Is E-Transfer Safe? How to Protect Yourself From Fraud

Electronic transfers (e-transfers or EFTs) offer a swift and convenient method for moving money between bank accounts, typically initiated via email or text. This article discusses e-transfer security measures and how individuals can protect themselves from fraud.

How E-Transfers Work Securely

E-transfer systems incorporate security mechanisms to protect financial data. Financial institutions utilize encryption technologies to secure data during transmission. Funds do not directly travel through email or text messages; instead, these channels serve as notifications for the recipient to access their secure banking portal and complete the transaction.

Funds transfer through secure banking networks. Security questions and answers add protection, ensuring only the intended recipient can deposit funds. If a recipient fails to answer the question correctly within a set number of attempts, the funds can be returned to the sender.

Common Scams and How They Operate

Criminals exploit human vulnerabilities to perpetrate scams. Phishing involves fraudsters sending fake emails or texts impersonating banks or legitimate senders. These trick users into clicking malicious links leading to fake websites that steal banking credentials or encourage unauthorized transfers. Impersonation scams involve criminals pretending to be trusted individuals (e.g., family, friends, authority figures) claiming urgent need for funds. Overpayment scams occur when a buyer sends more money than owed for an item and requests the difference back. The initial payment is often fraudulent or reversed, leaving the victim at a loss.

Protecting Your E-Transfers

Enhance e-transfer security with specific practices. When sending money, create strong, unique security questions and answers not easily guessable from public information. Never include the security answer in the e-transfer message or notification channel; share it via a separate, trusted method like a phone call. Before any transfer, verify the recipient’s identity and amount, ideally through a different communication channel.

Enabling auto-deposit, if available, reduces risk by automatically depositing funds without a security question, limiting interception. Maintain strong, unique passwords for all online banking accounts and enable two-factor authentication (2FA) for added defense. Remain vigilant against unsolicited e-transfer requests or suspicious links in emails or texts, as legitimate financial institutions do not send direct links to accept or cancel transfers.

What to Do If You Suspect Fraud

If you suspect e-transfer fraud or notice a suspicious transaction, act immediately. Contact your financial institution (bank or credit union) without delay. Prompt notification can sometimes allow the bank to intervene, especially if funds have not yet been deposited. Report the incident to relevant authorities, such as local law enforcement or the FBI’s Internet Crime Complaint Center (IC3). While accepted e-transfers are generally irreversible, document all communication and transaction details to assist investigations.