In theory, it should be perfectly safe to transfer money from one bank to another. The process is similar to writing a check or paying a bill online. Unfortunately, a few hidden risks can pop up with this type of payment method.
How Safe Are Online Transfers?
Before people could use PayPal or Zelle to transfer money, they used wire transfers to send money overseas. While this is a convenient technique for sending money, consumers can sometimes face problems. The Nigerian prince scam is an excellent example of these issues in action.
With a Nigerian prince scam, someone sends the victim an email that says they have a lot of money and cannot access it temporarily. They want to wire the victim the money, and then the victim can wire part of the money back. The victim gets to keep a portion of the original wire transfer in payment.
Unfortunately, the wire transfer is not real. After the victim transfers the funds back to the scam artist, the bank will generally realize that the transfer is fake and shut everything down. As a result, the victim loses the money they sent to the scam artist. Meanwhile, the scam artist gets to move on to someone else.
According to the Federal Deposit Insurance Corporation (FDIC), consumers should never transfer money to someone they do not know. In an advertisement or email, a reputable organization will not ask for a bank account or credit card number. Additionally, scam artists will often pressure the victim to make decisions quickly.
How to Transfer Money Safely
While there are always risks to sending and receiving money, consumers can also take precautions to stay safe. According to the experts at SoFi, “Consumers can transfer money from one bank to another with email money transfers, peer-to-peer transfers, wire transfers and checks.” While peer-to-peer and email transfers are free, other types of transfers can cost $5 to $50. Some of these methods take seconds to complete, and other options can take up to five days.
To stay safe, it is important to use the following tips.
- Consumers should only wire money to people they know
- To wire funds to an overseas business, verify the company’s business credentials and testimonials first
- Use a money transfer company that has a fraud prevention team
- Exercise caution when giving money to small, independent charities
- Be wary of wiring money to anyone from a dating site or an email message
- Talk to the local securities commission before wiring money to an investment company
Can Banks Make Online Transfers Safer?
When consumers transfer money from one bank to another, there are a few ways they can make the process safer. For example, working with SoFI (SoFi Bank) or other reputable banks can help because these banks include fraud prevention departments and software programs for spotting irregular transfers. Consumers should be cautious about transferring money to strangers and do their research before sending any wire transfers to stay completely safe.
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