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By: Steve Timmons

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2020-09-21

Online Financial Fraud: How to Keep Your Bank Accounts Safe

Identity and Fraud Protection

Two of the most lucrative scams for fraudsters involve online banking and wire fraud. In most cases, the two methods provide quick access to victims’ funds.

However, there are several signs you can look for that indicate you might be the target of online financial fraud. For both online banking and wire fraud, we’ll cover what fraudsters typically do when they are trying to gain access to your money and how you can protect yourself.

ONLINE BANKING FRAUD

How does a fraudster even gain access to someone’s online banking account(s)? It’s difficult to believe, but most fraudsters get victims’ online banking credentials from the victims themselves. Fraudsters have many ways to gather information from their victims:

  • Social media (Facebook, Twitter, Instagram)

  • Phishing emails (emails requesting personal/financial information)

  • Compromised data (security breaches that may provide the victim’s name, Social Security number, address, or even card information)

  • Dating sites (Match, Tinder, OkCupid)

  • Tech support scams (posing as a Microsoft or Apple employee to solve a computer issue)

  • Internet transactions (Craig’s List, eBay, dog adoption sites, etc.)

  • Text messaging

  • Phone calls


Regardless of the technique, fraudsters are creative in making their victims believe the scam they are perpetrating is legitimate and will convince their victim to release information to them.

Most of the online banking fraud we have seen in the fraud department at VSECU is from relationship scams that have taken weeks, sometimes months, to develop. Once the fraudster has established a level of trust with their victim, they ask for financial favors, which often involve the release of online banking information.


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After acquiring someone’s online banking credentials, fraudsters use a couple of tactics to take their victim’s money. One way is to move funds between the victim’s accounts, transferring money from savings to checking to make them believe a deposit was made (if the victim doesn’t look carefully). They will then request that the victim send money back to them that had never been deposited in the first place.

Fraudsters can also use mobile banking apps to deposit a fraudulent check and make it appear as if funds are available. Hoping to access the stolen funds before they are rejected during the reclamation process, the fraudster will often request funds be transferred back through a money transfer app such as Venmo or Zelle, or shift from online banking to another method of acquiring the funds, such as wire transfer or gift cards. This is typically accompanied by a story explaining why the funds need to be sent in this manner, such as an immediate need and sense of urgency or an issue with their bank account that requires alternate payment methods. If gift cards are requested, they instruct their victims to provide the information from the back of the cards via email which provides them with immediate access before fraud can be identified.

WIRE FRAUD

Another method that makes funds available to fraudsters—wire fraud—often occurs under the guise of a transaction. Scammers will often attract their victims behind the pretense of selling a vehicle, boat, or piece of real estate, or sometimes offering an investment opportunity that’s “too good to pass up.” They require the victim to wire them the money in order to complete the purchase, providing immediate access to the funds. Meanwhile, the victim soon discovers there is no car, boat, or investment.

(Wire fraud can also involve any of the information-gathering techniques previously mentioned, which fraudsters use to carry out online job or romance scams, to name two common examples.)


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Once a wire transfer has been initiated, the funds become available immediately at the institution to which they were sent. When fraudsters request a wire, they most likely have someone waiting to withdraw the funds.

Another technique fraudsters use is to request that the funds be transferred in succession to multiple institutions. By moving the money around, they make it difficult to trace and retrieve the funds once they have been transferred.

 

HOW TO PROTECT YOURSELF FROM ONLINE FRAUD

Because there is always a risk sending funds to an individual you have never met, it is best to ensure the legitimacy of a transaction through due diligence. Do some investigative work on the recipient and the sale before completing a wire transfer or sending any money to someone with whom you are not familiar. The internet can be a useful resource for you, just as it is for the fraudster.

Here’s how to conduct an investigation, if you suspect you may be the target of online fraud, and a few rules to follow when speaking with strangers online about finances:

  • If your correspondence has occurred over email, check the email address to ensure it is legitimate. If you receive multiple emails in your correspondence, look for differences in the name or email address.

  • If you communicate by text or phone calls, Google the phone number to see if any information indicates it has been previously associated with a scam. With texts and phone numbers, it is important to keep in mind that fraudsters have the ability to “spoof” a number, which makes their call appear to be from a legitimate number.

  • As a blanket rule, never give your online banking credentials to anyone you meet online. If someone asks for this information, it is most likely a scam.

  • Never send money back on a transaction with someone who indicates they “sent too much money,” regardless of the reason for the funds being returned. Legitimate transactions rarely see this kind of error.

  • Don’t respond to pressure to send funds back quickly. If you feel, or are, threatened with consequences or a sudden deadline, you are likely a target of fraud. Financial institutions, government agencies, and credit card companies will not strike a threatening tone and will give you advance notice.

If you do suspect you have been victimized, immediately contact your credit union or bank. With a wire transfer in particular, time is critical—if acted upon quickly, a wire could be recalled if the funds have not yet left the receiving institution. You can also report suspected fraudulent activity to the Internet Crime Complaint Center and the Federal Trade Commission.

 

OTHER ARTICLES YOU MAY ENJOY:

9 Ways to Protect Yourself from Cybercrime

Is that a Fake Check? How to Avoid Check Fraud

Protect Your Finances from Fraud during COVID-19

 

The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of VSECU.

About Steve Timmons

Steve Timmons is our Fraud Coordinator. Steve makes sure that our members’ identities are protected and helps members understand what fraud is, how to identify scams, and how to protect themselves and their family members from being defrauded.