Micro-Deposit Scams

What is a micro-deposit?

Before we can explore the actual scam, it’s important to understand how a micro-deposit works.

Micro-deposits are small sums of money transferred online from one financial account to another. They are used legitimately, usually to verify the receiving account is correct. Micro-deposits are generally less than $1 and can be as small as $0.02. They are also typically deposited in pairs (within one to three business days of linking accounts).

For example, if you’d like to link your checking account with an investment account, the investment brokerage firm will want to verify your dividends go to the correct account. Before sending any of your investment earnings, the firm will do a test run by sending a pair of micro-deposits to your checking account. You’ll be notified that the firm has sent these deposits, and asked to verify the amount of the deposit by logging into your newly linked account. Once you’ve completed this step, the brokerage account will withdraw the small amount of money sent through the micro-deposits and proceed with regular deposits of investment dividends as planned.

How the scam plays out

In this scam, crooks link brokerage accounts with strings of random numbers, hoping to hit a valid account. When a deposit is verified from an account, they use additional information about the account holder to withdraw funds from this account as they please.

What to do if you’re targeted

Micro-deposits are small enough to fly under the radar, and you may even verify one accidentally. Here’s what to do if you’ve received a micro-deposit from an unknown source:

• Don’t verify it. This way, the scammer won’t know they’ve hit an authentic account.
• Do not click any links embedded in the verification request message or download any attachments.
• Let your financial institution know you’ve been targeted.
• Report the scam to the Federal Trade Commission at FTC.gov so they can do their part in catching the scammers.