Health & Safety

October 4, 2012

Money transfers can be risky business

Legal Assistance Office

“You’ve won a prize!”

“I’m in a foreign country, and I need cash.”

“We’re temporarily unable to accept credit cards.”

“Your dream apartment is available immediately at an incredible price!”

Scam artists use a number of elaborate schemes to get people’s money, and many involve money transfers through companies like Western Union and MoneyGram. According to the Federal Trade Commission, the nation’s consumer protection agency, money transfers may be useful when people want to send funds to someone they know and trust but they’re completely inappropriate when dealing with a stranger.

Scammers pressure people to use money transfers so they can get their hands on the money before their victims realize they’ve been cheated. Typically, there is no way to reverse the transaction or trace the money. Another reason is that when people wire money to another country, the recipient can pick it up at multiple locations, making it nearly impossible to identify them or track them down. In some cases, the receiving agents of the money transfer company might be complicit in the fraud. Money transfers are virtually the same as sending cash — there are no protections for the sender.

Many money transfer scams involve dramatic or convincing stories that play on people’s optimistic nature, altruism or thriftiness. However, the scams always cost people money.

Counterfeit check scams:
Someone sends a person a check with instructions to deposit it and wire some or all of the money back. By law, banks must make the funds from deposited checks available within days, but uncovering a fake check can take weeks. Depositors are responsible for the checks they deposit, so if a check turns out to be fraudulent, depositors will owe the bank any money they withdrew.

Counterfeit check scams have many variations:
Lotteries and sweepstakes: You just won a foreign lottery! The letter says so, and a cashier’s check is included. All the recipient has to do is deposit the check and wire money to pay for taxes and fees. Although it looks like a legitimate cashier’s check, the bank eventually determines it is a fake. The lottery angle is a trick to get people to wire money to someone they don’t know. If people deposit the check and wire the money, the check will bounce and victims will be responsible for the money they sent.

Overpayment scams:
Someone responds to a posting or ad, and offers to use a cashier’s check, personal check or corporate check to pay for the item being sold. At the last minute, the so-called buyer or buyer’s agent comes up with a reason to write the check for more than the purchase price, and asks the seller to wire back the difference. The checks are counterfeit, but very often, good enough to fool bank tellers. Acting in good faith, sellers deposit the check and wire the funds back to the “buyers.” The check bounces. Sellers are liable for the amount they wired.

Online purchase scams:
If buying something online and the seller insists on a money transfer as the only form of payment, consider it a red flag; ask to use a credit card, an escrow service or another way to pay. No matter what story the seller tells, insisting on a money transfer is a signal that sellers won’t get the item or their money back. Find another seller.

Advance fee loans:
Ads and websites that guarantee loans or credit cards regardless of one’s credit history may be tempting. when people apply, they find out they have to pay a fee in advance. If someone has to wire money for the promise of a loan or credit card, it’s likely they’re dealing with a scam artist.
Family emergency scams: A sudden call comes from someone who claims to be a family member who needs cash to get out of a jam — to fix a car, get out of jail or leave a foreign country. He begs those called to wire money right away and to keep the request confidential. Check it out with your family; it’s likely they know nothing about it. If a person cannot ignore the request, try to verify the caller’s identity by asking very personal questions a stranger couldn’t possibly answer. Keep trying to reach the family to check out the story.

Apartment rental scams:
Some scammers hijack bona-fide rental or real estate listings by changing the email address or other contact information, and placing the altered ads on other sites. Other rip-off artists make up listings for places that aren’t for rent or don’t exist, and try to pique interest with the promise of below-market rent. But once they have someone’s attention, a skilled scammer asks them to wire an application fee, a security deposit or the first month’s rent. It’s never a good idea to send money to strangers for an apartment you haven’t seen. If you can’t meet in person, see the apartment or sign a lease before paying, keep looking.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1.877.FTC.HELP (1.877.382.4357); TTY: 1.866.653.4261.

The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.




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