11 Common Money Transfer Scams and How to Avoid Them

Last updated on May 7th, 2024 at 03:55 pm

People send hundreds of billions of dollars in remittances every year. And sadly, because of this volume, certain scammers try to trick people through different money transfer scams.

Here at Remitly, we want to help you understand how these money transfer scams work and recognize the warning signs of potential fraud so you can keep your money safe.

11 Common Money Transfer Scams

As people become better at recognizing fraudulent activities, such as credit card theft and wire transfer fraud, scammers are also improving their methods.

Since tracing many of these scams might be complicated, your best protection is learning to spot potential fraudulent acts when you encounter them.

These are some of the most common scams we encounter here at Remitly as we work tirelessly to keep our customers’ information safe.

Please note, if you send a transfer to a scammer, we might not be able to help, and you could lose your money.

1. Family emergency scams

In this type of scam, the victim is led to believe that they are sending funds to help a loved one or friend in an emergency situation.

Scammers exploit the victim’s natural worry for someone they care about. This can involve a car accident, being stranded at an airport, or avoiding arrest‌.

The scammer may place an urgent phone call, posing as a relative, friend, or loved one or as a figure of authority such as a law enforcement official or medical doctor.

To protect yourself:

  • Verify the emergency by contacting the loved one or friend directly.
  • Do not rush the transaction. Take time to verify the situation.
  • Be suspicious of requests for secrecy or urgency.
  • Be wary of unsolicited calls or messages from unknown individuals.

2. Extortion scams

An extortion scam involves the act of obtaining an individual’s property, assets, or money through threatened or actual force, violence, and intimidation. Sextortion is a type of extortion where a perpetrator threatens to expose sexually compromising information, such as sexually explicit private images or videos of the victim, unless the victim meets certain demands, usually money.

Victims tend to be younger adults or elders.

To protect yourself:

  • Be cautious about who you connect with on social media and dating sites.
  • Do not engage in explicit video chat or exchange sexually explicit images with strangers.
  • Do not send money to someone who is threatening to expose intimate photos or videos.
  • Be wary of false communication from law enforcement officials.

3. Threats/Blackmail scams

Threats/blackmail scams involve scammers unlawfully obtaining money from a victim through coercion. The scammer threatens to harm the victim if they do not cooperate.

The scammer may relate personal information in the email or call to add intimidation. They may threaten physical harm, claim to know where you live or work, and threaten to hurt you or your loved ones unless you pay up.

Scammers may also threaten the victim with arrest or jail time if they do not comply with the demands.

To protect yourself:

  • Do not comply with the scammer’s demands.
  • Contact law enforcement immediately if you feel threatened or scared.
  • Be wary of unsolicited calls or messages from unknown individuals.
  • Be cautious about sharing personal information online or in response to unsolicited calls or messages.

4. Imposter scams

In an imposter scam, a scammer poses as an authoritative individual and requests money to sort out a false situation.

Scammers may also pose as representatives from a reputable business (business impersonators), or financial institutions and make false claims of fraudulent charges that need to be reviewed or refunded or as overpayments to steal from the victim.

They make false claims about fraudulent charges and bank transfers, refunds, shipment issues, or other bogus fees that will cause the victim to share personal and/or financial information. Scammers may even hack the customer’s phone in order to process unauthorized transactions.

To protect yourself:

  • Be cautious about sharing personal information online or in response to unsolicited calls or messages.
  • Verify the legitimacy of the representative or business.
  • Do not share financial information over the phone or email.
  • Do not trust unsolicited communication from unknown individuals or businesses.

5. Investment scams

Investment scams often sound “too good to be true” or offer “risk-free” investment opportunities. They pressure victims to invest immediately, sometimes indicating the opportunity is for a limited time.

The victim is often lured through social media apps or cold calls/email inquiries.

To protect yourself:

  • Be cautious of investment opportunities that sound too good to be true or pressure you to invest immediately.
  • Do your research and verify the legitimacy of the investment before investing any money.
  • Do not invest money you cannot afford to lose.

6. Romance scams

In a romance scam, the victim is tricked into thinking they’ve found true love online. Scammers play with your emotions, pretending to be interested in a romantic relationship. They use flattering words and stolen pictures to win trust and affection.

Once they have the victim hooked, they ask for money or gift cards. They might claim it’s for a plane ticket to meet up or to cover unexpected medical expenses. They prey on the desire for love and companionship, making it hard to say no.

To protect yourself:

  • Verify the person’s identity by doing a reverse image search or asking for a video call.
  • Be suspicious of requests for secrecy or urgency, as scammers often use these tactics.
  • Be cautious of unsolicited messages or calls from strangers professing love or interest.

7. Tech support scams

Tech support scams involve scammers posing as representatives from reputable companies like Microsoft or Apple and claiming that the victim’s computer requires tech services in order to gain access remotely and steal from the customer.

Typically, victims receive an unsolicited phone call, text message, or email from an individual claiming to represent a company’s “Tech Support,” “Help Desk,” “IT Department,” or a similar office.

