Wire Fraud Examples – How Bank Transfer Scams Work

Wire transfers are a popular payment method, and sometimes this is exploited for the wrong purposes. It’s a convenient way to receive money, but we can’t say the same about sending it.

Why? Because wiring money to a stranger is like moving cash: once the other has it, you most likely lose it forever. Many scammers request wire transfers to their victims because of these “flaws”.

It’s not that bank wire transfers an services like Western Union or Moneygram are fraudulent. It’s normal to accept a wire transfer. Accepting wire transfer instructions is not.

  • A seller wants you to wire money upfront without payment protection. 
  • A buyer overpays and wants you to wire him the difference.
  • An employer makes you go through complex payment methods that subtly go against the Western Union guidelines.

Con men expect you to follow his instructions because of their kindness, or because they have something you want. Everything in their plan could be legit except for the payment method. Then, why do they require wire transfers?

Wire Fraud: Where Your Money Really Goes

Wire transfer scams based on confidence tricks to make a victim send money electronically, taking advantage of the major payment brands. Wire fraud can affect you whether you’re the money sender or the receiver. 

Why is it a problem? 

If you use wire transfers, you need to know what you’re doing and who you’re sending money. Otherwise, you expose yourself to several unacceptable risks:

  • Permanent transactions. The money you send is likely gone forever, whether you sent it to the right person or a scammer. No matter the sum, not even law enforcement can guarantee to recover your money.
  • Identity theft. Some phishers use fake Western Union emails and cloned websites. Once you enter data through their phishing page, they can steal your identity and ruin your life.
  • Data sharing. Once scammers know you’re vulnerable to scams, they’ll try to scam again with another story. Else, they’ll sell your contact to other con men, which will flood your inbox with spam messages.
  • You might become a criminal. Accepting money from a stranger and wiring it can link you to money laundering schemes. As a felony, money launderers go to jail, even if they knew nothing about what they were doing.

The next time a stranger reaches out with an opportunity, you can ask yourself: is it worth the risks? As we’ve seen, probably not. 

Wire Transfers: Safe VS Fraudulent

Those dangers aren’t meant to alarm you of wire transfers. These services have their place when we give them the intended use they were designed for. If you go through the guidelines, you’ll learn how safe transfers work, and what legit companies never do.

A. Payment Agreement

When buying goods and services, you wire money after you’ve received the product. If the deal requires upfront financing, you deposit money in an escrow platform. Sellers have no problem accepting wire transfers as long as you pay. 

What about scammers? All the contrary.

  • They want a prepayment from you, then they send you the goods, and you pay the remaining sum.
  • They ask you to wire the full amount to them upfront.

Con men have good reasons to make you wire money. They promise you impossible deals and make non-sense discounts for choosing wire transfers. That’s a sign what they’re selling you may not exist.

B. Payment Methods

A business— especially a small one — wants your money no matter how you pay. That includes credit card, bitcoin, wire transfers, or cash. They will offer multiple methods if that makes it easier to close the deal.

Fraudulent sellers aren’t as flexible. You either choose to wire money, or they tell you to get lost. They make wire transfers a must, and everything else is somehow unsafe and ineffective.

Learn more about payment fraud here.

C. Security Considerations

Some universal values of business include trust, value, and security. Entrepreneurs follow them because they benefit both sellers and customers. They don’t mind if a client tries to be cautious by choosing a safer method, even if it’s more complex.

Every payments platform has a list of do’s and don’ts to prevent fraudulent transfers. The sellers who aim to build a brand will respect it. 

A wire transfer con man disregards safety measures. In fact, he’s so confident about security that he insists on taking action recklessly. “Our system is the safest thing in the world. Why bother to inspect it at all?”

D. Processing Fees

Not only is it risky, but wire transfer can also be expensive, depending on whom you send money. The seller who proposed the wire transfer method will agree to split costs by 50% on the deal.

A fraudster, however, will use sneaky techniques to make you pay them yourself.

  • He’s too busy to pay for it, so you pay 100%. But he promised to pay back the 50% after you complete the deal.
  • If you lack the money to cover the fees, he’ll send you a (fraudulent) check for it. You wire the money as told and keep the difference as a reward.

If the person isn’t paying a single penny for shared costs, it’s probably a scam.

