Money Transfer Scams: How to Spot and Avoid Them

Sending money has never been easier. With just a few taps, peer-to-peer (P2P) and account-to-account (A2A) apps like Venmo, Cash App, PayPal, and Google Pay let you move funds instantly between friends, family, or accounts. But as these tools become part of everyday life, scammers are finding new ways to take advantage of that convenience.

At Sound Credit Union, we know how important it is for members to feel confident managing their money online. While these digital payment tools are safe when used correctly, money transfer scams are on the rise, and understanding how they work is the first step to protecting your funds.

What are Money Transfer Scams?

Money transfer scams happen when a scammer, sometimes called a fraudster, or someone who commits financial fraud, tricks a person into sending money or sharing personal information that gives them access to their accounts. These scams can take many forms and often appear convincing, such as legitimate messages, texts, or calls from your financial institution.
Unlike credit card transactions, P2P and A2A payments are instant and typically irreversible, which means once the money is sent, it’s very difficult to get it back. That’s why it’s so important to pause, verify the request, and make sure you know exactly who you’re sending money to before completing a transfer. Below are some of the most common money transfer scam scenarios to watch for.

Common Money Transfer Scam Scenarios

Here are some of the most frequent examples of wire fraud and money transfer scams to watch for:

• Fake Verification Codes: Scammers may call or text pretending to be from your bank or credit union, asking for a verification code sent to your phone. A legitimate financial institution will never call or text you asking for this code. If someone does request it, do not share it; hang up, and contact your institution directly.
• Impersonating Your Bank: You might receive a message claiming there’s “suspicious activity” on your account and that you need to send money to yourself or another account to “reverse” a charge. This is always a scam. Banks and credit unions will never ask you to move money to resolve an issue.
• Posing as Fraud or Merchant Departments: Some scammers pose as customer service representatives or fraud investigators to gain your trust. They may ask for details like your online banking credentials, debit card number, or Social Security number. Once they have this information, they can open fake accounts and gain access to your funds.
• The “Accidental Transfer” Scam: Someone claims they accidentally sent you money and asks you to send it back. This, unfortunately, is a classic setup; if you send the money, it’s gone for good. Always report these cases directly through your payment app instead.
• Letting Strangers Use Your Phone: It might seem harmless, but never let a stranger use your phone. In just seconds, someone can open your banking or payment apps and transfer money without your consent.

Recognizing these scenarios is the first step to protecting yourself, but knowing how to respond is just as important. The good news is that with a few smart precautions, you can avoid most money transfer scams before they happen. Here’s how to keep your accounts and personal information safe.

How to Protect Yourself From Money Transfer Scams

You can avoid most scams by being cautious and following a few simple safety steps:

1. Verify before you send: Only send money to people you know and trust. Before confirming any transaction, double-check the recipient’s name, phone number, or email address to make sure it’s correct.
2. Never share your verification codes or login details: If someone asks for your bank verification code, password, or one-time security number, it’s a scam. Financial institutions will never contact you asking for this information. Hang up and contact your credit union directly using a verified phone number.
3. Monitor your accounts: Set up text or email alerts so you’re notified each time a transaction occurs. These alerts make it easy to spot unauthorized activity and act quickly if something doesn’t look right.
4. Be cautious on public Wi-Fi: Avoid logging into online banking or payment apps on public networks. These connections are often unsecured and could potentially expose your information.
5. Stay informed: Scammers are always coming up with new tactics. The more you understand about how wire transfers and online payments work, the better equipped you’ll be to recognize red flags and protect your money.

Are Wire Transfers Safe?

When handled through a legitimate financial institution, wire transfers are generally safe and secure. They use encrypted systems and verification processes to ensure funds go to the correct recipient.

However, the risk comes when scammers trick people into sending money voluntarily. For example, by pretending to be a trusted company, friend, or financial representative. Once you approve a wire or money transfer, it’s nearly impossible to reverse the transaction.

Before sending any wire or P2P payment, take a moment to:

• Confirm who you’re sending money to and why.
• Verify details like the name, phone number, or account information.
• Be cautious of anyone who pressures you to act quickly or share personal information.

Can You Be Scammed Through a Bank Transfer?

Unfortunately, yes. Just like P2P apps, bank transfers can be used in scams if you’re tricked into sending money under false pretenses.

Common examples include:

• Fake invoices or payment requests that appear to come from legitimate businesses.
• Overpayment scams, where someone sends you “extra money” and asks you to return the difference.
• Impersonation scams, where a scammer poses as your bank, employer, or even a family member in need.

Once the money leaves your account, it’s nearly impossible to get it back, especially if it was sent voluntarily. That’s why it’s so important to slow down, confirm, and trust your instincts when something doesn’t feel right.

If you’re ever unsure, contact your financial institution directly using the phone number on your card, statement, or mobile banking app. They can verify whether the request is real and help you protect your account from potential fraud.

Protect Yourself with Confidence

Staying alert and informed is the best defense against money transfer scams. At the end of the day, trust your instincts. If something feels off when making a P2P or A2A transaction, don’t proceed.

At Sound Credit Union, we’re committed to helping our members stay safe in every aspect of their financial lives. If you ever receive a suspicious message, text, or call about your account, or if something just doesn’t feel right, contact us directly. Our team can help you verify the situation and take steps to protect your money.

Visit our Security page to learn more about the steps we take to protect members as a financial institution.