To protect yourself:

  • Remember that reputable companies will never contact you out of the blue and ask for access to your computer.
  • Never provide personal or financial information to unsolicited callers or email senders.
  • Independently verify the legitimacy of any request for tech support services.

woman's reaction to money transfer scams

8. Immigration scams

If you receive a call from someone claiming to be an immigration official, it’s okay to feel suspicious immediately. Scammers may call you and claim there’s a problem with your immigration documents that you can solve by making an immediate money transfer or providing your account information.

They may even provide personal information or make threats of deportation, but you should never give out personal financial information.

To protect yourself:

  • Remember that the USCIS and the government will never ask you to transfer money to an individual. You can only pay any fees on the USCIS online portal or Pay.gov.
  • Don’t provide any personal or financial information to people you don’t trust.
  • Be sure to contact USCIS directly if you need help with any immigration processes.

Unfortunately, you may come across other scams as the methods change frequently. Learning to recognize general warning signs of scams can help you stay safe.

9. Prize scams

With the prize wire money and transfer scam, criminals attempt to steal money with phony sweepstakes, lotteries, or contests. Usually, the scam begins with an unexpected email or phone call saying that you won a cash prize in another country.

The scammer might ask for your bank account information so that they can directly deposit the winnings and then use the information to conduct fraudulent activity with your bank account.

Another version of the scam works similarly to some other money and wire transfer scams. The fraudsters send a fake check to the victim and then tell the victim to wire money to them to cover fees like currency conversion or processing fees.

After you deposit the check and transfer or wire money, you find the check fake. You may be subject to fees from your bank and be out the transferred or wired money.

To protect yourself:

  • Research any unfamiliar contests or sweepstakes before wiring money.
  • Never initiate money or wire transfers until you’re certain checks have cleared.
  • Call the issuing bank of any check received to verify funds and authenticity.
  • Never give your bank account information to an unknown party.

10. Job scams

A job scam is when a fraudster advertises a fake job, such as a secret shopper position or work-from-home opportunity, through social media, fake websites, and even roadside signs.

When you express interest in the job, the scammer may put you through a fake interview process, asking you to answer questions and provide personal information.

Then, they’ll tell you that you’re hired but explain that you need to transfer or wire money to cover processing fees to enroll you in their work-from-home program, to pay for necessary equipment, or to complete a mandatory training course.

You only find out that the job was fake all along after the money’s been sent.

To protect yourself:

  • Check the Better Business Bureau and state business registration records to confirm the validity of companies.
  • Be wary of sending money for any employment opportunity.
  • Use caution for any job offer that seems too good to be true.

11. Marketplace scams

Marketplace schemes seek to take advantage of people buying and selling things through Facebook Marketplace, Craigslist, eBay, and other sites.

There are two versions of this scam. With the first, a fake buyer asks if they can pay for an item via money order, personal check, or cashier’s check.

If the seller says yes, the buyer sends a fake check or money order for more than the sale price. The buyer will then ask the seller to transfer or wire the extra money back to them. After they go through with wiring or transferring money, the check turns out to be bad.

Fake sellers can also try to perpetrate this money or wire transfer scam. With this version, a fraudster lists an appealing item for sale on a marketplace site.

If you express interest, they will ask you to send money or a wire transfer and tell you they will ship the item after receiving the funds.

Once you wire money to them, they will contact you and say there is a problem. Most often, fake sellers will claim that they didn’t receive money and ask you to provide the money transfer control number so that they can track the payment. If you give them this number, they will pick up cash and never send the purchased item.

A common marketplace scam is called a fake check scam in which the scammer requests the recipient to cash a check for a purchase or service and then asks to wire part of the funds back to cover certain expenses.

To protect yourself:

  • Don’t accept a personal check, money order, or cashier’s check when selling things online.
  • Only process transactions through sales platforms, being wary of anyone who asks you to go outside the system to avoid fees.
  • Check reviews and ratings for buyers and sellers.
  • Never agree to wire money to pay for something that you buy through an online marketplace.

protect yourself from money transfer scams

Common signs of financial scams

Not sure whether something is a scam? Watch out for these red flags:

  • They insist on handling everything by email, text, or social media messages.
  • There are misspellings or serious grammar issues in communications.
  • The return email address is strange or unrecognized.
  • They put pressure on you to send money quickly.
  • They ask you to send money to a foreign country even though they claim to be in the U.S.
  • You’re asked to use cashier’s checks, wire transfers, or other potentially untraceable funds.

Staying safe from money transfer scams

Follow these steps to safeguard your money and your information:

  • Never give out personal information on an unsolicited call or message.
  • Don’t send money to someone you don’t know personally.
  • Contact family members at known phone numbers if you receive an unfamiliar request from them.
  • Regularly update your passwords.
  • Install blockers for pop-ups and antivirus software.
  • Do not share your login information for Remitly, online banking information, or login credentials for other financial apps.

Report money and wire transfer scams

If you discover that someone has stolen funds from you, act quickly by contacting Remitly or the wire transfer provider you used. In some cases, it may be possible to recover your hard-earned money.

Even if a fraudster was unsuccessful in committing money transfer or wire fraud because you caught onto the scheme, you should report the attempt. The Federal Trade Commission offers a detailed guide on how to report wire transfer scams that you can access here.

Although criminals do try to exploit the wire transfer system to their advantage, wire and money transfers are still a convenient way to send money to your loved ones located abroad. By following the tips outlined in this article, you can do so more safely and protect yourself from fraud.