Don't Wire Money to Someone You Don't Know

Wiring money to a stranger is never a good ideaThe recent fleecing of a Consumer Ally reader by a bogus online lender underscores a basic rule of the road when trying to avoid getting scammed: Never, ever wire money to someone you don't know.

The victim, whom we'll call Miranda due to her wish to remain anonymous, learned that painful lesson when she fell for an advance-fee loan scam, an old and effective con that tricks victims into paying an upfront premium for a loan that never materializes. The Federal Trade Commission recently banned debt-relief telemarketers from charging advance fees for loans.The company that defrauded Miranda goes by the name "Cobot Capital," and boasts a slick website, complete with an irritating, techno-pop soundtrack. Problem is, as Mitch Lipka noted in his Boston Globe column, the company's supposed headquarters is actually a house for sale in Grafton, Mass. Cobot's website is also identical to that of Suncrest Mutual, who, like Cobot, also received a failing grade from the Better Business Bureau.

Not long after Miranda filled out an online form to search for loan companies, a "loan representative" from Cobot named "Robert Baston" called to tell her she'd been approved for a $5,000 loan. But before she could collect the money, Baston said, she needed to send them $800. Unfortunately for Miranda, she fell for the scam, and wired $800 via Western Union to a Christina Nichols in Woodside, NY.

Later that day, she was contacted by "Steven" in Cobot's "customer service department," who told Miranda that because of her poor credit record, she needed to wire them an additional $800 in order to receive the loan, and she did what she was told. Needless to say, though, she never received the loan and is now out $1,600. "I feel so sick for being so gullible and trusting," she told Consumer Ally. "And now it has cost me money I cannot get back."

Consumer Ally contacted Miranda's state attorney general, who advised her to file a complaint with her local police department as well as her state's consumer protection division. But as we told her, there's little or no chance she'll recover her money because she used a wire transfer to send it.

According to the FTC website Money Matters, there's a good reason wire transfers are the vehicle of choice for fraudsters, and why you should never wire money to anyone you haven't met in person.

"Wiring money is like sending cash; once it's sent, you can't get it back," the FTC warns. "Con artists often insist that people wire money -- especially overseas -- because it's nearly impossible to reverse the transfer or trace the money."

The Money Matters page on wiring money is full of handy tips on various kinds of wire scams and how to avoid them, and urges consumers to never wire money to:
  • Sellers who insist on wire transfers for payment.
  • An online love interest who asks for money or a favor.
  • Someone advertising an apartment or vacation rental online.
  • A potential employer or someone who says it's part of your new online job.
  • Someone who claims to be a relative or friend in dire straits -- often in a foreign jail or hospital -- and wants to keep it a secret from the family.
If you have fallen prey to a wire transfer scam, you certainly aren't alone. In 2009, MoneyGram agreed to pay $18 million to settle FTC charges its own agents helped con artists trick consumers into wiring more than $84 million. The FTC said the real number is probably much higher.

Western Union also alerts customers to beware of common types of fraud on its website, and also warns consumers are at risk for "fraud if you don't know the person you are sending money to."

If you are defrauded by a wire transfer scam:
  • Report the fraud to your local police department.
  • File a complaint with your state's consumer protection division.
  • File a complaint with the Internet Crime Complaint Center.
  • File a complaint with the FTC.
  • Report the fraud to Western Union, MoneyGram or any other wire transfer service you used.
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