Money Order Scams (9 Examples + How To Avoid Them)

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Money orders are a secure and pre-paid form of payment, minimizing the risk of insufficient funds. They provide a viable option for individuals without a bank account, offering a means to make secure transactions. However, they are frequently exploited by scammers running clever schemes.

Money order scams target unsuspecting victims who believe they are receiving legitimate payments, only to find out later that the money orders were fake or fraudulent. These scams come in many forms, from fake checks to phony sweepstakes winnings, and result in major financial losses each year.

1) Fake Check Scam

The fake check scam is very common – a scammer will send you a check and ask you to deposit it, then wire some or all of the funds elsewhere. However, the check is counterfeit or fraudulent.

It can take weeks before the fake check bounces, allowing ample time for the scammer to receive your real money from the wire transfer.

Many people fall victim to this because the check initially appears valid and clears the bank.

For example, you may advertise an item for sale online and a scammer expresses interest, sending a cashier’s check for $2,000 when the item is only worth $500. They ask you to kindly deposit the check and wire back the difference.

But a few weeks later, the bank discovers the check is fake and you are on the hook for that $2,000. This is an extremely common scam that happens with rental listings, vehicle sales, boat sales, and many other online transactions.

Protect yourself by never wiring funds for someone you don’t know, even if the check seems to clear initially. Wait for checks to fully clear before taking action.

2) Mystery Shopper Scam

The mystery or secret shopper scam typically starts with someone contacting you about an opportunity to work as a mystery shopper and evaluate the services of money transfer locations and agencies.

They send you a money order or check and instruct you to deposit it into your bank account, then wire-transfer a portion of the funds through companies like Western Union or MoneyGram to someone else.

Supposedly, this is meant to allow you to “secretly” assess the money transfer process and customer service. Eventually, the bank discovers the original check or money order was fraudulent, leaving you liable for the amount you withdrew. Unfortunately, the money you wired is long gone.

Safeguard yourself by being wary of any job, especially a mystery shopping gig, requiring you to deposit checks or money orders and wire money elsewhere. Real mystery shopping jobs provide legitimate checks for purchasing items or services.

3) Rental Listing Scam

The rental listing scam happens when scammers list properties online for rent, often at below-market rates to lure responses. When victims express interest in renting the property, the “landlord” comes up with an excuse that they are overseas or unavailable to show the unit in person, then asks for a security deposit or first month’s rent to secure the rental.

They request that funds be sent via wire transfer or money order. Once the overpayment is sent, the scammer disappears without providing rental documents or keys. Victims discover too late that the landlord didn’t own or have rights to the property at all.

You can protect yourself by never sending money to rent a place you haven’t physically toured, met the landlord or agent for – and most importantly validated ownership of. Be wary of unbelievable deals, unavailable landlords, and requests to wire funds.

4) Advance Fee Loan Scam

The advance fee loan scam operates by fraudsters promising loans or credit cards to people with poor credit, provided they first pay an upfront processing or administrative fee typically by money order, wire transfer, gift card codes, or cryptocurrency.

But victims ultimately never receive the promised loan after the initial fee is paid and the scammers disappear with their money. What makes this scam believable is that real loans often do require appraisal, credit check, and application fees paid upfront before funds are disbursed.

Important to note however is that real lenders never guarantee approval without checking someone’s credit report first.

Protect yourself by being wary of guaranteed approvals on loans without credit checks, upfront fee payment requests before receiving paperwork, and demands to pay fees using unusual or irreversible means rather than normal credit/debit cards or checks.

Get promises of loans in writing beforehand and check companies thoroughly before sending any advance fees.

5) Car Wrapping Advertising Scam

In the car wrapping scam, scammers target social media users and claim they represent advertising firms willing to pay for putting brand or product wraps featuring logos and imagery on people’s vehicles. 

They say they’ll send payments of hundreds of dollars per month by check or money order if you are selected and agree to drive your wrapped car around to expose the ads to the public.

Unfortunately, the checks they send turn out to be fake while asking you to deposit them and wire back install costs for applying the wrap.

By the time banks flag the checks as counterfeit weeks later, the scammers have disappeared with your real cash from wire transfers.

You can protect yourself by remembering that legitimate advertisers don’t select random individuals for installing expensive permanent wraps on their vehicles. They work through professional auto-wrapping services instead.

6) Craigslist Overpayment Scam

The Craigslist overpayment scam starts with scammers expressing interest in an item you have listed for sale on Craigslist, typically something like an automobile or expensive electronics.

They agree on a price with you to purchase the item, then send you a certified check, cashier’s check, or money order for far more than the asking price, often thousands extra.

They provide some rationale for the overpayment like accidentally issuing the wrong amount or needing to add extra for delivery fees. The scammer asks you to kindly deposit the check/money order and wire back the difference.

But some time later, the bank alerts you that the check is fake. Unfortunately, the money you wired out is long gone while you are now liable for the entire amount.

This scam is possible because certified checks and money orders can take weeks to properly clear and be validated as legitimate. You can stay away from this scam by not accepting checks that are significantly more than your sale price and wiring back any overages.

Keep in mind that certified checks can still be fraudulent. Wait for payments to fully clear.

