How to Protect Yourself Against Wire Fraud

Editor’s note: This is the latest entry in a yearlong series on protecting yourself against fraud. You can read additional posts about fraud here.

Wire transfers are popular because they allow people to send money to someone else almost instantaneously. Unfortunately, that instantaneous transfer of funds is also what makes them so dangerous.

In this post, we’ll take a look at some of the types of popular wire transfer scams – and offer some tips to help you avoid falling victim to a very costly scam.

Types of Wire Fraud Scams

• Real estate fraud. In these terrifying scams, hackers hijack an email address and send legitimate-looking closing documents that they have doctored to include their wire transfer destination instead of the appropriate wire transfer destination.

• Lottery scams. In these scams, the victim may be told they’ve “won” money but need to wire a payment for taxes or fees first. Then the “winnings” never arrive, or they do come, but they come from an individual rather than a sweepstakes or company, and you’ve unwittingly helped launder money as a mule. (Check out our previous blog on “money mules” here.)

• Romance scam. The victim “meets” someone online – maybe it’s through social media or an online dating site – and as the conversations get more serious, the scammer requests money so they can come visit, or because they have an emergency surgery coming up, or some other urgent matter.

• “Grandparent” scam. In this scam, someone calls the victim impersonating a grandkid or another younger relative. They’re in trouble (arrested, medical bill, car problems, etc.) and need you to wire them money – but not to tell anyone about it.

• Government impersonation scam. This common scam starts with someone telling you they are from the government (or even an automated message) and that there is a problem with your Social Security Number, you owe money to the government, a case is being brought against you, or something similar that sounds alarming.

• Fake sellers. Marketplace scams are utilized by scammers who ask for payment via a wire transfer, and then never provide the item you purchased.

• Fake buyers. In this scam, fraudsters respond to items for sale in online classifieds, newspapers, and online marketplaces. They’ll then pay with a fake check for more than the sales price and ask you to wire the extra funds to someone, maybe to someone who is going to ship the item. The check is fake, and you’re now out the money you wired.

Tips to Remember

Never …

• wire money to someone you don’t know.
• wire money to someone claiming to be from the government.
• wire money to someone pressuring you to act immediately.
• wire money to someone who says a wire transfer is the only way to pay.

Watch out for these red flags:

• The call/email appears to originate from another country.
• The email is riddled with typos.
• You are told you will receive a check and are asked to wire money that the check supposedly covers.

If closing a real estate transaction…

• Discuss the closing process with your real estate agent in person or use a password that you’ve agreed to confirm who you’re talking to if you’re discussing the closing on the phone.
• Beware of last-minute changes.
• Contact the closing attorney directly to confirm the wire transfer details.

Call the wire transfer company immediately if you suspect you’ve wired money to a scammer.

• The sending company can only reverse the transfer if they are able to notify the receiving financial institution before the transaction is processed, so you must act quickly.

Check back next month for more tips on protecting your identity and your financial life.