Last week, we kicked off our two-part series on scams to look out for. Here is what you should know about Advance Fee and Impersonation scams.
Advance Fee Scams
Tip: Don’t pay for something upfront, especially by non-refundable means like MoneyGram, Western Union, PayPal, a money order, or a reloadable card.
Good news, you’ve inherited money, won the lottery, or qualified for a loan! That’s great, unless you’re asked to pay a small upfront “fee” to access the money. If you have to send money for anything before getting a big check, it’s fraud. After you hand over the money the person will ask for more, or you’ll never hear from them again.
“Once a wire is sent, it may be impossible to recover the funds, and there is likely no recourse such as there may be with debit or credit card fraud,” explains Thorsen Steen, Supervisor, Financial Crimes Investigations at BECU. “Be sure you know who you are wiring money to. And never wire money to an individual you haven’t met in person, even if you share a relationship online.”
Creative fraudsters have taken money scams in many directions. Lately, we’ve seen scams posted across social media. In one, the poster gives you a check, let’s say for $100. Then they ask you to send them (or a third-party) a portion perhaps $50, promising that you’ll keep the extra $50. By the time you realize you were sent a fake check and the money isn’t coming, you’ve already sent the scammer your $50 using a non-refundable method.
Tip: Fraudsters can fake social media shares and “likes” to make their scams seem real.
There are many other advance fee money scams. For example, in an employment scam, fraudsters advertise for people who will place advertising, (called wrapping), on their car for a business. The victim is sent a check for more than the amount they are supposed to be paid, and are instructed to wire the overage amount to a third-party who will put the advertisements on your car. After you wire the money, the check the fraudsters sent will bounce, so not only will you not be getting your money back that you sent to cover the overage, but clearly no one will be paying you to advertise on your car.
Tip: Just because funds are available from a deposit made doesn’t mean the funds are valid, or that the money has cleared the account it’s drawn upon.
Sometimes a scammer will tell you you’ve inherited money from someone you really know, who really died. Sometimes they will offer you an investment opportunity with unbelievable returns. Or, they could offer you a “refund” from a company you often buy goods and services from. There are a lot of tactics out there.
Tip: Account holders are ultimately responsible for any deposits made to their accounts.
Everyone wants money, that’s why scammers keep using it as a promise to fool us. Always keep your guard up—wait until you know it’s real to celebrate a big windfall.
Tip: Don’t assume someone is who they say they are. Caller ID and official looking emails can be faked.
Scammers are great at pretending to be someone they aren’t. Many scammers will impersonate charities, collection agencies, government representatives, and other authorities so that you will trust them. Most commonly, they will impersonate the Internal Revenue Service. The scammer may even know personal details about you like what charities you support, debt you may have, and much more.
When a scammer impersonates a representative of a charitable cause, they will try to use emotion to get you to tell them personal information or send them money. Don’t give an inch—even telling them something as simple as the town you live in can help them find more of your personal information.
Tip: Research charities before you donate. If you decide to give, find the charity’s number and contact them directly. Don’t rely on information a potential scammer gives you.
When a scammer impersonates a collections agency or government official, they are relying on fear to get you to give them your information or money. Keep in mind that “no legitimate company or government agency accepts payment in iTunes cards, or by gift card. If payment is requested in this form, it is a scam,” Steen says. "If the person threatens you (with jail time, or a lawsuit), or promises that they’ll send someone to your home, you can be sure they aren’t who they say they are."
Tip: The moment someone threatens you, leave the conversation. If you’re worried the person is legitimate, look up the agency or organization’s contact information and ask them about it.
Government agencies, including the Federal Trade Commission will never ask you for money or your password. In fact, “there is never a legitimate reason for any third-party to request your online banking user name and password,” Steen says. “Employers will require your routing and account number for legitimate direct deposit, and those are safe to share with your company’s payroll or HR department, but your online credentials should be known only by yourself.”
Reporting a Scam
If you suspect you’ve encountered a scam, it’s important to report it to help the authorities get the word out to other potential victims. If it was a sweetheart scam, you should contact the police and/or the Federal Trade Commission. If the scammer impersonated an organization, please notify that organization as well as the Federal Trade Commission.