7) Family Emergency Scam

The family emergency scam typically involves someone contacting you pretending to be a friend or family member who is traveling abroad and has run into trouble requiring them to urgently wire money for legal or medical bills.

They can also claim that they have been mugged and all their accounts frozen.

They may then ask that you quickly wire them a few thousand dollars via Western Union, MoneyGram, or a reloadable debit card to help resolve their emergency. This works by scammers utilizing slight personal details they know about you from social media sites to make their claim seem legit.

Some even spoof caller ID to make it appear their call is coming from a family member. You can shield yourself from this con by employing healthy skepticism before wiring money.

Ensure that you independently verify emergency claims by calling friends or family to confirm stories. Never send money solely based on a phone call or text plea.

8) Job Opportunity Scam

The job opportunity scam typically starts with scammers advertising openings like secret shopper, administrative assistant, envelope stuffer or re-shipper jobs requiring little experience on sites like Craigslist, Instagram or shady pop-up employer websites.

When victims express interest, the scammers conduct fake “interviews” then offer the job only if candidates pay for training programs, materials, software, uniforms or equipment costs upfront via money order or wire transfer.

Scammers may even send fake checks to deposit and wire amounts back under the guise of paying for job necessities and supplies.

Ultimately no job exists at all and victims are left having lost whatever upfront costs they covered. What makes this scam believable are that some real jobs do involve uniform, training and equipment costs paid upfront before starting.

Make sure you research companies thoroughly before paying anything or cashing any checks from new job offers. Never wire funds to employers you don’t know and trust. Wait for checks to fully clear first too.

9) Lottery and Sweepstakes Scam

In the lottery and sweepstakes scam, victims receive letters, emails, or calls claiming they have won a big prize in a random drawing, lottery, or sweepstakes.

But to collect the prize, they are informed that taxes, fees or customs duties need to be paid upfront first via bank wire, money order, or prepaid gift cards.

Scammers make claims seem legitimate by using real lottery/sweepstakes names and official-looking documents. Unfortunately, after victims pay upfront to claim their “winnings”, they never receive any of the promised jackpots which can be tens or hundreds of thousands in cash, trips, or electronics.

In reality, victims’ names are often just randomly drawn from public listings to send these scam notifications about prizes they never won. No legitimate lottery requires upfront fees using money orders or wire transfers to receive prizes.

Ensure that you ignore all claims of lottery wins if you don’t recall entering and winning that specific drawing. Verify directly with lottery administrations about winning numbers rather than send any upfront fees immediately to strangers.

Understanding Money Orders and How They Enable Scams

A money order is a type of payment issued by non-bank institutions, allowing customers to pay a specified amount of cash plus a small transaction fee in exchange for a paper check-like document. The purchaser fills out the recipient’s name and the amount to pay on the money order form. 

Money orders function similarly to regular printed checks, though they are not linked to bank accounts. They are commonly accepted by retailers, landlords, and creditors as alternatives to cash or personal checks.

Money orders offer a useful option for transferring funds without a bank account. However, the detachment from personal accounts also makes fraudulent money orders harder to recognize and money order scams more successful. 

Scammers can easily create fake yet realistic-looking money orders with none of the validation processes against actual bank accounts that standard checks provide. Many money order scams target online sellers expecting payments for goods and services from purported buyers.

Regrettably, unsuspecting recipients of payments can also become victims if they ship items before recognizing the money orders they deposit will eventually bounce. Understanding common money order scams can help shield against fraud.

Are There Safer Options Than Accepting Money Orders?

Given the prevalence of money order scams, safer payment methods exist for receiving funds when selling goods or services, especially for higher-value transactions.

  • Cashier’s checks – Though counterfeiting is still possible, legitimate bank-issued cashier’s checks provide more security than money orders. Inspect checks closely upon receipt for signs of alteration. Verify legitimacy by independently contacting the bank with security features like watermarks or micro-printing. Cashier’s checks draw directly from issuer accounts.
  • Wire transfers – Wire transfers direct funds instantly between financial institutions before banks release payments. This guarantees available balances in sender accounts, nearly eliminating fraud. Downsides may be higher fees and processing times for senders and recipients versus transfers within digital platforms. 
  • Digital payment platforms – Services like Zelle, PayPal, Venmo, CashApp, Apple Pay and Samsung Pay allow instant peer-to-peer digital payments. Security features often include verification processes and fraud monitoring. Note however that certain transaction types on platforms like PayPal still enable fund reversals, so caution is warranted in high risk situations.

Check platform rules, fund availability directly in your account before shipment. Also verify recipient identity on platforms requiring less validation. When selling products or services online, transition towards these digital and direct payments tied to validated accounts rather than random money orders from strangers without verification.

Avoiding money orders reduces exposure to scams.

Money order scams may seem harmless at first, but they can have devastating financial and emotional consequences for victims. These prevalent schemes are likely to persist as scammers continue dreaming up new ways to exploit the vulnerabilities of consumers.

But by educating yourself on the most common techniques used in money order fraud, exercising healthy skepticism, and following basic security best practices, you can identify red flags early and avoid becoming the next victim. 

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