/ / 7 Common Money Transfer Scams

7 Common Money Transfer Scams

And How to Avoid Them


While it’s easier now more than ever to send money to your family abroad, pay a friend instantly, or pay for goods and services online with a money transfer service or mobile wallet, this ease comes with pitfalls

You see, while you can spot some scams right away, other’s are a bit more difficult to recognize. 

Scammers evolve with our awareness, but you can stay one step ahead of them. 

Be Aware! 👍

In this article we uncover 7 common online money transfer scams to watch out for, how to avoid them, and how leading money transfer companies keep your money and data safe.

Scam 1 – Advance Payments

In these types of online money transfer scams, people are generally asked to pay a fee or a large sum of money upfront before the goods or services are delivered. 

A prime example, is the advanced-fee scam.

The Federal Bureau of Investigation (FBI) states that, “An advance fee scheme occurs when the victim pays money to someone in anticipation of receiving something of greater value—such as a loan, contract, investment, or gift—and then receives little or nothing in return.” Source wikipedia.

Typically, they’ll want you to pay a large amount often through a wire transfer in advance as a tax liability, “finder’s fee,” or incidental expense that they promise to refund.

There are many variations of this scam.

Another great example of advance payment fraud, is property rental in a different country.

Typically the scammer finds a property online and then pretends to be the owner through a fake listing online.

Then they ask for a deposit, bond or rent for the stay.

Scam 2 – Charitable Donations

Ever had anyone knock on your door, ask you for money after a natural disaster or major event, and then guilt you for not supporting a good cause? 

That’s the first sign of a charitable donations scam – putting excessive pressure on people to take advantage of their compassion. 

Here are some other warning signs of fake charities or charitable donation scams:

  • Individuals posing as associates of legitimate charities and insisting you make a cash instead of writing a cheque to the charity. Or asking you to transfer money to their their personal account instead of the charitable organization’s account.
  • Refusing to share a receipt or sharing a receipt that doesn’t have the registered name or legal information of the charity they claim to be from.
  • Asking you to make a donation on a website without a secure payment gateway (a quick way to check this is whether their website URL says “http://” or “https:/” – if it’s “https://,” the website is secure).

Scam 3 – Emergency Fund Transfer Fraud

Anything happening to your family while you’re away, whether for work or travelling, is probably your worst nightmare. 

Scammers know this and they try to create fake urgency so you act on an impulse and send a large amount of money their way. 

How do they pull this off?

  • By hacking into a family member’s email, social media, or instant messenger (like Voxer or WhatsApp) and sending a payment link or 
  • By posing as a well meaning doctors, nurses, hospital admin staff or lawyers who want to help out your family members in their time of distress by taking this task off their plate. 

Scam 4 – Identity Theft

Identity theft via phishing, smishing, vishing (we’ll explain these in a minute) are popular ways scammers steal your personal and financial data. 

What is phishing?

If a website you buy from frequently (typically small or medium sized businesses) doesn’t audit their payment gateways to ensure complete security, scammers can steal data such as your credit card pin, customer ID, CVV, etc. 

More information about phishing can be found in wikipedia.

What is smishing?

You probably receive lots of text messages from your bank about new offers, bank down time, or updates about your transactions. 

Sometimes, scammers sneak in a text message with a malware link which compromises your personal and financial data. 

What is vishing?  

Sometimes scammers call you up posing as bank officials and ask you a bunch of general as well as very specific questions in the hopes that you’ll give away sensitive data without realizing. 

Scammers can use each method individually (and very tactfully) or a combination of these methods to steal your data and authorize payments on your credit card or bank account with you being in the dark.

More information about vishing can be found in wikipedia.

Scam 5 – Money Mule or Money Laundering

Ever get emails that tell you’ve got that job you applied for or won a lottery, but you need to send money to someone else to actually get access to all of those things?

Chances are the scammers are trying to make you a part of “money mule” scams where they steal money from other people and use your good will with banks and money transfer companies to move funds from one account to another. 

Scam 6 – Data Theft or Extortion

Remember the “ransomware” threats from a couple of years ago? 

Here’s what happened. 

People logged on to their laptops or PCs to find all their files mysteriously locked (encrypted) by the scammers.

The scammers then asked the victims to decrypt their files by purchasing an “unlocker” online or by directly transferring money to specific accounts to receive access to their files. 

While this issue isn’t reported as frequently now, some unsuspecting person or the other keeps getting scammed in this way. 

So it’s always a good idea to stay aware and take precautions to protect your personal and financial data.

Scam 7 – Cash App Scams

Apps like the Cash App, Venmo, Zelle, Square Cash, PayPal, Google Pay, Apple Pay, Square Cash, and Facebook Messenger are a super convenient way to pay family and friends (often instantaneously) for smaller things like a restaurant bill, fuel, shared rent with a roomy… you get the picture. 

Basically all those little things that you would have used cash, now done often through your phone.

There is a big problem though.

All these apps are designed to be super convenient to use, which means you usually don’t need much at all to send money.

They also are designed so that when your money is gone – like cash – it is gone. Usually with very little recourse.

For a scammer that makes you an easy target. 

For example, in one scam (shown in the video below) the scammer uses social media to connect with you. To build your trust, the scammer sends you money in return for you sending a smaller amount. This can be do through a cash app or fake wire transfer. As the scammer builds trust the amounts get higher, until finally, no money is returned.

How to Keep Your Data and Money Safe

Generally if you are 100% sure of the details of who you are sending the money to and use a well known, and reputable service the chances of being scammed are far lower.

They are licensed

All reputable money transfer services (for example, TransferWise, World Remit, Remitly, Western Union, XE, TorFX, OFX etc.) are licensed financial service providers in all the regions they operate and regulated by local authorities

This means they have to adhere to the same regulations high street banks need to follow while handling your money. 

And, if you’re sending large amounts ($7000 USD/$9000 CAD/ $9500 AUD/ €5800 EUR/ £5300 GBP and above), it’s always a good idea to double check that the currency transfer company you’ve chosen is registered in your country.

They require you to verify your identity (upon sign up or if you’re sending a large sum)

This makes sure that the users that transact on their platform are indeed staying within the scope of service offered by the currency transfer company (personal transfers only or both personal and business transfers) and to avoid duplicate accounts that can be used for financial crimes such as scams and money laundering.

Regular audits

Currency transfer companies also conduct regular audits and may ask you to provide additional information for a transfer if it raises a red flag (for example, unusually large amount, exotic currency, etc.). 

These audits are conducted to protect your money, the goodwill of your account, as well as other users on the platform.

Secure website

All registered and licensed currency transfer providers keep their website protected with updated security certificates and industry-leading encryption protocols. 

These encryption methods also alert if you have malware on your system and whether it’s safe to conduct a financial transaction from the compromised system.

Two-step authentication

Most money transfer companies have easy-to-use mobile apps to make transfers on the go easier. 

But they also make sure these transfers are safe by enabling two-factor authentication on the mobile apps and website – this means if you don’t approve a transfer, it doesn’t go through.

Never ask for sensitive information

Reputable money transfer companies will never call or email you and ask about sensitive financial information such as your bank customer ID, debit or credit card PIN, debit or credit card CVV, etc.

Bottom Line

While online money transfer companies have a robust set of checks and balances, it’s ultimately your best judgement that can keep your personal data, sensitive financial information, and your money safe. 

Scammers are sneaky, but you can outsmart them if you know their game.

So make sure you do your due diligence before you send money to a stranger, pay up for a too-good-to-be-true deal, or double check with your friends and family in case of emergencies.

Happy and Safe Transfers!

Similar Posts

Leave a Reply