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I often read of the risk of wiring money to a fraudulent recipient. For example, on a real estate closing, a common scam is to trick the buyer into wiring the closing costs to an account belonging to a con artist.

I don't understand how this could even be possible. If the buyer is dealing with a lawyer in a local town, why would they wire funds to a foreign country? Wire transfers always have the address of the recipient, including the country, so it would be obvious to the buyer that the funds were being wired to a foreign country.

In the situation that the scammer sets up a local bank account, that would require a confederate in the United States--something much harder to accomplish. Also, if somebody sets up an empty account in the United States, has $25,000 wired to it, then immediately wires the $25,000 to a foreign country the next day, I would expect that would raise a flag and the bank would immediately investigate.

So, how does this work? Does anyone have an actual example of a wire transfer instruction that fooled a person into wiring abroad when they knew they were dealing with a local US firm, like a real estate attorney's office?

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  • You know that some people get their banking passwords compromised I assume? This is one of the things they use those accounts for. There are also enough criminals in the US who can use identity theft to open accounts to use for this. Why should it be so much more difficult to have a US account to use?
    – MD-Tech
    Oct 28 '21 at 15:26
  • @MD-Tech Banks in the United States don't set up bank accounts by phone. You have to appear in person. So, as I said, the scammer would need someone in the United States to be creating a bank account with a false identity, not a trivial undertaking. That person would have to have a fake driver's license, social security number and secondary form of ID, plus an address that they have access to. Furthermore, banks check that information against fraud prevention databases to make sure the name matches the social security number, etc. It would be difficult to do all this. Oct 28 '21 at 15:49
  • If I've compromised someone's bank account password (see a lot of the scams on here where they ask for the bank account username and password and a lot of people fall for it) why do I need to set up an account? I just use theirs
    – MD-Tech
    Oct 28 '21 at 15:52
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    @Five Bagger: If you can't open a bank accout except by appearing in person, then how are the credit card companies who offer me money if I'll just open a checking acount with them (and deposit a bunch of money, of course :-)) supposed to work?
    – jamesqf
    Oct 28 '21 at 16:32
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    You seem to assume that there aren't any/many scammers based directly in the US, so all these scams are just foreign bad guys trying to steal American money. I suspect that assumption might be unwarranted. (I've never lived in the US, but here in the EU we have plenty of our own entirely domestic scammers, so I'd be surprised if the situation was radically different your side of the pond).
    – TooTea
    Oct 28 '21 at 20:22
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Because there are plenty of compromised accounts in America (or the EU)

People get their bank account hacked. The scammer uses this legit U.S. account as a middle man and wires money to his foreign account.

If the buyer is dealing with a lawyer in a local town, why would they wire funds to a foreign country?

Lawyers aren't always tech savvy. They don't know how to verify email authenticity, or to call and talk to an individual if things change. A well timed email that look legitimate will probably fool a good number of them.

People don't always check where the bank is located. Even if they did, the attacker could buy compromised bank accounts off the dark web and route through those.

In the situation that the scammer sets up a local bank account, that would require a confederate in the United States--something much harder to accomplish.

Or bought a compromised account off of the dark web. People don't login to their bank account everyday. Given the number of data breaches and people's penchant for reusing passwords there are probably thousands of compromised accounts.

I would expect that would raise a flag and the bank would immediately investigate.

Immediately after suspicious activity. Wire transfers cannot be reversed, there are valid reasons to wire money out of the country. They'll flag it as suspicious eventually, but the scammer has already likely routed tens of thousands out of the country.

So, how does this work? Does anyone have an actual example of a wire transfer instruction that fooled a person into wiring abroad when they knew they were dealing with a local US firm, like a real estate attorney's office?

The link you added has a story like this. I've also told several people to use a cashier's check sent by certified mail for large sums of money. Scamming is a numbers game. Out of hundreds of people a few are dumb enough to be duped. In the story linked about, the scammer would have over 100k if he was able to dupe 5 people like that.

EDIT - PSA for wire transfer

They are very difficult to reverse and the only real advantage is you have the money immediately. They are also a favorite of scammers because of this. Consider using a cashier's check if possible. This has 2 advantages.

  1. They are made out to a specific person or entity, and you must have an address to mail it to, or hand it in person. Technically wire transfers are made to a person too, but many banks don't bother to check this part.

  2. If details change at the last minute, be wary. If tens of thousands are on the line people at the bank will understand a follow-up call. Don't trust new information received. Verify through trusted channels.

  3. Email is not a particularly secure or safe form of communication. Follow up via a different channel if things change.

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