Crime is as old as civilization, and it's always wise to be on the alert for anyone who may target you as a potential victim. Fraudsters may contact you randomly or target you specifically based on some personal information they have about you, such as an email address, phone number or the name of a company where you have an account. They can email or call you, pretending to be from a financial institution you have a relationship with, from the government (such as the Internal Revenue Service or Social Security Administration), or they may use the name of a well-known software company to alert you that something is wrong with your computer and they can fix it, either online or over the phone, for a fee. While fraud occurs everywhere, residents of some states appear to be more heavily targeted by scammers. A recent U.S. Federal Trade Commission (FTC) report noted that “The states with the highest per capita rates of reported fraud in 2020 were Nevada, Delaware, Florida, Maryland, and Georgia.”
Whether by email or phone, some of the scammers can be extremely convincing as they attempt to persuade you to give up information or money to them. Unfortunately, thousands of people get fleeced by fraudsters every year because the crooks are experienced, skilled, and always innovating new approaches to their potential victims. According to the FBI's 2020 Internet Crime Report, last year there were more than 240,000 complaints just on email phishing scams, with adjusted losses of more than $54 million. Those numbers are based on reported crimes; it's very likely that for various reasons, many more people did not report being defrauded of their money; this includes older Americans who are more likely to be victims of fraud. When these scammers convince someone to go along with their scheme, they often ask their victims to pay them money in unexpected and unconventional ways so the money can't be tracked. These payments often involve money laundering, which is illegal.
So, what, exactly, is money laundering?
According to the U.S. government’s Financial Crimes Enforcement Network, “Money laundering is the process of making illegally-gained proceeds (i.e. "dirty money") appear legal (i.e. "clean"). Typically, it involves three steps: placement, layering and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the "dirty money" appears "clean." Money laundering can facilitate crimes such as drug trafficking and terrorism, and can adversely impact the global economy.” According to the United Nations Office on Drugs and Crime , “The estimated amount of money laundered globally in one year is 2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars.”
How you pay a fraudster may ensnare you in money laundering—don't use unusual forms of payment
If anyone or any company asks that you pay them in an unusual way, you should refuse, since you may be drawn into a money-laundering effort. Common, traditional payment methods include:
- Cash
- Personal checks
- Credit cards
- Bank drafts
- Cashiers' checks
- Money orders
- Payment services, wire transfers and other forms of electronic funds transfers
If someone asks to be paid in a very non-standard way, don’t do it, since they may be engaged in illicit activity, including money laundering, and you would be assisting them—and you're probably getting cheated out of your money. People who take part in these fraud schemes or fall victim to one are called “ Money Mules,” and most people are unaware they are helping criminals launder money.
So, what are some odd, unusual payment methods? They can include:
- Gift cards—yes, these are the standard gift cards sold at many grocery stores, pharmacies and other retailers. Regular retail gift cards are the most common form of payment made to scammers by the people they have swindled. In the Federal Trade Commission's Consumer Sentinel Network Data Book 2020 , the report highlights that gift card scams cost Americans at least $124 million last year, and those are just the reported losses. Gift cards are an easy way to convert a cash or credit card transaction into another form of payment that’s untraceable, and that type of financial conversion could be considered a simple form of money laundering. A legitimate company, person—or even a U.S. state or the federal government—will not ask you to pay them by converting money into gift cards; that’s not a normal payment type. The scammers will make up a bogus reason as to why they require gift cards and then ask you to send them either a photograph of the back of the gift card(s) or read them the serial numbers on the card(s); then your money is gone, and there is no way to get it back. If anyone asks you for payment by gift card, that’s a very good sign they are trying to defraud you.
- Cryptocurrency and other forms of digital money, such as Bitcoin, Dogecoin, and Ethereum. Similar to electronic fund transfers, payments made in cryptocurrency are difficult to trace and usually can't be stopped or reversed. Once the cryptocurrency is paid, then it’s gone. These types of digital currency are not issued or regulated by country governments or banks, and often have few governmental regulations controlling them.
What about payment services and wire transfers? Are they okay to use?
If you've been asked to pay a company or someone by money transfer services, you should be very careful. Always know who you’re paying. Scammers will often ask their victims to send money through money transfer services, wire transfers or online payment options built into financial accounts, such as Zelle®*. The FTC report mentioned above noted that “Bank transfers and payments accounted for the highest aggregate losses reported in 2020 ($314 million), while credit cards most frequently identified as the payment method in fraud reports.” Using these services is very similar to sending cash. You should be very careful about making digital payments with people and companies you don’t know and have no reason to trust. Delta Community offered some tips on using payment services in a blog post in September 2020.
What do I do if I think someone is trying to scam me?
- Again, if someone wants to get paid in an uncommon way, just pay them with cash, check or another traditional method.
- If you think someone is trying to defraud you, collect and report the details to the U.S. Federal Trade Commission (FTC) at ReportFraud.ftc.gov. Another option for anyone who's been a victim of an internet crime is to report it to the U.S. Federal Bureau of Investigation‘s (F.B.I.) Internet Crime Complaint Center (IC3).
- If you lost money to a scammer, the FTC has a series of quick steps to take so you can try and recover your funds.
- If you think your Delta Community accounts have been compromised, contact our Member Care Center via our toll-free number at 800-544-3328.
Did you know that Delta Community is legally required to report any suspicious account activity to the U.S. government, including potential money laundering?
To help protect its members—and comply with the federal Bank Secrecy Act (BSA)—Delta Community must report any suspicious account activity detected either by its systems and/or its staff, including any actions that may appear to support money laundering, which is covered by the BSA .
We have some other information and advice on protecting yourself you might want to look at...
Below are a few of our recent blog and security posts on managing online personal security:
*Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.
