Warning Signs of Money Scams

Businessman Bribing Another Businessman With a Bundle of Cash
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Becoming familiar with the common warning signs of money scams can help you spot trouble before it’s too late. If you see any of the red flags listed below, proceed with extreme caution and do some more investigation before parting with your money.

Wire Transfer Requests

If somebody you don't know asks you to wire money through a company such as Western Union or MoneyGram, be careful. There are a few legitimate situations where wire transfers make sense, but they’re a bad idea if you’re not sure who you’re dealing with.

Also watch out for scammers posing as your friends or relatives. They may say they're having a crisis and need you to wire money immediately. They'll usually ask you to do it without telling anyone else about it, as well. This is a major red flag.

Thieves love wire transfers because the money is available for withdrawal almost immediately (before everybody figures out what they’re up to). And senders have very little protection. Once the money leaves your account, it’s gone, and you can’t ask the bank to undo the transfer.

Emails Promising You Money

Scammers often send emails promising vast sums of money (or even a few bucks) for little or no effort. Sometimes these messages will say that you've won a prize, sweepstakes, or lottery, and the money is waiting for you. Others will look like they were sent to you accidentally—and you’ve somehow had the good luck to stumble into a fantastic situation.

In many cases, the thief will ask you to pay a fee or wire money in order to receive a larger amount of money back from them (and you'll never receive it). Or, they'll ask you to deposit a (fake) check and wire some of the money back.

If something sounds too good to be true, and it’s coming from somebody you don’t know, then it’s almost certainly a scam. Also keep in mind that real lotteries and sweepstakes do not require you to send money in order to receive your money.

If you've discovered a scam or believe you've been a victim of one, then you can help yourself and others by reporting it to your state consumer protection office or the federal government. You also can report online and international scams to the Internet Crime Complaint Center.

Offers to Buy With Alternate Payment Methods

If you’re selling something that you’ve advertised online, be wary of accepting anything but cash in person or payment through a secure method. Scammers have various ways to cheat you out of money even when you’re supposed to be the one collecting money.

One example of this is a cashier’s check scam: A buyer offers to make a purchase by sending you a cashier's check, but they send a check for the wrong about (usually more than the cost of the item). They ask you to deposit the check and wire them the overage. A week or so after you wire the money, that you find out the check was fraudulent and that you're responsible for paying it back to the bank if you've withdrawn it or spent it.

Handling Payments for Someone Else

There’s no legitimate reason for you to handle payments for somebody else. If you’re asked to deposit money into your account and forward it to somebody else, then it's wise to turn it down. At best, you’re being set up for a scam; at worst, you’re involved with something illegal (such as money laundering).

Threats and Hyperbole

A scammer's goal is to exploit your hopes and fears until you hand over your cash. To take advantage of your fears, they might tell you that you’ll go to jail, lose your job, or somehow face humiliation if you fail to make “required” payments (none of which they can accomplish legally). To take advantage of your hopes, they may tell you that you'll receive a reward or prize if you do what they ask of you. Or they may approach you through an online dating site.

Unsecured Sites

If you're using an unencrypted website then you're leaving yourself vulnerable to attack. Look for a picture of a lock or “https” in the address bar when doing anything sensitive online. If you provide personal or financial information to an unsecure site, it can be stolen easily. Any reputable bank, credit union, or online shopping site will require a secure connection. If your connection is not secure, you might be caught in a so-called "man in the middle" attack, in which your usernames and passwords are collected for later use.

Emails That Don't Look Quite Right

Sometimes you can find everything you need to know in an email. If you notice bad spelling and grammar, you might be dealing with an overseas phishing scam (a type of fraud where a user's personal data, such as passwords and credit card info, is stolen through an electronic communication like email). It also helps to look closely at any links when you hover your mouse over them before clicking. Do they go where you think they should go?

What to Do After Recognizing Warning Signs

If you see any of the warning signs above then it's best not to engage with the scammer at all. If you have doubts, then get more information. Research the person or business in question until, and continue to educate yourself about the types of scams that are out there. It also helps to talk about the situation with a friend or relative, and look for similar stories online—you might be surprised at what you find.

Article Sources

  1. Federal Trade Commission. "Using Money Transfer Services," Accessed March 28, 2020.

  2. Federal Trade Commission. "Prize Scams," Accessed March 28, 2020.

  3. USA.gov. "Report Scams and Frauds." Accessed March 28, 2020.

  4. Stop Fraud Colorado. "Cashier's Check Scams." Accessed March 28, 2020.

  5. Bank Newport. "Security & Alerts." Accessed March 28, 2020.

  6. Australian Competition & Consumer Commission. "Threats to Life, Arrest or Other." Accessed March 28, 2020.

  7. Federal Trade Commission. "What You Need to Know About Romance Scams." Accessed March 28, 2020.

  8. Federal Trade Commission Consumer Information. "How to Tell If a Website Is Encrypted," Accessed March 28, 2020.

  9. Attorney General of Texas. "How to Spot and Report Internet and Email Scams," Accessed Dec. 5, 2019.

  10. Federal Trade Commission. "Self-Defense Against Scams." Accessed March 28, 2020.