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Money Transfer Scams: What Are They and How Can You Protect Yourself?

How common are money transfer scams in the U.S.?

In 2018, there were more than 1.4 million fraud reports filed with the Consumer Sentinel Network. 25% of those reports involved a loss of money which collectively totaled $1.48 billion. This is up $406 million from the 2017 report.

With money lost to fraud on the rise in the U.S., how can you protect yourself? Here’s the breakdown of what money transfer scams are and how you can protect yourself.

Top 10 types of fraud

How exactly are people being scammed? Here are the top 10 types of fraud in 2018:

RankCategoryIncidences ReportedPercentage of Total ScamsTotal $ LostMedian $ Lost
1Imposter Scams535,41718%$488M$500
2Telephone and Mobile Services164,6935%$20M$200
3Shop-at-Home and CatalogSales142,92967%$107M$155
4Prizes,Sweepstakes and Lotteries132,47010%$118M$530
5Internet Services57,90728%$36M$139
6Travel,Vacations and Timeshare Plans28,35340%$68M$800
7Foreign Money Offers and Counterfeit Check Scams27,44334%$42M$1,214
8Businessand Job Opportunities24,62042%$116M$1,304
9Advance Payments for Credit Services19,57577%$23M$376
10HealthCare17,06946%$4M$130

1. Imposter scams

Imposter scams occur when a scammer pretends to be a trusted person to persuade the victim to give up personal information or money. For example, they might impersonate a friend or relative who needs money, a government agency representative, a computer technician, a representative for a charity, or a romantic interest.

2. Telephone and mobile services

Telephone and mobile services scams involve your phone or phone service. Some examples include:

  • An unknown number requesting money for a phone bill. Unsolicited mobile text messages.
  • Charges for calls to ‘toll-free’ phone numbers.
  • Unauthorized charges.
  • Charges for calls you didn’t make.
  • And more.

3. Shop-at-home and catalog sales

Fraud involving catalog and shop-at-home sales can involve sellers charging undisclosed costs, not delivering the product on time or at all, or refusing to honor a guarantee.

4. Prizes, sweepstakes, and lotteries

A common fraud technique is to offer “free” prizes that you can be eligible for if you pay a fee. Alternatively, you might be asked to pay into a foreign lottery or sweepstakes.

5. Internet services

Fraud is often reported with internet services, like social networks, internet gaming sites, virtual reality, online payment platforms, website design, or broadband internet.

These scams can come in the form of failure to deliver services, difficult cancellation procedures, undisclosed charges, malware, computer exploits, or misrepresentations of access or speed.

6. Travel, vacations, and timeshare plans

Everyone fantasizes about dreamy vacations — so scammers use that desire to lure you in. Look out for deceptive vacation offers that are very low-cost or seem too good to be true.

Also, be aware of discount travel packages and timeshare offers. Be careful not to pay for a package or timeshare that doesn’t really exist.

7. Foreign money offers and counterfeit check scams

Foreign money offers involve messages that promise the recipient millions of dollars from a foreign country in exchange for bank account details, money, or personal information.

Counterfeit check schemes involve a victim being overpaid with a counterfeit check and then asked to wire back the difference immediately, before the original check bounces.

8. Business and job opportunities

Fraud can also involve business and job opportunities, such as offers to start a new business, multi-level marketing schemes, work-at-home plans, job counseling, overseas work, and more. They may offer you false opportunities which only exist to collect your personal information.

9. Advance payments for credit services

Scam artists often use credit services to lure people in. They may promise a loan or credit card but ask you to pay a fee first.

Other such scams include:

  • Worthless insurance programs or credit card loss protection.
  • Services offering to recover unclaimed funds.
  • Promises to remove negative information from your credit report.

10. Healthcare

Fraud regarding healthcare is also common. Healthcare fraud occurs when business or individuals make deceptive, misleading, or fraudulent claims for health-related products of services. These services might include health spas, vision correction, weight loss products or services, sunscreens, medical discount plans, and more. They may ask you to pay up front to get a benefit, product, or service that you never receive.

While there are many more fraud report categories, these 10 are the most common.

Top payment methods for money transfer scams

You may be wondering, how do scammers get your money? How does it get from your bank or wallet to the scammer’s pocketbook? You can find the full breakdown below:

Payment MethodsNumber of Fraud ReportsTotal $ Lost
Wire Transfer101,434$423M
Credit Cards50,413$131M
Gift/Reload Cards41,046$78M
Bank Account Debit33,037$78M
Internet/Mobile14,392$40M
Cash/ Cash Advance10,822$109M
Check9,133$75M
Money Order3,714$20M
Telephone Bill1,106$5M

The most common payment method for fraud is the wire transfer, accounting for a reported total loss amount of $423 million. The next most popular method was credit card payments, which account for $131 million lost.

How do scam artists contact people?

How do scam artists get ahold of you? Here are the different contact methods, along with how frequently each is used:

  • Phone – 69%
  • Website – 12%
  • Email – 10%
  • Consumer Initiated Contact – 5%
  • Mail – 3%
  • Other – 2%

Below, see the number of reports and how much money was lost for each contact method:

Contact Method# of ReportsTotal $ LostMedian $ Lost
Phone647,310$429M$840
Website111,057$227M$321
E-mail92,210$173M$306
Consumer Initiated Contact43,322$87M$216
Mail30,577$55M$1,000
Other17,069$133M$1,245

Accordingly, you should be especially cautious when receiving phone calls that seem fishy. But be wary of other contact methods, too. Scammers may pursue you via websites, email, and snail mail.

Who is filing fraud reports and how much are they losing?

No age group is safe from scammers, but some fall victim more often than others. Check out the data below to see which group tends to lose the most money.

AgeShare of Reported FraudShare of $ LossesPercentage Reporting $ Loss
19 and under3%$15M46%
20-2912%$83M43%
30-3916%$138M33%
40-4914%$158M29%
50-5916%$168M24%
60-6920%$184M18%
70-7913%$128M15%
80+6%$79M13%

Americans between the ages of 60 and 69 have the largest share of reported fraud and money losses. But Americans ages 19 and under are the group to most frequently file reports and lose money. Accordingly, we can conclude that younger people lose money to fraud more often, but that older people lose more money when they do fall victim to a scam.

What to do if you fall victim to a money transfer scam

If you fall victim to a money transfer scam, the first thing you should do is call the police. Tell them what happened and how much money you lost.

Next, file a complaint with the FTC. Once you realize you have been scammed, do not communicate with the scammer any further.

How to protect yourself from money transfer scams

Lastly, how can you prevent yourself from being scammed? Well, you are already on the right track by educating yourself about how scammers operate. If you understand the tactics that scammers use, you will be better able to identify them if they contact you.

Additionally, here are a few tips to keep in mind.

  • Don’t send money to a stranger under any conditions.
  • Listen to your gut. If something seems off, it probably is.
  • Don’t take quick action when sending money. Perform internet research and consult with friends or family members first. If you are in contact with someone who pushes you to send them money fast for an urgent deadline, be wary.
  • The government, service providers, and financial institutions don’t send, request, or confirm personal information or passwords via email.
  • Choose a reputable money transfer provider with the latest security measures in place.

Falling victim to a money transfer scam is never a good feeling. But by taking these steps, you can reduce your chances and keep your savings safe.

Review and compare money transfer services below to find one you can trust.