A scam isn't complete until money has changed hands. So crooks expertly use all available methods to make that happen quickly and easily. Increasingly, they're using these four popular money-transfer approaches. But pause and ask yourself, Would an ordinary business or government agency ask for money using one of these payment methods? If someone calls and seeks cash from you in one of these ways, take a long moment to consider.
Peer-to-peer apps like Venmo, Zelle and Cash App allow you to move funds easily to a friend or relative who also has an account. But apps like these say in their user agreements that they are designed to be used by people who know and trust each other, and they note that they don't offer consumer protections. The best-known transfer app, PayPal, does mediate disputed transactions. But caution is critical when using most of these apps. If someone you don't know has something for sale and will take the money only via a peer-to-peer money-transfer app, you should decline.
Fraudsters Ramp Up Their Schemes in the New Year
Changes in Social Security cost-of-living benefits that went into effect Jan. 1 will open the window to a new round of scams, experts warn.
"The Social Security impostor scammers will use this as an opportunity to confuse you with messages about your accounts,” says AARP Fraud Watch Network's Amy Nofziger. “Remember, the SSA will not call you to demand payment with prepaid gift cards or cash."
Those schemes rocketed to new highs in 2019. The Social Security Administration received more than 450,000 impostor complaints during the fiscal year ending Sept. 30, its Office of Inspector General says, up from 15,221 the previous year. Under this scam, criminals mislead victims into making cash or gift card payments or wiring money to avoid a phony threat to shut down their Social Security account.
These tried-and-true services are good for sending funds to loved ones. But criminals love them, too. Wire transfers are often requested as part of sweepstakes and lottery scams, where you are asked to send money to help process big winnings — which never materialize. When a MoneyGram or Western Union transfer falls into the hands of a crook, it's untraceable. There are limited protections on this type of transfer. If you are ever asked to pay for a product or service via money transfer, consider it a red flag.
Store gift cards
As we have previously reported, gift cards have become a favorite way for scammers to cheat you. One common con: You get a call from a person alleging to be an IRS official who says that you owe back taxes. Or you are called about an unpaid traffic ticket from someone claiming to be a local police officer. The person requests payment via gift card from a major retail chain. You are directed to buy the cards for up to several hundred dollars, then read the code numbers on the back of the cards to the caller. Once you've done that, the swindler can use the codes to buy merchandise — including other gift cards with lower denominations. That makes the cash untraceable.
The AARP Fraud Watch Network helpline has gotten calls from more than 80 people in the past two years who encountered crooks requesting cryptocurrencies like Bitcoin. While not as common as some other forms of payment preferred by con artists, their use is growing. The Federal Trade Commission recently reported that these virtual currencies were being requested in the Social Security scam, in which people are falsely told a payment is needed to unfreeze an account. Victims are instructed on how to open an account and told to buy a fraction of a Bitcoin, for example, in increments of as little as $10. Transactions take a few minutes and are person-to-person, without any bank or regulating body. When the crook gets your money, it's gone.
So, how should you pay bills or shop online? We recommend using a credit card for most transactions, as they have added protections that other forms of payments don't. As for these other means of making transactions: Use them only with people you know and trust. Paying someone you've met online with these types of currency is always risky. Don't help crooks use these popular fund transfers to perpetuate their scams.