How to Spot a Wire Transfer Scam

This information comes courtesy of Rob McKenna, the Attorney General for the State of Washington ...

Q: I applied for a job as a secret shopper. My assignment was to evaluate a wire transfer service. I was given a check and told to cash it. I was to keep some of the money and wire the rest. But after I wired the cash to Canada, the check I cashed bounced and the bank withdrew the funds from my account. I'm out thousands of dollars. Is this a common scam?

A: (Attorney General Rob McKenna) Sadly, US consumers lose millions of dollars each year to fraudsters using wire transfers as part of their scams.

Western Union, Moneygram and similar businesses allow you to send money quickly. But cons frequently try to take advantage of victims by persuading them to wire money to a stranger, usually someone in Canada or overseas. Recently, our office learned of a Spokane man who lost $4,500.

The initial hook can take many forms: Someone wants to buy something you advertised, or pay you to do work at home. You're told that you won a sweepstakes or were selected for a loan. A foreigner asks for your help withdrawing money from a U.S. bank account or transferring funds from an offshore fund.

In every case, the scam ends the same way -- you are asked to wire money. And once you do, it's gone for good.

The most important thing to remember is this: Never wire money to someone you don't know or you haven't successfully conducted business with for a long time.

Any of the following "red flags" should signal a potential scam:

- You are asked to wire money.

- You are sent a check in connection with a payment request. Cons often win their victims' confidence by sending a fake check for more than the amount of purchase, or to cover so-called processing fees, shipping costs or other expenses. They instruct the victim to cash the check or money order and send them a portion of the money by wire transfer. Even if the check looks authentic and your bank cashes it, you're not safe. Banks are obligated to make deposits available within a few days, but it can take weeks for a check to clear. Once the con's check bounces, the bank will withdraw the funds from your account and hold you liable for any overdraft fees.

- The contact says a confirmation code or money transfer control number (MTCN) is needed before your money can be withdrawn. This is a blatant lie. Once you wire money, it can be picked up immediately.

- The contact implies that a wire service or online classified Web site offers a purchase protection policy. Don't take a stranger's word -- check directly with the site. Western Union, Moneygram and Craigslist do not offer any purchase protection program.

- A caller or e-mail appears to originate from overseas. Many cons use the language barrier to engender trust by seeking the "assistance" of their victims. Steer clear of sloppy Web sites and messages that are not well written.

Wire transfers are often associated with these types of scams: Classified-ad purchases involving fake buyers or sellers, foreign lotteries and sweepstakes, advance-fee loans, bogus secret shopper programs, work-at-home schemes and 'Nigerian' fund-transfer scams.