Wired for Safety: Proven Steps to Prevent Wire Fraud

The Expert Podcast

Episode Show Notes:

• Is it even safe to transfer funds online or electronically?
• Traditional ways of paying money: cash, checks, credit cards, and merchant accounts.
• New digital payment methods like PayPal, Zelle, TransferWise, and bank wire transfers—are they safe?
• Understanding the difference between online transfers and other payment methods.
• Important to know: once you transfer money electronically, it’s no longer yours—no take-backs, even if there’s an error like the wrong name or account number.
• Recommended best practice: always do a test transfer first before sending any significant amount.
• For large payments such as escrow closings or purchases, send a small amount ($1 or $2) to verify the recipient’s information.
• Verify that the recipient received the small transfer and get written confirmation.
• Beware of scammers who may impersonate your intended recipient by using similar-looking email addresses or fake accounts.
• Banks may still process wire transfers even if there’s evidence of fraud, and they typically rely on the account number, not the name, to complete transfers.
• Example case: Lucky Star Enterprises vs Wells Fargo—company lost $125,000 to a scammer because the bank processed the wire based on account number despite the name mismatch.
• Courts ruled in favor of the bank; the sender lost their money.
• This shows how risky wire transfers can be if not done carefully.
• Zelle, a popular bank app, has been targeted by scammers extensively, with millions of people affected.
• The immediacy of these transfer apps makes them attractive for fraudsters.
• The problem is not limited to Zelle; other platforms like PayPal, Venmo, and newer services are also at risk.
• Once scammed via money transfer, it’s very difficult to get your money back since these transfers are irreversible and don’t offer chargebacks like credit cards.
• Scams can include fake sales of puppies, electronics, sneakers, fake rentals, cars, and more.
• Always do your research on the legitimacy of the money transfer platform and the party you’re dealing with.
• If you lose money, investigations can sometimes recover funds in high-dollar cases, but prevention is critical.

Best prevention tips:

• Send a small test transfer first.
• Confirm receipt and get it in writing.
• Use the exact same payment details for the full transfer (don’t retype).
• Documentation and verification help protect your money before sending large wire transfers.