Why is the FTC interested in money transfers?

We’ve seen a great rise in the last year on money transfer frauds. Often times, people will get phone calls from someone who claims to know a relative, from someone who tells them they’ve won a prize, from someone who tells them they’ve got a wonderful business opportunity. And the key is, at some point, they have to wire money to someone they don’t know. And what we’re trying to tell the public is: if you’re ever asked to wire money to someone you don’t know, it’s likely a scam. Stop. Think. And make sure that the person that you think you’re sending money to is someone who is legitimate, someone who in fact is a relative, or someone who you have a pre-existing relationship with.  

What are different types of money transfer scams?

The Grandparent Scam:
The problem is that money wire scams come in all shapes and sizes. We see scams that we call the Grandparent Scams. These are phone calls from people who purport to know a grandchild or even from a grandchild saying that they’re in trouble in a foreign city or in a remote place, and they need money quickly. And then the caller suggests sending money by wire. And so money is sent by wire to a friend, someone who claims to be a friend of a relative or a grandchild. The money is transferred, and it disappears. Once it’s wired, it evaporates. There’s no way for you to get it back. And we’re seeing a real rise in those kinds of scams.

The Prize Promotion Scam:
Other kinds of scams are what we call the prize scams. You’re called up; you’re told that you’ve won a prize. All you need to do is to wire some money, and then they’ll send you the prize. Or they’ll ask you to send them a check so they have information about your checking account, and they will drain your money. And so these kinds of scams take all kinds of forms, but the bottom line rule is that if you’re asked to wire money to someone you don’t know it’s almost certainly a scam.

The Counterfeit Check Scam
One scam we’re seeing a lot of—wire scams—starts with you getting a check from someone you don’t know. And as soon as you deposit that check, and that person will be asking you to use that check for some of your own purposes and then to wire them some money back. The problem is the bank has to clear your check within a couple of days, even before it’s certain that the check is valid. And if, and this happens all the time, if you wire money back thinking there’s money in your account, and it turns out—as it often does—that the check is a fake, you, not the bank, are liable for those overdrafts.  

Mystery Shopper Scam
So people are looking for work and will get a call from someone who says, for instance, they’ve been selected to be a mystery shopper. And they will soon get a check for thousands of dollars that will pay not only their salary but will pay them to go shop at stores that are available everywhere. They’ll cash the check; the bank will clear the check because the bank doesn’t have any choice. And then they’ll go out, spend some money and wire money back to their employer. Or so they think. But they’re not wiring back the employer’s money because that check was fake. What they’re doing is they’re wiring money they don’t have but they will be liable for, and they will end up in debt as a result of this.  

Are there times when money transfers are appropriate?

Let me make one thing clear: Money transfers are a useful way to get money to people you know and you’ve had dealings with in the past—quickly and efficiently. What we’re worried about, is using money transfers to send money to people you don’t know or haven’t had any dealings with in the past. That’s a red flag that often times is not a false alarm.  

What if I wired money to someone I don’t know?

So suppose you’ve fallen prey to one of these scams: and you’ve sent a wire transfer to someone you don’t know or you’ve cashed a check that turns out to be fake and sent a wire transfer based on that. The first thing you should do is report that incident to the wire transfer company so it can conduct an investigation. Then, please, file a complaint with the Federal Trade Commission. You can do that either through our website at ftc.gov, or you can do it by phone, at 1-877-FTC-HELP.