How to Spot and Avoid a Money Mule Scam

Money mule scams sound like something that happens in the dark underworld of organized crime. And in fact, that’s where the name came from. But the scams you might find yourself unwittingly embroiled in are often much less organized, and you become the victim rather than a paid smuggler.

What’s a Money Mule Scam?

A money mule scam is set up similarly to the structure of real money mule operations: someone referred to as a “mule” moves money or goods on behalf of someone else.

In organized crime, this is an illegal process of money laundering or drug smuggling. The mule — sometimes called a courier — is usually well aware that they’re transporting illegal money, drugs, or stolen goods across international borders.

But in the case of money mule scams, the mule is usually a victim who doesn’t know they’re being taken advantage of until it’s too late. They don’t carry a duffle bag full of cash or drive a semi filled with stolen goods … they’re simply caught off guard when engaging with the wrong person during normal day-to-day activities.

How Does a Money Mule Scam Work?

A scammer will usually send you payment, often in the form of a check or money order. These funds are allegedly for something like a job, an item you’re selling, or a romantic gift. But it will be more than expected, whether the transaction was agreed upon or not.

The criminal will ask you to deposit the check, keep what they owe you, and send the rest back or use it for something specific. They might request this payback to be on a gift card or through cryptocurrency so it’s harder to track. Or they might ask you to pay a third party. The problem is that the check is fake — or the payment otherwise fails — and when it doesn’t clear, you’ve lost all the money.

How to Spot a Money Mule Scam

There are several different types of money mule scams that work in a similar way, but the details are completely different. Let’s look at some of the more popular ones and how you can spot them.

Job scams

With job scams, you’re hired outright to be a money mule with cleverly disguised verbiage that many people don’t pick up on. This is the most blatant of all the money mule scams because it actually advertises what it is — as long as you know what to look for.

You might see a posting for a work-from-home position like a “money processing agent” or a “finance officer.” You’re asked to open a bank account in your name or in the employer’s name for receiving, processing and transferring money. The employer deposits money, you keep your cut, and you send the rest to another person or entity through a wire transfer or money service.

Seems innocent? Well, this is blatant money laundering, which is highly illegal and should be avoided at all costs. Even if you make money for a period of time, you become part of the crime ring and could end up in prison. It’s even worse if you’re asked to recruit other “agents” (or rather, mules) and promised a percentage of their activity too. We could call this an MLM — or multi-level mule — scheme.

Freelance scams

Freelance scams also involve a job offer of sorts, but it’s typically for a creative gig or side hustle that you’re qualified for and assume is legit. This job is completely unrelated to moving money, and you just happen to fall into a trap.

In this case, the scammer might contact you through a job site or freelance group to hire you as a photographer, actor, party planner, nanny, or driver — whatever your expertise is. They say they’ll send you a money order for more than the offer, and you should take your cut and use the rest for a specific purpose. Maybe they want you to rent special photography equipment, purchase party supplies, pay a landlord, or hire a sub-contractor. This doesn’t seem out of the norm for these types of gigs, so many people don’t think twice about it.

But either the money order will be fake, or the payment somehow gets declined or reversed. If this happens after you’ve already paid for the supplies or sub-contractor, you’ve lost that money from your own funds. If it happens before you’ve paid them, you could all end up losing money. Sometimes the person you’re paying is part of the scam, and sometimes they’re another victim.

Sale scams

For this variation, you’re contacted about something you’re selling online, like through Craigslist or Facebook Marketplace. The potential buyer offers more than the asking price, or “accidentally” sends you too much.

Either the payment ends up not going through after you’ve already sent the item, or you’re asked to return the “extra” before realizing that the original payment was fake. Whichever way it goes, you’re out the money and potentially the item you were selling as well.

Romance scams

Unlike quick scams that don’t give you time to think it through, this one can go on for months or even years. Someone poses as a potential love interest — which is a classic con artist ploy, but in this case, the two parties usually don’t meet in person. And since the scammer is almost never who they pretend to be, we call them a “catfish.” Not all catfish are operating money mule scams, but most modern romance fraud involves catfish.

A catfish will reach out through social media or a dating site, befriend you or pursue you, and try to get you to open up to them. They use information you post online to establish trust and convey things you have in common. When you think you’re getting to know this person, or even falling in love, it all gets cranked up a notch.

In many romance scams, the catfish will ask for money. Often they say it’s so they can purchase airfare to come visit, but they never show up. In romantic money mule scams specifically, the catfish will usually send money to the victim first to establish more trust — but they always ask for more back than what they send.

How to Avoid Being a Money Mule

To avoid becoming involved in a money mule scheme, never agree to take more money than you expect in order to pass some along to someone else. If you do find yourself in a freelance situation where it wouldn’t be unusual to use some funds for a specific purpose — such as equipment rental for the gig — tell the “client” to make it payable directly to the third party. Or insist on using a digital peer-to-peer payment platform like Zelle or Venmo.

Ask your bank to verify whether checks or money orders are real. While tellers might occasionally miss a bad check, having them take a closer look will surely ferret out the fakes. You can also tell the other person that your bank is investigating, and you’ll let them know when the funds have cleared. A scammer will skedaddle at that point, whereas a legitimate payer likely won’t be concerned.

With potential catfish, do a reverse image search by uploading one of their photos through Google Images or TinEye. If it’s a stock image or stolen from another person’s profile, you’ll see the result and can verify that they’re faking their identity. And no matter how much you think you know someone, never send money to anyone you haven’t met in person.

What To Do If You Get Scammed

If despite your best efforts you do get scammed, stop all communication with the criminal immediately — especially for romance scams. For other schemes, often sending a message saying that your bank caught the fake payment will prompt them to disappear.

Next, file a complaint with the FBI’s Internet Crime Complaint Center (IC3) at IC3.gov. This department is specifically focused on stopping cybercriminals and other fraudsters, including those running money mule scams.

These types of schemes have cost a lot of people a lot of money, and they don’t seem to be slowing down. The best offense is always a good defense, but if all else fails, never hesitate to report the incident.