Types Of Wire Fraud

Wire scams go beyond merely wiring money. Sometimes, you don’t know who you’re sending it. Others, it’s not even you who’s sending your money. 

While some scammers restrict you to wire transfers, others are quite flexible. They agree on everything as long as you say “Yes” to wire transfers. Remember that a scammer could fake/manipulate any option you propose: Paypal, Escrow, Payoneer, Transferwise, and whatnot.

#1 Impersonation

A scammer can con you before you send any money. You know you’re dealing with one the moment you receive unexpected messages (which coincidentally start the same week you meet the scammer).

Let’s say you accept wiring via Western Union, but you’re suspecting, so you stop responding. If a scammer thinks you’re taking too little action, he may pull phishing tactics on you.

Within a few days, you get security email alerts from Western Union, Transferwise, or whatever platform you use. But these notices come from the scammer posing as a platform, not the platform itself.

The conman asks you to re-enter your data. Once they access your account, they wire money to themselves and leave you at zero dollars.

Imposters can disguise as the most secure websites, such as Escrow.com.

#2 Confidence Tricks/ Advance Fee Fraud

The conman uses a powerful hook/reward to encourage you to go through his steps. At some point, you need to wire him money and trust all his promises on his “good intentions.”

In the best-case scenario, you lose your money with no chance of refunding it.

If they work from a third-party website, they may make promises that go against terms and conditions. A seller can advertise a (dishonest) lifetime guarantee while the platform only holds two-week money-back guarantees.

If they work from their own company website, they’re not regulated, so they can make the boldest promises in the world. This false confidence disguises wire transfers as a risk-free method.

Learn more about advance fee scams here.

#3 Wiring The Overpayment

We said wiring money is safe once you receive your goods. We’ve also warned about the dangers of upfront prepayments. They not only pay first. They pay more and trust you to solve the payment problem. 

You may haven’t been in this scenario, but if you did, it never ends well. Why are they paying upfront plus extra money? By accident? If it really was that concerning, they’d contact their bank to undo the transaction. Why are they asking you for their money?

They either send you a check or pay with buyer protection. After you pay, they can request a 100% refund of their money. If you wired the difference, you can’t revert the transaction. 

If you receive more money than you should, it’s a scam, not an accident.

#4 Escrow Hacking

Escrow platforms use wire transfers as their primary payment method. But that doesn’t mean your money is safe. You expect Escrow.com to keep your data private, but what if it doesn’t?

No system is infallible. Even Escrow.com is vulnerable to hacking attacks. A fraudster who gets into their computers can lift all the emails and export the customer database. That can manipulate hundreds of wire transfers in an instant.

Now, the Escrow.com case is singular. You don’t expect it to happen unless you deal with new, unreliable escrow sites. A scammer could create a fake escrow platform or clone an existing one to read your banking information.

Learn more about Escrow scams here.

How To Prevent Wire Transfer Scams

Wire transfers aren’t the only way to pay online. Reputable businesses accept multiple methods, so you can choose whichever is more secure. Use escrow services or avoid wire transfers in general; the best way to stop wire fraud is to not use their method.

Also, consider the following financial practices:

  • You can accept wiring but not wiring instructions. Don’t let others tell you how to use your money. Make yourself responsible by sticking to the security measures. Someone may communicate one intention, but the directions show the opposite.
  • Beware of unexpected messages. Scam emails rarely come up individually. They all compound at once, hiding one another. If ten other contacts reach out right after you meet a stranger online, that person could be coordinating fake identities.
  • Don’t be pressured with overpayments. Their “mistake” isn’t your mistake; nobody sends money for no reason. Receiving a check overpayment doesn’t require you to give back. You definitely needn’t do it right away. Wait until it clears. Otherwise you might be fooled with check fraud.
  • Avoid wire transfer variations. Don’t pay without buyer protection, don’t send cash to people you don’t know, and about using permanent methods like Bitcoin.
  • If you recognized the scam and they didn’t pick up the funds yet, request a refund immediately.

Wrapping Up

The number of wire fraud victims does not seem to be getting any lower. But these days, people fall due to identity theft more often than confidence tricks. For example, they browse around the Internet, not knowing they’re leaving identity traces. Few data breaches can be enough to unlock a bank account.

