Online Money Transfer Scams and Frauds

If you’re a product of digital dough life, you definitely prefer transferring money with a tap or a swipe as easy as pie. But wait you might want to know about this sneaky little bug that’s making waves around the money transfer business, and it’s called online money transfer fraud.

You see, there are some pretenders out there who are willing to extort money from unsuspecting people. We want you caught so you stay caught up on their tricks. Recent stats are turning heads, and they are alarming. 18 to 24-year-olds are the most affected when it comes to money transfer scams.

Well, if you belong to this age group, don’t worry because you are not alone, and wise owls between 45 and 54 are not far behind. According to the report, 35 percent of the respondents of this age also fell under this scam. Fraudsters stole $5.5 billion in 2021 through wire transfers in 2021, according to a report by GoBankingRates.

Enough came the following year when that number jumped to $8.8 billion. Yes, you read that right – billions with a “B,” and when it comes to the fraud playground, phone scams are king, with a home run as the top scam tactic. Score. Close on their heels? You guessed it — money transfer and mobile payment fraud, getting a 30% share of the scam pie.

So, you might be wondering how to avoid these scams. Read us through, and we’ll tell you all the tips on how to keep your money safe and miles away from scammers and thieves. Let’s dive in and tell you the full details about the topic at hand.

Types of Money Transfer Scams

To hack money transfer scams, you need to block different types of money transfer scams. It is important to understand at least the most common types of money transfer scams to avoid them. So here are the most common types of money transfer scams.

Phishing

You may have heard the term “catfishing” from social media. It is the activity in which a person creates a false persona or character and deceives other people. Phishing is a very similar phenomenon.

Here, scammers try to get their hands on your details or data by pretending to be an organization or acting on behalf of your trusted authority.

Most of them try to ask for personal information such as your passwords or bank account details under the illusion that the data is needed for administrative reasons. Such information is then used to hack bank accounts and make unauthorized transfers.

Fake president scam

A fake president scam is when a scammer contacts a person pretending to be a company executive and asks the person to transfer a certain amount of money to the scammer. A scammer uses the persona of someone who actually exists.

It may be hard for you to imagine that something like this could happen to you, but reports suggest that fake president scams have recently increased over the past two years.

Millions of Americans lost their money because of just one email, The Borowitz reports. Someone emailed people asking for money.

The email claimed to be from an individual stating that his election winnings had been taken from him and that he needed cash to get them back.

The alarming thing about this scam is that despite having a cyber security or crime policy, many companies still need to have the necessary measures in place to deal with this scam. Social engineering is hard to deal with.

Social engineering refers to when a scammer exploits common psychological weaknesses or assumptions about authority. Often, fraudsters exploit patterns of behavior that are imperceptible and at a subconscious level that people or companies don’t realize until they’ve been victimized by the scam.

Such scams are not included in the cyber policy because it is easier to identify such vulnerabilities once something happens.

Fake supplier scam

Fake supplier fraud occurs when a scammer uses information from a specific company’s accounts payable department to collect money from people. Fraudsters collect payments that are sent to the company, but the company never receives them because they get hacked en route.

Sometimes, fraudsters do all the activities themselves. Other times, a company employee may help the scammer with inside information.

Research by ACFE ACFE study states that fake supplier fraud is difficult to detect because it typically takes 15 to 18 months to track down a supplier fraud scandal. It is because of the complex accounting and financial management systems that fake supplier scams are difficult to detect.

Internal fraud

Insider fraud occurs when an employee in an organization uses confidential information and obtains illegitimate benefits. Internal fraud happens on many occasions, but it can rock a company, especially when it happens in banks. This is because people trust banks with their money, and these types of scams can basically damage their reputation.

Internal fraud can be addressed through policies such as strict background checks, limited access, whistle-blowing, zero-tolerance policy, employee welfare, employee monitoring, fraud response plan, recruitment and promotion, strict investigation, etc.

APP scam

APP Scheme means Authorized Push Payment. APP scams refer to types of scams where a scammer sends money to a fake account while posing as the real recipient.

APP scams are the most widespread. Every year, thousands of people fall victim to APP scams. This scam hurts people a lot as it mostly happens to foreigners living abroad, and their money goes to their families.

UK Finance has just released its report on app fraud for the first half of 2023.

Ben Donaldson, Managing Director of Economic Crime, said:

“Ruthless criminals have already stolen more than half a billion pounds from victims through fraud in the first six months of this year. In addition to financial losses, these crimes often involve manipulation of the victim, causing psychological and emotional harm. As a UK Finance report shows, criminals use social media, online platforms, texts, phone calls, and emails to trick victims into handing over their details and money.

Protect yourself from money transfer scams.

Let’s face it: navigating the world of money transfers can be challenging. You may feel like you’re in a maze. You can’t avoid fraudsters by not acknowledging their existence, but with the right knowledge and security kit, you can protect yourself from fraud.

How to protect yourself

Protecting your money is not rocket science. It’s just a simple question of vigilance. If you stay vigilant and keep your security tight, pay attention to warning signs, track your money, and choose reliable and proven ways to send money, you can avoid scams and fraud.

Money laundering in online scams

In terms of money laundering, you need to be careful. Be aware of signs of money laundering, which may include unexpected requests to transfer funds. Keep in mind that a simple transaction on your part could be financing a criminal.

Foreign money transfer scams

You need to be more careful while doing foreign transactions. Such scams often involve high levels of interest or withdrawals. They can also lure you into the illusion of an emergency, for example, fundraising for war victims. Confirm everything before sending anything.

