Wired In: Fraud is one phone call away
Wired in: Fraud is one phone call away
MSN recently published an article about a scam artist who convinced a 92-year-old man to send $40,000 via a wire transfer. The details of this call are common in many social engineering scams. A “vishing” scam involves a phone call by someone pretending to be someone they are not in order to get access to your information.
In this instance the scam was simple. Simplicity adds to the authenticity.
- The victim was told he was subscribed to a service he’d never heard of.
- The scammers asked the elderly man to give them his bank account information to process a refund of $39.95.
- It appeared that a deposit of $39,920 was made into the victim’s account. The victim said he would wire the overage back to the scammers.
- He went to his bank and initiated a wire transfer and told the bank employees that he trusted the person receiving the money.
- The wire transfer was sent off and the deposit disappeared from the account.
How could this happen?
It’s the first question we all ask. Aren’t there protections in place to stop fraud like this? The answer is yes, but with caveats. Scammers know how to use the bank system. With an account number and a routing number, they can initiate a deposit into an account, so the money appears to be pending and on its way. This elderly gentleman believed he would receive the funds, and wired money out of his account BEFORE the incorrect deposit had posted to his account.
After the wire transfer is made, the deposit falls off the account because the money was never truly on the way. Most transfers take two to three business days to go from pending to posted.
Why did the scammers request a wire transfer?
Wire transfers are an easy way for scammers to get around law enforcement. A wire transfer can only be initiated by the owner of an account—a valid signature is required for any wire transfer sent. Once an account owner puts their signature to the paper, they are stating that they are taking responsibility for initiating the wire. Unlike credit card fraud, a wire transfer is initiated by the account owner and the financial institution is not liable for where the funds go, assuming the wire transfer order is executed properly.
Bank and credit union employees ask questions around wire transfers for this reason. Sometimes it can feel uncomfortable, and you may wonder why the person you’re talking to at your financial institution is asking so many questions. The answer is simple: We want to protect you and your money.
Is it possible to get the money back from a wire transfer?
It is possible sometimes, but not always. There is an extensive legal process and, if the receiving financial institution is in another country, it can be even more difficult. Financial institutions work to reverse these types of fraud, but it may not be possible. Again, unlike credit card fraud where a transaction is authorized without the account owner’s knowledge, a wire transfer is always initiated by the account owner and the financial institution employees are working at the direction of the account owner.
How can I help my family avoid these types of phone call scams?
The best way to avoid a scam is open communication around finances. Financial discussions are difficult, especially with family. Yet, it’s the most effective way at combating fraud. Talk to your family and discuss the common signs of fraud, including returning deposits and phone calls from people you don’t know and with whom you do not do business. Another telltale sign is that a scammer will often ask the victim to keep the details secret from everyone.
Tell your family that if there is ever a question regarding the authenticity of a transaction, to sit down and talk it over with you or a financial professional.
At Consumers, we are always willing to discuss any questions you have about your accounts and transactions.
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