Common money transfer scams - and how to avoid them

Online money transfers are a fantastic way to send money quickly, securely, and easily to anyone, anywhere in the world. Unfortunately, there are also those who want to take advantage of these services for unscrupulous purposes.

In these situations, people might try to get you to give away your password, bank account information, or other sensitive details, but you could receive an odd message asking (or, more likely, demanding) that you make a money transfer for some vague yet apparently urgent reason.

We want to make sure that your money transfers are as safe and secure as possible. Take a moment to familiarize yourself with the following common money transfer scams and some tips on how to avoid them.

Common money transfer scams

1. Urgent (and odd) requests

You've received an urgent message:

• One of your loved ones is stranded abroad and needs money to get home.

• A friend or family member has been imprisoned, and you need to send money so they’ll be released.

• You’re apparently guilty of some vague 'criminal activity', and you need to transfer money so you won’t be arrested or imprisoned.

• Your boss or someone else at your company is away on business, and needs money from you.

The list goes on. These messages will all have the same common threads: they claim that something drastic has happened, and that you need to transfer money to a certain individual as soon as possible to fix things.

The events listed above could conceivably happen, but if that were the case, you probably wouldn’t hear about them from a complete stranger, and quickly sending money to an unverified recipient wouldn’t be the solution. Double-check everything before you transfer.

2. 'Accidental' transfers, and sellers who require wire transfers

Let’s explore three scenarios:

1. Someone you’ve never met transfers you money completely out of the blue. They contact you and let you know that they sent the money to you by mistake, and ask you to send them the same amount back.

2. You’ve agreed to sell something to an online buyer. They transfer money to you, but it’s more than you agreed on. They contact you, explain their mistake, and ask that you transfer the difference back to them.

3. You want to purchase something from an online vendor. They ask that you provide upfront payment, and only accept wire transfers or money orders.

These three scenarios are common scams. If you were to transfer money to them, here’s what would happen:

1. These phony payments are typically made with a stolen card or other fraudulent means, so they’ll get cancelled on their own, without any money coming into your account. But once you send your own money back, it’s gone.

2. Similar to the above, the cheque that the buyer 'overpaid' with will likely bounce. Any 'difference' you transfer will be coming entirely out of your own pocket.

3. It’s possible that the seller is just more comfortable with a secure wire transfer. But if they insist upon upfront payment and refuse any other form of payment (such as meeting in person, or escrow), they could be planning on taking your money and never providing the item you tried to buy.

3. Phony charities

Many charities will reach out asking for support, but some scammers will also pose as charities and ask for you to transfer money to support their mission.

If you’re not familiar with the organisation, do a little research to ensure that they exist and are legitimate. If the message claims to be from a known organization, check with the charity to make sure that this is one of their official communications before sending any money.

4. Surprise, you’ve won a contest or received a job offer—but you need to pay first

Sound too good to be true? It probably is.

You may receive a message about a 'contest' or 'drawing' you’ve won. You’re going to get a great prize, but there’s a catch: before you can claim it, you’ll have to transfer a small amount (relative to the grand prize) to cover taxes or processing fees.

Or maybe you saw a posting for a job that sounded great. You’ve been offered the job, but they need you to transfer money over to cover your 'supplies' before you can start.

Needless to say, the prize money and the too-good-to-be-true job will disappear after you’ve sent your money.

5. Online relationships

Ever seen an episode of Catfish? Then you’re familiar with these scams, which typically take place on dating websites and apps.

Two people meet online and form a strong bond, but suddenly one of them needs money for an emergency. They’re ill, a loved one is ill, they need to move, or something else has happened that has led to them to asking their new friend (who they’ve never met) to transfer them money.

6. Pig butchering scams

Pig butchering scams are a type of fraud where criminals build trust with victims online, before persuading them to invest in dubious ventures (often involving cryptocurrency or unconventional assets), or other offers like timeshare sales.

Here's what you can do to protect yourself:

1. Maintain a healthy skepticism.
   • Approach investment opportunities with caution, especially those promising unusually high returns. If the deal is genuinely lucrative, why would people share it with others? If it seems too good to be true, it probably is.
     
     
2. Be wary if you are asked for an upfront fee to take part in an investment scheme.
   • Don't send money without a properly documented contract that has been verified by reputable legal or financial experts.
     
     
3. Speak to a certified, licensed or regulated financial advisor, accountant or lawyer.
   • These professionals can help you tell the difference between genuine opportunities and scams. Seek their expertise before investing.
     
     
4. Contact us immediately if you think you've been scammed, or if someone tries to coerce you into using our services to commit fraud. Your vigilance may prevent someone else falling victim to a similar scam.

7. Social media scams

In today's digital age, social media has become a hotbed of fraud, putting unsuspecting users at risk.

Types of Social Media Scams:

1. Marketplace scams:
   • Fraudulent sellers advertise goods or services at attractive prices to lure buyers.
   • After receiving payment, they disappear without delivering the item, or provide counterfeit products.
2. Recruitment scams:
   • Fraudsters pose as legitimate recruiters offering lucrative job opportunities.
   • They ask for personal information, like bank details or social security numbers, to cover 'processing fees' or carry out 'background checks'.
   • Victims may have their identity stolen or be defrauded.
     
     
3. Rental scams:
   • Scammers post fake rental listings for properties that don't exist or aren't available for rent. They often ask for upfront payment or deposits before disappearing with the money.

How to Protect Yourself:

1. Research the seller or recruiter thoroughly first.
   • Check their identity, credentials, and reputation through independent sources or reviews.
     
     
2. Use secure payment methods from reputable platforms that offer buyer protection.
   • Don't transfer money or use unusual payment methods that don't offer fraud protection.
     
     
3. Beware of offers that seem too good to be true or that put pressure on you to buy.
   • Look out for grammatical errors, inconsistencies, or requests for sensitive information in unsolicited messages.
     
     
4. Check rental listings for discrepancies or signs of fraud.
   • Very attractive offers, or offers where there are limited ways for you to contact them could be a red flag. 
     
     
5. Trust your gut.
   • If it doesn't feel right, stop and ask friends, family or a professional you trust what they think.
     
     

How can I avoid falling victim to money transfer fraud?

You probably noticed some common threads in the examples above. When you check your emails or interact with people online, keep an eye out for the following warning signs when someone asks you to transfer money:

• The call or message came out of the blue, from someone you’ve never met or worked with in any capacity.

• The communication claims to be professional but the details aren’t right; there might be spelling and grammar errors, broken links, you need to download an unspecified attachment, or an unbranded or incorrect email address (for example, legitimate messages from Amazon would come from an @amazon.com email address, while fraudulent ones might be from [e-mail]).

• The situation is incredibly urgent, and pushes you to transfer money as soon as possible.

• It seems too good to be true, and wouldn’t make sense if you took a few minutes to think about it.