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Wire Transfer Fraud: How to Spot Them and Protect Your Funds

Wire transfers are a safe and effective way to move money quickly. But scammers also find wire transfers useful. At Merchants Bank, we are committed to ensuring our customers and their funds are protected, which is why we take steps to confirm with our customers when they request a wire transfer to ensure the transaction is legitimate. Sometimes, though, our customers may not realize they are being scammed until after the funds are transferred. By then, it may be too late to recover your funds.

We want to help you spot the scam and avoid losing your funds. Below are signs to look for when it comes to wire transfer fraud, steps to take before sending a wire, and what to do if you think you’ve fallen victim to fraud.

Credit card, stress or business woman with anxiety from banking fraud, financial problem or ecommerce scam. Password error, bankruptcy or sad worker frustrated with declined online payment or debt

Why Wire Fraud?

As the Federal Trade Commission (FTC) notes, wiring money is like sending cash, once the wire is sent, there is usually no way to get your money back. It is nearly impossible to identify or track down who picked up wired funds at a wire company location such as MoneyGram, Ria or Western Union. Wiring money also does not provide the same protections as other payment methods, such when using ACH, or a debit or credit card.

Common Wire Fraud Schemes

Wire fraud schemes come in many forms, from last minute changes to wire instructions in large business transactions, to romance scams or fake check scams that instruct you to wire money. Never wire money to anyone you haven’t met in person, who pressures you into paying immediately, or who tells you a wire transfer is the only way you can pay. Always be vigilant when conducting wire transfers and pay special attention to the following:

Real Estate Transactions

Large sums of money change hands when closing real estate transactions. Scammers target these deals to ensure your hard-earned funds end up in their accounts instead of with your agent or lender. By using emails that look similar to your agent or lender, “spoofing” their phone numbers and more, scammers will contact you in the 11th hour to say there has been an account number change or that you didn’t have the correct wire instructions in the first place. They hope you won’t verify with your agent or lender and instead accept the change and wire the funds.

This is a scam.

Utilities, Government Agencies or Software Companies

These come via calls or urgent emails saying…

  • Your gas, water or electric bill is overdue and your service is going to be shut off.
  • You owe the IRS thousands of dollars and you’re going to be arrested.
  • Your company owes money on the vital software you use every day, such as Microsoft 365 or QuickBooks, and you will lose all your data.

That is, unless you wire money as soon as possible to the account they provide. They rely on your panic at the thought of negative consequences to rush and pay the money requested without stopping to research and confirm the claim’s authenticity.

Legitimate utility companies, government agencies, telemarketers or sales representatives will never ask you to wire money. It is illegal.

These are scams.

Shopping and Prizes

You receive an exciting email that you’ve won a prize, such as a new grill or an all-expenses-paid cruise. All you have to do to claim the prize is wire money for the processing fees, shipping and handling, or reservations.

Or, if you are one of the millions of individuals who sell items in online marketplaces, scammers may offer to purchase your item via check. However, they overpay you and helpfully suggest you can wire the balance back to them.

These are scams.

Family Emergencies and Romance Scams

Your phone rings and it’s a close friend or family member, and there’s an emergency. They need you to wire money to them right away. Many times it is a young person calling an elderly individual and posing as their grandchild, asking them to please not call their parents to verify and just send the money.

With the popularity of online dating and not always meeting people face-to-face, fraudsters create fake online dating profiles and make a connection with someone looking for companionship. After cultivating the relationship and building trust, the scammer will say there is an emergency or they want to travel and visit you, but they need your help to afford it. A wire transfer will be the easiest way to get them the money.

These are scams.

What To Do If You Wired Money To a Scammer

If you or a friend or loved one encounters a situation like any of the above, or one of many more listed here by the FTC, it is important to not panic but rather stay calm and think through the scenario.

  • Remember – Do not wire money to anyone you have not met in person, who pressures you to send funds right away, or who says a wire transfer is the only way to pay.
  • Do verify where a call or email is coming from. Call the company’s number, not the number the new person gave you. Call your friend or family member to confirm they are okay or if there is really an emergency.
  • Do call us at Merchants Bank:
    • If you are contemplating wiring money through us, talk to one of our professionals about the situation. We can help advise on the wisest course of action.
    • If you have already authorized a transfer through us, call us immediately to report it and we may be able to reverse the wire transfer.

Report Fraud

If you believe you’ve fallen victim to this form of fraud, or if anyone has demanded you wire them money for any reason, report it to the proper authorities.

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