Common FX scams to be wary of – plus tips for how to avoid them

Sending money across international borders opens up great opportunities for businesses and global citizens, but it also creates opportunities for fraudsters, who have proved themselves a force to be reckoned with during the pandemic.

Several factors over the past few years have contributed to the rise of scams linked to foreign exchange (FX) transfers, explains Jason Nader, head of fraud and identity at global money transfer specialist, OFX.

“The pandemic saw a large shift from bricks-and-mortar retail to e-commerce,” he says.

“Fraudsters and threat actors took advantage of this and shifted their attacks to target people using this sector. Phishing emails and texts quickly shifted to emulate major online businesses in an attempt to gain access to clients’ sensitive data.”

The number of online relationship scams also increased, with people engaging more with social media and dating platforms, particularly during lockdown periods. Even since the start of the war in Ukraine, Australian authorities have warned people against sending money overseas, having been alerted to cases of criminal gangs promoting Russian romance scams.

While older demographics may have historically been more susceptible to such crimes, Nader says: “The reality is we are all potentially at risk of becoming a victim.

Common scams targeting Australians

According to the Australian Competition and Consumer Commission’s (ACCC) Scamwatch, Australians lost more than A$177 million to investment scams last year, as well as A$56 million to dating and romance schemes – by far the most lucrative scam types for fraudsters.

As COVID-19 restrictions continue to ease and people venture out more, Nader believes we may start to see a return to some previously used fraud techniques as well.

“Threat actors will approach it as a ‘what’s old is new again’, but the pandemic has also hurled us ever more forward into a Digital Age, which suits fraudsters, who can take advantage of their online anonymity,” he says.

“Advancement in internet technology will see more exposed; in such a connected commerce ecosystem, we will certainly see spikes in attacks via these devices, as well as continued social engineering attacks.”

How to mitigate risk

Before transferring funds overseas, individuals and businesses should do their due diligence on the organisation or person they’re dealing with.

If you’re buying something from another country, Nader recommends conducting an open source search of the company; checking independent reviews; asking friends and family for their opinion; and always remembering that if it seems too good to be true, it is.

He also emphasises the importance of verifying the financial details of anyone you’re dealing with before transferring funds, particularly if anything seems amiss, adding: “If you’re a business and your supplier sends you new payment details, reach out to them via phone or another trusted method you’ve used before and ensure the change actually came from them.”

While anti-fraud technology now plays a critical role in preventing scams, Nader says there’s no “silver bullet or magic tool” that affords total invincibility. Instead, a layered approach is required; one that relies on both digital and human elements to detect and avert fraud.

“Biometrics, machine learning, AI [artificial intelligence] and rules-based systems all have their place, but people will always be the best anti-fraud tool any organisation has,” he says. “Education and awareness of risks is the greatest weapon we can provide in the fight against fraud.”

When you move money around the world, you need to know it’ll get there. OFX has over 20 years of experience managing international transfers, with on-the-ground currency specialists and a global network of banks and regulators, so you can feel confident about your next move. Find out how OFX can be an extension of your team.