Advance money transfer

A smart person is one who questions everything. Be skeptical when it comes to transferring money in advance. Before taking the plunge, do thorough research. Fraudsters can easily steal your advance payments and make them disappear.

Avoid payment transfer scams.

If someone asks for money, something needs to be fixed. Only click on links if you know the source is authentic. If it’s from someone you know, ask them what it is before they ask. If it’s from a reputable company, call them and ask about it.

Different types of money transfer scams

With the growth of digital banking, money transfer scams also increased. And this headache is not only for individuals but also businesses that have been hit by it. Fraudsters use different schemes to trick you. Here are some of the most common types so you can spot and avoid them.

Emergency scams

Emergency scams are mostly based on emotions. The scammer may impersonate a loved one, family member, or friend and say they need money urgently or that they have been in an accident. You should always be wary of such scams and keep your nerves under control. Also, confirm before sending money.

Threats/Blackmail Scams

These are the worst kind of scams. A scammer may threaten or blackmail you into extorting money from you. This is when scammers know your pain points or weaknesses. Never give money in such cases and seek help from police or law enforcement agencies. No matter how dire your situation is, law enforcement agencies have the power to get you out of these situations.

Imposter scams

Fraud occurs when fraudsters impersonate the police, reputable companies, or a government agency in order to extract money from you. You may be asked to pay taxes or other fees to these entities. You can always get verification from the institutions they claim to be.

Investment scams

Investment scams include high-interest rates or double return policies. Such scams lure people to make quick money. Fraudsters thrive on this type of fraud. They may say they have fake websites and testimonials. You should consult a financial professional before investing any money.

Tech support scams

These scams often involve fixing a virus or tech issue. Scammers may ask for access to your computer. They can steal your personal information, which they can later use to hack you.

 They also ask you to pay for their technical services. Reputable tech companies never do such things. They have a standard operating procedure. So, never buy into this kind of fraud.

What do banks do to protect against fraud?

SAMS is a serious problem when it comes to the banking industry. The risk increases with the proliferation of new schemes. Banks are implementing strict security measures to ensure that customer data is safe and secure.

Voluntary regulation

The voluntary Code is a new way to ensure high standards of consumer protection and refunds for victims of bank transfer scams. It came out in May 2019. The Code is a non-legislative commitment that promises to protect consumer data. According to this Code, banks are responsible for their customers in different areas.

Verification of Payee (CoP) cheques

CoP is another service that helps banks fight scams and fraud. They verify the recipient’s details, such as their name and bank account. This extra layer of security reduces the risk of fraudsters accessing your account under a false name.

Reporting and transferring account fraud penalties

Banks are proactive in preventing fraud. They actively report and track down scamming activities. There are various penalties for account transfers. New technologies and cyber security measures are creating an ironclad system to prevent scamming.

Stay informed about the latest scams.

Fraud evolves and thrives on newer and newer information. Therefore, our awareness of scams should also be enhanced. If you’re aware of the latest scam trends, it’s important to avoid getting scammed.

Social media scams

Summers could try something special as they will curate a social media account that looks outdated. They may try to get people’s attention. They will offer and give to charities to gain trust. They can give the illusion of legitimacy and accuracy. Double Tick is not necessarily a valid account.

WhatsApp scam

WhatsApp scams are popular. Its other name is Hello Mum Scam. Someone pretends to be your sweetheart and says that they are in trouble and need money urgently.

Bank fraud

The number of bank frauds is high. This may include phone calls or emails from an authorized source. Banks will never ask you for your sensitive information over the phone or email. So, never trust such scams and always contact the concerned bank directly.

Cash-trapping ATM fraud

ATM fraud occurs when fraudsters somehow get your card details and use your identity to retrieve money. However, bank security is improving day by day, and they are making card security impenetrable.

Conclusion

There is a simple formula for avoiding money transfer scams. Strong knowledge is your best ally. Although banks and remittance companies use strong policies such as voluntary codes and payee check verification, you, as a consumer, need to be aware and keep your information up to date.

Scamming can also bring a lot of emotional stress. If you understand the nature of various scams, such as WhatsApp tricks and ATM fraud tactics, you can protect your money and emotions.

Our simple advice is to trust your gut. When you smell something fishy, stop for a moment and check again and confirm. If a transaction looks suspicious, listen to your intuition and contact your bank or whatever remittance service app you’re using.

Your financial institution is there to serve you; they will always support you. So, stay up-to-date with scam alerts, think twice before transferring money, and engage in safe banking practices. Together, we can create a safer money services environment for everyone.

Frequently Asked Questions

How do fraudsters transfer money?

Fraudsters capture money by pretending to be someone they are not. Like they pretend to be your loved ones or they pretend to be from a reputed organization.

Who gets scammed the most online?

Statistics show that young adults or less tech-savvy people are more prone to scamming. However, with more sophisticated scams now, even well-informed users can fall victim to scamming.

What if I was scammed by an e-transfer?

As soon as you realize that you have been a victim of an e-transfer scam, try to contact the money transfer companies whose services you are using. They have their own system to meet such problems.

What is app fraud, and how can I recognize it?

An authorized push payment scam occurs when scammers trick someone into sending money by using someone else’s identity. Always double-check before sending money under such requests.

What are the latest scams people should be aware of?

The latest scams include online marketplace scams such as fake vendor scams, online dating, and investment scams that offer double interest returns.