Wire Fraud: Common scams to look for and how to respond

Have you ever been asked by an unknown source to send money via a wire transfer? If so, you may have encountered wire fraud, a common tactic for scammers looking to manipulate their targets into sending money directly to them. Wire fraud scams are unfortunately common, but knowing the warning signs and what steps you can take to protect yourself will go a long way to minimizing your risk of becoming a victim.

What is a wire transfer?

First, it’s important to understand what a wire transfer is. While scammers frequently use wire transfers to scam people, they’re also a legitimate way of electronically transferring funds. Advantages of wire transfers over other money transfers, such as ACH, include a relatively fast transfer speed and the ability to send funds internationally.

Why are wire transfers commonly used to commit fraud?

There are several factors for why scammers often use wire transfers as their chosen method to defraud people. Many scammers live outside of the U.S., so they need a method that will work internationally. Wire transfers provide that at a relatively fast speed. Additionally, wire transfers are often impossible to reverse once completed. Therefore, wire fraud makes it easy for scammers to take your money quickly with little recourse once you’ve realized what happened.

Common wire fraud scams to watch for

These are some of the most common wire fraud scams used today.

Wire request from a loved one

Scammers sometimes claim to be someone you know, such as a parent or grandparent. They’ll often claim to be in distress and need money wired immediately. These emotional ploys can be tempting to fall victim to, especially as AI technology improves and makes impersonating a loved one easier. Still, there are simple steps you can take to disprove these claims. Be suspicious of someone claiming to be a loved one but contacting you through a different phone number or email than usual. When in doubt, contact the person supposedly asking you to wire money directly to confirm whether that’s really them.

While this situation can be emotionally overwhelming, any threats and claims you must pay immediately are merely empty words. Scammers use these tactics because they’re effective and result in many people completing the wire transfer before they can think things through. Anyone asking for a legitimate wire transfer should be more than happy to provide additional information, verify their identity or offer another way to pay.

Real estate scams

There are three categories of real estate scams: rental fraud, mortgage fraud and real estate fraud. In the case of rental fraud, the scammer typically puts a fake online ad up for a rental, usually with a great price attached. When someone inquires about the listing, the scammer will ask them to wire money, often for a fake application fee or security deposit.

In the case of mortgage fraud, scammers will pose as your mortgage lender, claiming you need to wire them money to complete your mortgage payments. Real estate fraud, on the other hand, happens before closing on a house. Scammers will impersonate a real estate agent or attorney involved in an ongoing real estate purchase, claiming a wire transfer is necessary to pay the down payment or closing costs.

Fake check scams

This scam can come in many varieties, but they all involve you receiving a fake check from the scammer. Common stories scammers will tell involve claiming they overpaid you by mistake or that you won a prize and need to wire the associated fees. If you’ve been on the job hunt, be on the lookout for work-from-home job scams, where scammers will claim the fake check is a stipend to buy home office supplies, asking you to wire back what you don’t spend.

In all these cases, the check is not valid. You may be able to deposit it initially, making it seem legitimate, but your financial institution will eventually realize it’s fake, putting you on the hook for anything you bought with the fake funds and any money you wired.

Government agency scams

Scammers looking to commit wire fraud will often claim to be a government agency, such as the IRS, SSA or FBI. They often threaten harsh penalties, such as large fines or arrest if you do not comply. If you encounter this, you can know with certainty this is a scam. The U.S. government will never ask you to wire money under any circumstances.

Utility scams

A scammer will claim to be one of your utility companies, threatening to cut off service unless you pay them by wiring money. You can confirm this is a scam by contacting your utility company directly with the contact information listed on their website or your bills.

Dating app scams

Emotional manipulation is involved in many wire fraud methods, and dating app scams are a prime example of that. Scammers will create fake profiles on online dating platforms, posing as an attractive single suitor. They will start by messaging people on the platform to build trust and connection. Then, they’ll come up with a story about why they need money wired to them. To avoid this, never wire money to someone you meet on a dating platform you haven’t met in person.

Tech support scams

This is a classic scam that is still commonly used to commit wire fraud. Scammers will pretend to be tech support, often from a reputable company, claiming they need to fix your computer and asking for a wire transfer to perform their services. This scam usually involves pop-ups on malicious webpages or through viruses that include contact information for the fake tech company.

What to do if a wire fraud scam targets you

There’s no need to panic if a wire fraud scam targets you. Scammers typically contact a wide net of people, so there’s likely no reason they targeted you in particular. Do not respond to the scammer, and report the scam to the Federal Trade Commission at reportfraud.ftc.gov.

If you made the wire transfer and are now realizing you are a victim of a wire fraud scam, there are several steps you can take. While reversing a wire transfer is often impossible, still contact the institution you completed the wire transfer through and inform them of the scam. You can also report the wire fraud to the Federal Trade Commission at reportfraud.ftc.gov. Gather as much evidence as possible, including texts, emails, call logs, other communication and the wire transfer details.

While wire fraud is all too common, knowing common methods scammers use to commit it and what to look out for will go a long way to protecting yourself. For many of us, becoming a target of wire fraud is not a matter of if but when. Even if you become a victim of wire fraud, there are still important steps you can take to minimize the damage, protect yourself going forward and help the authorities stop future wire fraud.

Learn more about protecting yourself from fraud:

• How to protect yourself from financial phone scams
• 4 password tips to help increase your online security
• Spotting the FTC’s most reported crypto scams

Ben Heinze is a marketing content specialist with a passion for financial education. Instilled with a strong sense of frugality from a young age, he views money as a means to building the life you want, rather than an end in itself. From reading Money Mentor, he hopes you discover new ways money can be used to build your ideal life—whatever that may look like.