By Janet Alvarez, CNBC + Acorns Contributor
Money laundering scams, also known as "money mules," have been around for a long time, but have increased in frequency during the COVID-19 pandemic. That's because many people are in home confinement, spending more time online, where these scammers hunt.
The three most popular money mule scams involve online love interests, work from home, plus lottery or prizes.
Consider any offers or invitations to send or receive money in these suspicious scenarios until thoroughly examined. Any of these scams can cause you to accidentally wash or transfer stolen money, and possibly face financial or legal consequences.
Scam 1: The Foreign Lover
You meet someone handsome online who lives remotely, maybe in another country, but it seems wonderful and you two fall in love really fast. Soon, this person starts asking you to send them money or to receive money in your bank account or by bank transfer. It may even ask you to send money elsewhere.
The excuses or reasons they give you for requiring money may seem reasonable, such as the need for money to travel by plane, pay for visa procedures or medical expenses. However, these are not actual expenses and you soon begin to suspect that you are falling for a scam.
See also: Discover the keys to avoid falling into a scam by phone and internet
Stop communicating with the person immediately. The above are telltale signs of a money mule scam. You should report this immediately to your bank, wire transfer company, or your state attorney general's office, or you could inadvertently become involved in a financial crime. You can also file a complaint with the FTC.
Scam 2: The Fake Shipping Scam
You respond to an online job posting that offers you an easy job of packing or forwarding packages. You are asked to pay the shipping or forwarding costs out of your own pocket, while the company provides you with a bogus "refund" or "profit" check. This is a scam, you can face overdrafts or bank penalties and worse, you could be sending illegal material without realizing it.
Thoroughly review any job postings by researching the company online or with the Better Business Bureau. If you suspect that you are being the target of a scam, please report it.
Scam 3: lottery rewards or prizes
They inform you out of the blue that you have won a foreign prize or lottery. All you have to do is transfer money to "secure" the prize, improve your chances of winning a drawing, or pay "shipping and handling fees."
They may ask for your bank account or credit card information. Do not do it. This is a classic scam and has been growing in popularity in recent years.
First, it is illegal to participate in foreign lotteries. Second, legitimate lotteries or sweepstakes do not ask for personal financial information. Finally, if it sounds too good to be true, it probably is.
Other scams
Although the three scams listed above are the most common, there are a large number of scams to watch out for, including charity scams, online job scams, and many others.
The key is to recognize the telltale signs, in which scammers ask for money, request that you receive or send wire transfers or bank transfers, or request your financial information. And when in doubt, remember to contact the FTC, CFPB, or your state attorney general's office. Stay alert so you can avoid being a victim.
See also:
3 ways to detect a scam when paying your student loan
Be careful! Scammers Would Now Ask For Gift Cards
Learn How To Protect Yourself From Immigrant Scams
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