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Be Aware of the Money Mule Scam

When one hears the term “money laundering,” the image that typically comes to mind is of a mastermind criminal disguising their wealth.  For example, a wealthy but crooked business tycoon that has concocted a genius plan to move funds of illegal origin in order to give the funds the appearance of being legally earned.   Although those cases do exist, there is now a newer scam where one may assist with money laundering and not even realize it.

The term “money mule” refers to a situation where scammers send money to an individual, and then ask that individual to send it to someone else.  If compensated, the “money mule” is allowed to keep a portion of it.  By using the individual to move the money, it makes it more difficult for law enforcement to catch and “clean” the money.  Thus, the reference to money “laundering”.

In the past, you may have seen a lot of signs on the side of the road saying you could “Make Money Working From Home.”  Today, these ads are posted on social media, job posting boards online, and internet chats.  The allure to these postings is that you can make a lot of money with little effort.  Sometimes, these ads are in fact looking to hire money mules.  Many of those who respond to these ads are completely unaware that illegal activity is the main purpose of these ads, and may remain to be unaware after hire.  This makes it very difficult for the FBI and law enforcement to determine if the money mules are truly criminals or innocent people who were taken advantage of.

Current circumstances such as unemployment during the Covid-19 pandemic have caused criminals to take advantage of innocent individuals looking to provide for themselves and/or their families.  They are even taking advantage of those looking for a relationship on dating websites.  Women and men need to be careful of individuals who cast themselves as the kind and caring individual looking for a relationship who then starts asking them to assist in matters involving money.

A strong example of a scammer using a dating website can be found in an article by Katherine Skiba on AARP’s website.  (https://www.aarp.org/money/scams-fraud/info-2021/money-mule-romance-scam.html)  During the pandemic in April 2020, a 55 year-old woman named Denise lost cash and helped launder money without knowing it.  Denise and a man met on Zoosk, a dating website.  Denise was divorced and the man portrayed himself to be a kind man looking for a long-term relationship.  He promised he would love and care for her stating that her family was his family.  He said all the right things to give her a sense of security and emotional attachment.  He even sent her gifts and flowers to affirm his feelings.  During their six-month relationship, though, he always made excuses to not meet even though they lived within the same state.

He randomly asked her to buy him gift cards in large amounts promising to pay her back.  The amount of gift cards came to $5,000 and he never paid her back.  She had also given him access to her checking account, and without her knowledge he used her account little by little to launder about $200,000 worth of funds with criminal origins, which included unemployment fraud.

When she found that her account was down to $18.00, he then took an additional $10.00 and never spoke with her again.  She did the right thing in reporting him to the FBI’s internet crime complaint center (ic3.gov).  She also shared her story with AARP in order to prevent this from happening to others. The emotional and financial damage she experienced, is something she wants to prevent others from ever experiences.

The rise in the number of scams today is significant, and it is important to know what to look for in order to avoid becoming a victim.  To summarize, if someone sends you money and asks you to send it to someone else, immediately stop.  Scammers also often ask you to buy gift cards or wire money.

As mentioned earlier, they might recruit you through dating websites, online job ads or even prize offers.  Avoid a money mule scam by never using your own bank account, or opening one in your name, to transfer money for an employer or anyone else.  Never pay to collect a prize or move any money out of your “winnings.” Lastly, never send money to an online love interest, even if he or she sends you a check first.  The check may clear, but turn out to be a fake check which the bank will want you to repay.

If you spot this scam, break off contact with the scammers and stop moving money.  Tell your bank and the wire transfer or gift card company immediately.  Lastly, report it to the Federal Trade Commission at ftc.gov/complaint.  (https://www.consumer.ftc.gov/blog/2020/03/whats-money-mule-scam) You can also report it to the FBI’s internet crime complaint center (ic3.gov).

Often times, victims are too embarrassed to report that they fell for the con and don’t report it.  One should know it is unfortunately very common and nothing to be embarrassed about.  The only way for it to end is for people to be aware and come forth when it does happen.   With knowledge about the scam of money mules and having a keen eye for red flags, the risk of becoming a victim in this scam will be greatly reduced.  The sharing of this knowledge with others, like how Denise from California did, is also important in order to prevent this scam from growing.  In summary, staying vigilant and informed of current financial scams will help ensure financial and emotional security.

I’m hoping this information prevents even one person from falling prey.  For more information, please contact:

Stacie Wolff, CTFA

Assistant Vice President / Trust Officer

Phone: 302-573-5812 / Email: swolff@fs-trust.com

The posts expressed are views of FSTC and are not intended as advice or recommendations. For informational purposes only.  FSTC does not offer tax, legal, or investment advice, professional counsel should be sought for tax or legal advice.

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