Thanks to technology, many aspects of our everyday lives have become easier, from quick access to information to earning a sizeable income outside of a traditional job.

With mobile banking apps like Grey, transactions are faster and easier, regardless of location. However, with this convenience comes new risks, as scammers are constantly finding new ways to exploit people, especially through money transfers.

In this article, we’ll look at five common money transfer scams and how to avoid them.

But first, what is a money transfer scam?

A money transfer scam happens when a scammer deceives you into transferring funds. They often create a sense of urgency — like claiming a family member is in trouble — to pressure you into acting quickly without thinking. They’d typically ask that you send the money via wire transfers, payment apps or prepaid debit cards to make it harder to trace the transaction.

Common types of money transfer scams

Overpayment scams

Online sellers and small business owners are usually targets of overpayment scams. Here’s how it works: a scammer contacts you to buy a product or service and pays with a cheque or money order. However, the check is more than the selling price. For instance, if you’re selling a laptop for $500, you might get a check for $1,000.

Banks usually take a few days to verify if the check is genuine. But while you wait, the scammer contacts you, claiming they made a mistake and asks for a refund of the excess amount. Since the transaction seems legitimate, it’s easy to trust the scammer and agree to refund the extra money.

But unfortunately, once the bank processes the check, it bounces because it’s fake. This means you lose both your money and the product or service you sold.

How to avoid overpayment scams:

• Research your buyer, and if possible, check their profiles and contact information
• Instead of a check or money order, use secure payment methods.
• If you must take a check, wait for it to be cleared before shipping an item or sending a refund
• Be wary of buyers who pay more than the agreed price, as legitimate buyers rarely overpay

Charity scams

In these types of scams, fraudsters take advantage of a person’s goodwill by posing as an organisation asking for donations to be sent to victims of natural disasters, illnesses or emergencies. These scammers take advantage of your emotions and create a sense of urgency to pressure you into donating your money quickly. Some red flags to warn you that you may be falling victim to a charity scam are:

• They only accept money donations via cash, gift cards, cryptocurrency or wire transfers
• They ask for your personal or financial information
• They pressure you to donate quickly
• There’s no clear information about the charity organisation or how the donations will be used

So, how do you protect yourself from charity scams?

How to avoid charity scams:

• Legitimate charity organisations will never ask you to donate with a wire transfer or gift card
• Take your time to thoroughly research the organisation online, read reviews and check their website before donating.
• Verify that the charity organisation is registered with the proper authorities.
• Don’t hesitate to ask questions on how the donations will be used and what causes they support.
• Trust your instincts.

Relationship scams

With the rise of online dating apps, relationship or romance scams have become one of the most common types of money transfer scams. Scammers create fake relationships and emotional connections to gain the victim’s trust. Once trust is built, they start asking for money, often in small amounts at first. They might claim it’s for a medical emergency or travel costs to visit the victim. These payments are usually requested through wire transfers or gift cards, making them hard to trace.

How to avoid relationship scams:

• Don’t send money to someone you’ve only met online
• Verify the identity of a possible love interest, reverse search their profile photos if possible
• Speak to your friends and family if you’re unsure about an online relationship.

Advance fee scams

In this scam, victims are asked to make advance payments for goods, money or services that are never delivered.

The scammer typically contacts the victim with an attractive offer, such as a job opportunity, lottery, inheritance, or loan. However, they claim that the victim must first pay processing fees. Usually, when the initial payment is made, the scammer asks for more money for extra fees and then disappears with all the money, leaving the victim with nothing.

How to avoid advance fee scams:

• Never pay for services, money or products upfront
• Be cautious of unsolicited offers that seem too good to be true
• Do your research on the person or company offering the deal

Emergency scams

Emergency scams happen when fraudsters lead victims to believe that their loved ones are in an emergency situation, such as an accident, arrest, or medical crisis, and in need of urgent help. The victim’s emotional distress is taken advantage of, and they usually send the money immediately.

How to avoid advance fee scams:

• Stay calm and take a moment to think before sending money
• Try to verify the story by checking with your mutual friends or family members
• Ask specific questions that only your friend or family would know
• Never send money via wire transfer or crypto unless you’re sure of the authenticity

Wrapping up

At Grey, we’ve put safety measures in place to protect your data from being hacked and flag suspicious activities on your account. You can learn more about how Grey protects you here.

However, if you ever feel like you’re being targeted by a fraudster or notice any suspicious activity, please don’t hesitate to contact us at support@grey.co