Money Transfer Companies and Scams

Epiphanies of a Newbie Money Sender

Before joining Sharemoney, a leading international money transfer company, I had a very limited understanding of the money transfer industry. Despite being an immigrant living and working in the USA, I never sent money to another country. I knew a few people who did, workers at a lighting factory, but money transferring would not come up in our conversations.

The only experience related to money transfers I had happened when I was trying to rent an apartment in the greater New York City area and came across an unbelievably good deal. I emailed the person and learned that I would receive the keys to the apartment within a day after I’d send the security deposit and first month’s rent via Moneygram.

Back then, I didn’t know what Moneygram was. It sounded too much like a scam, so I began my online research. Moneygram itself proved to be a legitimate company in the money transfers industry, but I understood that I was dealing with one of the most common types of rental scams, and all my hopes to get a place in midtown Manhattan for $1500/m were going down in flames. The only solace, though a poor one, was that I was not the only victim of such money transfer frauds.

How do they get away?

It all made sense to me. A scammer publishes a listing on a popular website, furnishes it with lovely photos of a luxury apartment, and when a gullible bird like myself responds, he or she asks to send money via Moneygram (or any other famous money transfer company) to an obscure location in California or Florida in exchange for the keys. Pets are allowed, so is smoking. I imagine, figure skating on the floor would be allowed, too. The generous landlord was even willing to pay the money transfer fees: that is, out of the $3000 I was supposed to send.

Clear as it seemed, there was one thing I still couldn’t understand: how scammers managed to get away with such a scheme. To transfer the money, I needed to give the address of the Moneygram location and the full name of the person who’d pick it up. Now, let’s say the money was sent. What would prevent the police from visiting that location and obtaining the name of the recipient? I already hear the sirens: the bad guys are going to get it!

Sharemoney’s Compliance

Or not… because the name didn’t have to be real! I learned that as I was preparing for a compliance test which every employee of Sharemoney must pass. According to financial rules and regulations, for a money transfer to occur certain information about the sender and the recipient has to be verified. The recipient, for instance, has to prove that he or she is indeed the beneficiary of the transfer by showing a government-issued photo ID. Unfortunately, not all money transfer companies follow the compliance rules as their representatives (those local stores and gas stations where you see “Send Money Here!” signs) prefer to make an extra buck whenever possible. Seriously: this guy knows both the name of the sender and how much money was transferred. Why should I not believe his name is John Smith?

Upon hearing my scam story, the compliance team at Sharemoney told me that it was rather typical, and that they themselves put a special emphasis on identifying such schemes through multiple cutting-edge electronic methods. I was still surprised, though, that a giant like Moneygram that must have millions of dollars allocated to its compliance efforts cannot prevent its service from being abused so simply. I was accustomed to thinking that it was the “big” and “famous” names that provided great services, be it money transfers or anything.

Smiling knowingly, the compliance guys told me that giant companies also tend to charge higher fees. And take longer to transfer the funds. But these are altogether different topics.