Some companies are already fighting the problem. There’re password managers, decentralized VPN services, and antivirus programs to name a few. All you need to do to stay safe is inform yourself to be aware of the tricks that are being employed against you and periodically update your cyber-security.

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Tom Wood
Tom Wood

I have a question that I cannot find an answer to. I have real estate lender who said that I have been approved for a loan and in order to receive the loan, I need to send them a fee of $9000. Because I do not have that kind of money, they said that they will wire the $9000 to me and then I am to wire that money to the company who is providing the loan to me who is a private lender. Please tell me how this is a scam since I am getting money wired to me… Read more »

Michelle
Michelle

I met a guy and we have been chatting now 4 motnhs he was on his way from england to stay with me here in Oklahoma. He had been missing I just figured he was a liar. Well I got an email from a man saying he found my friend on the side of the highway in Canada and took him to a private clinic for treatment. This man says gave me a Docotrs name of Ashton Nelson and the gentleman who supposedly found my friend said his name his Steven Cox. they are holding my friend hostage for 3500… Read more »

Kathleen
Kathleen

I was just scammed out of 520.00 I know we hear all the time, don’t wire funds to somewhere to received funds, and that if it sounds too good to be true it is. They hit me when i was desperate for money so I wouldn’t be evicted. I had applied for cash/payday loans on line, and received a phone call from this “california” based company, the person spoke with a thick India accent I was told to wire 112 dollars and I would have a loan of 1500 approved. I would then just need to make the monthly payments… Read more »

Candice
Candice

I was scammed out of $80,000 from BANK OF THE ATLANTIC supposedly located in Montreal Canada. They promised a huge return on my investment but when I asked them to wire me my money, they claim it would take 6-8 weeks. This was more than 11 weeks ago, and since then, there has been no answer. A friend of mine who introduced me to BANK OF THE ATLANTIC was also frauded out of $150,000 and another person I know about $100,000. BEWARE, they are BAD and DANGEROUS. They scam on innocent people, my friend did business with a Japanese department… Read more »

hilary
hilary

i got scammed out of 3362.00. i was looking for a nanny job when the woman told me the job had been filled and told me that a man needed someone to work for him part time. he sent me checks by ups 995.00 i was to deposit them but my bank had to let them clear over night and when they did i was to cash them deduct 10% and send the rest western union to were ever he told me to send it to. come to find out 2 weekd later all of the checks bounced now i… Read more »

Mr. P
Mr. P

I have a man who wants to buy 4 coins I have, total cost $170.00, and he wants to send me a certified check for $1500.00 and have me take out my money and wire, via Western Union, the remainder to a shipping outfit who will pick up his coins for him. He is offering me another $50 to do it this way, “for your inconveince.” I could mail the coins to him for less than $5.00, or overnight via Fed Ex if he is in a hurry, for $25. Anybody see anything fishy about this, and where would I… Read more »

Tanya
Tanya

My mom wanted to sell a timeshare but she ended up being scammed out of 1500$ via money wire to TD bank. She called the bank but they said that they knew the account was fraudulent so there was a chance that she could get her money back since no one had touched the account yet. She called back a few days later and they said that there was now no money in the account and they won’t admit to ever having said that there was a chance that she could get her money back to begin with. Who can… Read more »

Peter
Peter

I was scammed out of $631.00 by a company saying I needed to send them a security deposit for a personal loan. silver creek equity group from NJ. After I sent it they told me I had to send in another $631 I refused and asked for a refund. Now the phone number and website don’t work what can I do?

Richard
Richard

I forgot to mention, regardless of your success getting your money back, you should report fraud to law enforcement for investigation. You can contact the FBI if local law enforcement doesn’t seem like they are going to pursue the issue. Good Luck.

Remember …. fraud hurts every law abiding and tax paying citizen.

Richard
Richard

Yes, I have the answer. Report that immediately to the lending institution or bank that the funds were transferred by. For example, if you gave money via check/debit card, contact your bank. They will generally give you the money back after a small investigation into the fraud. You have to report it quickly so they can reverse the charges.

If you gave the money via credit card, contact the credit card company and notify them of the fraud. They can sometimes reverse the charge.

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