Wire scams may not grab headlines as often (or spectacularly) as other types of fraud. However, they are on the rise and can be equally, if not more, damaging. According to the Federal Trade Commission , Americans lost nearly $344 million in 2023 due to wire scams. Furthermore, wire scams ranked as the third most common payment form for scams last year, behind bank transfers/payments and cryptocurrency.
Scammers who favor wire scams often target industries that feature high-value transactions and a myriad of communication across multiple parties, such as the investment and real estate sectors. Also, as more organizations are digital-first and online, it's easier for scammers to anticipate, intercept, and manipulate communications.
Here are five questions that you should ask yourself before you wire money, especially if it’s an unsolicited request. Doing so can help prevent you or your family and friends from being scammed.
1. Do You Know the Person or Organization the Money is Going to?
This one might seem like a no-brainer. But when we get urgent requests that seem plausible, we are more apt to overlook details or the fine print (or lack thereof). If you have any doubts, take a moment to verify the person or organization requesting the wire transfer.
Be extra cautious when dealing with people who you’ve only met online who request wire transfers – especially if they are pushy or threatening about the request. Online wire requests usually are a red flag.
2. What is the Money Being Requested For?
You should always pay attention to the nature of any wire request. If you weren’t expecting a wire request, it’s very likely it’s a scam. You might be thinking, what if the request is from someone I know? It’s still important to verify that person sent you the wire request, even more so if it’s for a large amount. Speak to that person by phone or face to face if possible.
Scammers are sneaky and persistent. They will hack email accounts and social media accounts and send messages to try to trick people into sending money. Also, remember the government is highly unlikely to call you, much less request a money wire. Yet, scammers continue to impersonate government agencies to try to steal money from victims.
3. Are there Documents that Legitimize the Request?
If you have doubts about whether a wire request is a scam, ask for additional documents. If they can’t be provided or you receive pushback about them, you’ve likely sniffed out a scam. If a wire request is legitimate, any reputable organization should provide documentation that can help you determine if the request is a scam or not.
This is also a good reminder to always closely look at any wire request you receive. For example, wire instructions in Microsoft Word document that has no official company logo, should raise major red flags.
4. Are You Wiring Money in Exchange for More Money?
One of the most common types of wire scams attempts to get potential victims to wire money in exchange for more money. These scams are under the guise of inheritance, settlement, or lottery money. Before you can receive your “money” or “winnings”, though, you have to wire money. However, if you wire that money, you won’t be getting more money back. Remember, if something seems too good to be true, it usually is.
5. Are You Being Asked to Pay Money Back?
Another common form of wire scam works like this. A scammer pretending to be a reputable company claims the company paid you too much and that you need to pay them back. If you ever receive a wire request like this, it’s 100% a scam. No legitimate organization would ask you to pay them back in this manner, especially via wire transfer. And let’s be honest, how often do companies pay you back, much less too much?
Final Thoughts
It’s crucial to carefully vet and verify any wire requests that you receive. Once your financial institution wires money, they won’t be able to recover it or dispute the transfer. You aren’t protected the same way as you are for credit card or ACH transactions. Wired money can’t be returned.
If you suspect someone might be trying to scam you via wire transfer, take a moment to ask yourself these questions. It could save you from a lot of headaches and even financial ruin. As scammers get more persistent and cleverer in their techniques, it’s important to educate yourself on how to spot wire scams. Also, read our guide to common scams.
The best way to fight fraud is to report it. Fraud can happen to anyone. If you believe you have been the victim of fraud, contact your local law enforcement and call us immediately at 800.258.3115 or after hours at 866.272.4481. Here are five things we will never ask you via phone too.
For more information about TwinStar Credit Union Fraud Services, please visit: TwinStarCU.com/security.