Financial criminals continue to take advantage of cost of living pressures and emerging technologies such as artificial intelligence to dupe individuals into being scammed. Barclays consumer research shows students and young people are at risk: 80% of 18 to 24-year-olds have been targeted or know someone who has been approached by a scammer. Younger consumers falling victim to money muling – where someone lets a criminal use their bank account to move money, often naively – is a growing concern. We take a look at how this form of financial fraud has evolved – and explain how to spot the warning signs.
Have you ever been asked to transfer money via your own bank account in return for a commission on the transaction? Or have you been sent a deposit by ‘mistake’ and been asked to move the money to a different account? If so, you may have been targeted by a ‘mule herder’ – a person trying to recruit ‘money mules’.
Barclays consumer research shows that different types of scams – from money muling to impersonation – are pervasive. Almost three-quarters (70%) of 18 to 24-year-olds believe scams are becoming more commonplace. Meanwhile, financial criminals are adopting new tactics to trick individuals into receiving stolen money, for example by assuming false online identities (this accounts for 28% of scams reported by survey respondents) or posting fake job adverts (19%).
In part, this increase can be attributed to a combination of social engineering – the use of psychological manipulation to compromise personal security details – and technological advances. LoveGPT, for example, is a software that uses fake dating profiles to elicit money from dating app users – and around 14% of young people have been targeted by a romance scam or know someone who has.
Barclays’ proprietary data shows that purchase scams – the sale of non-existent or fake products at discounted prices – account for three-quarters (76%) of scams reported by those aged 18 to 24. “As people become more willing to shop and trade quickly online, purchase fraud is becoming increasingly prevalent.” Neil Scriven, Lending Fraud Director at Barclays explains.
“As a general rule, if it looks too good to be true, then it almost certainly is – especially when money is at stake.”
Neil Scriven
Lending Fraud Director, Barclays
Money mules take different forms
Money mules – willing and unwilling – fit into three main categories. ‘Complicit money mules’ knowingly open bank accounts with the intention of receiving illegal funds and participating in criminal activity. Conversely, ‘witting money mules’ suspect that they may be taking part in illegal activity but continue to move money due to financial pressures.
In some cases, however, victims are oblivious to the fact that they are being scammed or that their actions could result in a criminal sentence. The third category, ‘unwitting money mules’ are individuals who are unaware that by offering access to their account and agreeing to transfer funds, they are doing something illegal. Scriven says that these cases make up around a third of confirmed instances of fraud: “We are now getting a real sense of the scale of this problem.”
In terms of how ‘herders’ target victims, most money mule cases fall into one of three groups. First, individuals can be offered commission on a bank transaction. Scriven explains: “A fraudster could say that if you put this through your bank account, we will give you ten per cent of the payment”, offering the mule a quick way to earn money. More recently, online sales are emerging as a common tactic used by these criminals. “This refers to the sale of goods to a third party online – but the funds that are used to pay for the sale are stolen,” Scriven adds. The herder will buy an item from a seller and ask to pay by bank transfer – paying from a stolen account. The seller will then lose the money when the fraud is discovered.
The third form that a money mule scam can take is a ‘mistaken deposit’; where money herders transfer money into a mule’s bank account, convince the account holder that the transaction was accidental – and request them to move it into a different account. “If you do that, perhaps unbeknownst to you, you’ve laundered funds,” says Scriven.
“We are now getting a real sense of the scale of this problem.”
Neil Scriven
Lending Fraud Director, Barclays
Get to know the warning signs
Barclays data suggests that 15% of 18 to 24-year-olds have been targeted by a money herder. So, how can consumers protect themselves against the risk of becoming a money mule? First, consumers should be suspicious of any money that they receive unexpectedly, particularly if they don’t know the origin of the transfer. “It’s a clear sign that you are being targeted,” Scriven says. “If you don’t know where money has come from, then you must question why are you receiving it.”
When it comes to purchase fraud, sellers should be wary of anyone who appears too willing to buy an item, particularly above market rates – which can often be the case with sales of Bitcoin or other cryptocurrencies. “As a general rule, if it looks too good to be true, then it almost certainly is – especially when money is at stake”.
As fraudsters often create fake profiles to hide their identities, it is also crucial to be cautious if people attempt to discuss money with you on social media platforms. Over 66% of young people have noticed more scammers operating on social media recently and almost 40% say they now feel unsafe when using these platforms. “When conversations about your banking history or capability start on social media, you should be very nervous,” says Scriven. He recommends contacting the industry-led collaboration Stop Scams UK, of which Barclays is a member, if you notice suspicious advertisements or behaviour on social media, or contacting your bank if you spot unusual account activity.
“Ultimately, anyone with a bank account could be targeted as a potential money mule. Consumers need to be super vigilant to stay safe.”
Neil Scriven
Lending Fraud Director, Barclays
Fraud defence and digital safety
As money mule scams continue to evolve, monitoring the latest developments in fraud and providing educational resources to consumers is essential for Barclays.
In response to research that shows that almost a quarter (24%) of young people would not want to worry their parents by telling them about scams, Barclays is providing advice on how to discuss the danger of online fraud with your children through the Digital Wings platform – a free online resource designed to improve financial literacy and provide essential information for anyone concerned about fraudulent activity.
The bank is also educating young people about the warning signs and consequences of money muling as part of the ASPIRE Programme.
The Barclays Scams Bulletin is issued on a bi-monthly basis, sharing the bank’s latest proprietary scam insights, alongside guidance and advice from digital safety experts.
Consumers need the right tools and knowledge to defend themselves against financial crime. As social engineering technology develops at speed, Scriven concludes that “ultimately, anyone with a bank account could be targeted as a potential money mule. Consumers need to be super vigilant to stay safe”.
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