Despite tougher security, crooks still make a fortune from money wiring: Internet Scambusters #619
Despite tougher security, money wiring and reloadable debit card scams still cost us millions of dollars every week.
In this week's issue, we tell you what the wiring and card companies themselves advise to prevent fraud and why one reloadable card firm is switching products to try to beat the scammers.
We also explain how crooks are trying to use the recent celebrity photo leak drama to trick people into giving up their Apple identity info.
Now, here we go...
8 Money Wiring Fraud Prevention Tips
Money wiring services and reloadable debit cards are still criminals' payment method of choice when it comes to raking in their ill-gotten gains from scam victims.
So much so, in fact, that a couple of the big money wiring companies themselves have agreed to pay compensation of $200 million to reimburse victims, and one of the leading debit card firms has announced that it will abandon its main reloadable card in 2015.
The attraction to the crooks is simple: Both payment methods are untraceable. Law enforcement is usually unable to track down where the money went.
Wiring and reloadable cards are, of course, perfectly legal and play a very useful role in legitimate money transfers and payments.
But they're also perfect for scams, like:
- Advance payment (where victims get a dud check and are asked to wire part of the value to a scammer-in-disguise, before the check "bounces").
- Distress scams (where victims receive a bogus message from a relative, friend or colleague who is supposedly in trouble and urgently needs cash).
- Lottery scams (where victims are told they must pay tax and processing fees before they can collect their -- non-existent -- winnings).
- Phony fines and overdue bill demands, most recently the widespread IRS unpaid-tax-bill scam.
You'd think that the people who provide these payment methods would be able to spot a scam when a victim comes up to them and tries to transfer money -- especially to someone in countries where the crooks operate.
Actually, they sometimes do manage to stop people, mostly in their 80s and beyond, before they pay up.
But consumer organizations, notably the Federal Trade Commission, have been critical in the past, suggesting they could do more, which is why some of them have agreed both to hand money back to victims and to be monitored by the FTC.
Today, all the big money wiring companies provide guidance on their sites to try to steer customers clear of potential scams. We covered the broad details of these guidelines in an earlier issue, The Golden Rule that Halts Money Wiring Scams.
The biggest wirer, Western Union, now offers these 8 simple rules on their site to prevent fraud:
- Never send money to people you haven't met in person.
- Never send money to pay for taxes or fees on lottery or prize winnings.
- Never use a test question as an additional security measure to protect your transaction.
- Never provide your banking information to people or businesses you don't know.
- Never send money in advance to obtain a loan or credit card.
- Never send money for an emergency situation without verifying that it's a real emergency.
- Never send funds from a check in your account until it officially clears, which can take weeks.
- Never send a money transfer for online purchases.
The firm also has a good test of your fraud awareness in their Fraud Quiz. Try it!
It's partly because of this increased vigilance that crooks have been switching their favorite cash-collecting technique in a big way to reloadable cards.
These generally can't be used for such large sums as the wiring services accept but scams for smaller sums can be much more difficult for issuers and law enforcement to spot.
One of scammers' most popular payment cards has been the Green Dot MoneyPak Card, which we also touched on in Crooks Use Green Dot Scam for Advance Fee Fraud, when the scam was just surfacing.
Today, the scam is much more widespread. It works like this:
Victims are told they must transfer money immediately to the scammer, posing as some sort of legitimate organization.
They buy a MoneyPak at a grocery store or other outlet. The card has an activation code to cover its initial value, and a personal identification number (PIN), which the buyer can use to go online and top up or reload the card using a credit card or PayPal.
The crook tells the victim to phone or email the PIN to them to settle the phony bill, and then he/she uses it to drain the cash from the card account.
Scammers' use of MoneyPak has become so worrisome that Green Dot has decided to phase out its current usage from the first quarter of 2015.
From then, Green Dot cards will only be reloadable at store cash registers via new card swiping technology.
That should help to reduce this type of scam, but in the meantime the company warns: "Don't give your MoneyPak number to pay for something you buy through the classifieds or to collect a prize or sweepstakes. Do not give away your receipt information to another party either."
Debit cards and money wiring are certainly fast ways of transferring cash to people you know -- but they also can be fast ways of losing money when you send it to people you don't know. So don't do it.
Alert of the week
The recent commotion about pictures of celebrities in revealing poses leaking onto the Internet gave scammers a golden opportunity to try to cash in.
After the hacking of certain Apple iCloud accounts was announced, they immediately sent out spam emails pretending to be from Apple (though the firm apparently was not to blame for the original hacking incident) telling recipients their own accounts had been locked pending verification of user IDs.
This is just a cunning variation of a well-used identity theft trick in which victims are told their accounts -- banks, credit cards and so on -- have been frozen.
Never, ever respond to this type of message. Check out your account status directly and independently with the organization, not by clicking on links in messages.
That's it for today -- we hope you enjoy your week!