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June 8, 2021

Scam Alert! Watch Out For Money Mule Scams

In just the first quarter of 2021, the FTC documented $1,004,000 in total losses due to fraud.1 Our AVP of Asset Protection, Chantel Negron, is looking out for our members when it comes to helping you avoid scams. Negron advised, “Fraud comes in many forms, and unfortunately, I see people fall victim to scams frequently. Be vigilant about protecting yourself by staying educated about what scams are out there.”

We don’t want you to be victimized by scammers looking to steal your money and personal information. Something new to keep on your radar this year? Money mule scams.

What is a money mule scam?

The FTC has warned consumers about the increase of money mule scams, which are scams that involve fraudsters getting you to move stolen money for them. You might be thinking, “I’d never move money illegally!” Well, the tricky part is that you may not even know you’re participating in fraud.

Here’s how the scam works:

The scammer sends you money, often by check or sometimes by peer-to-peer (P2P) payment apps like Venmo, then asks you to send some of it to someone else or to send it back to them in some roundabout way. (Do you use P2P apps? Watch out for these scams, too.) They may ask you to purchase gift cards or use a wire transfer to send the money, making you think that you can keep a portion of the sum for your troubles. What they don’t tell you is that the money is stolen. If you deposit a scammer’s check, it may end up being flagged as a fake check, then your financial institution will hold you liable to repay that amount. If you send fraudulent funds through P2P apps, you’ll likely still be responsible for returning the funds, even after the scammer is long gone. You may even be legally liable for participating in a scam to move stolen money!

How do scammers trick you?

These scams can originate in different forms, usually exploiting your emotions or physical need in some way. These are a few common examples:

Empathy scam: This scam plays on your empathy and goodwill. Someone may tell you they are in a difficult situation to solicit your help and quell your better judgement. Example: “I’m stuck at the border, and I need you to wire me some money. I’ve sent you a check, and you can keep $500 if you please send me the rest.”
Romance scam: The scammer befriends the victim online and begins a relationship. Once they’ve established trust, they’ve thrown you off the scent of their real intent — to steal money from you or to get you to move stolen money for them. This form of the scam is more common than you may think. There were 15,743 reports of romance scams in just the first quarter of 2021, according to the FTC.1
Employment scam: You apply for a phony job listing and the so-called employer tricks you into sending money. For example, the fraudulent employer may send you your “first paycheck” and tell you to wire them part of the money or send them gift cards to cover a background check or to get your paperwork started.

How can you avoid money mule scams?

Here are three tips directly from the FTC that you can keep in mind:

  • Never send money to collect a prize. That’s always a scam, plus they may be trying to get you to move stolen money.
  • Don’t send money back to an online love interest who’s sent you money. This is yet another scam and way to get you to move stolen money.2
  • Don’t accept a job that asks you to transfer money. They may tell you to send money to a “client.” Say no. You may be helping a scammer move stolen money. Legitimate employers won’t ask you to send money around for them.

In addition to the tips above, you’ll also want to focus on protecting your personal data. Negron said, “Avoiding scams starts with protecting your personal information. Never give out your bank account info, Social Security number, credit card number or any other personal information over the phone or online, unless you’re speaking with a trusted entity with whom you’ve initiated conversation.”

When in doubt, trust your instincts. If something doesn’t feel quite right or seems too good to be true, it probably is.

1 FTC Explore Data. Accessed May 21, 2021. https://www.ftc.gov/enforcement/data-visualizations/explore-data.
2 FTC Consumer Information: What’s a money mule scam? March 4, 2020. Accessed May 21, 2021. https://www.consumer.ftc.gov/blog/2020/03/whats-money-mule-scam. 

 


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