution to discuss the legitimacy of the situation.

How to Report a Money Transfer Scam

If you’re the victim of a money transfer scam, contact your financial institution to protect your account and identity. Also, contact your local police department — even if the scam occurred online and the fraudster isn’t local.

Next, contact your city or regional consumer protection office. If you can’t find one close by, get in touch with the Pennsylvania Attorney General’s Office, which functions as the state consumer protection office.

In addition to alerting your local and state authorities to what happened, you should file a report with the federal authorities. Many scammers target people across the United States. Any information you can contribute to authorities may help protect others from being similarly targeted.

Use these strategies to avoid being scammed and report any potential scammers to the proper authorities. To learn more about protecting your money, check out our WalletWorks page.