Mule Fraud

We’re all wary of being victimized by fraud when we’re sharing our personal data online, but it doesn’t always ping our radar that we could turn out to be unwitting accomplices as well.

Mule fraud is a prevalent type of financial crime that can enlist ordinary people into becoming complicit in money-laundering schemes designed to conceal the source of illicit revenue, with severe consequences even for those who had no idea what they were getting involved in. How does mule fraud work, and what can people do to avoid getting dragged into this sort of criminal activity?

New call-to-action“Money laundering” has always been good for a sight gag (just picture old-timey gangsters scrubbing bills in a washtub) but as a crime, it is no joke and just as frequent as ever.

Fraud, identity theft, ransomware, and other forms of cybercrime have flourished in recent years, but the prize at the end of the scam is often the very thing that gets them caught.

Sudden influxes of cash raise flags and get fraudsters’ accounts investigated, which means they are constantly on the lookout for ways to make it appear as if they earned their money the legal way.

One classic way to launder money was to open up a small cash-heavy business, report your ill-gotten funds as revenue from the business, and hope nobody from the IRS wanted to look too closely at your receipts.

Today, the average fraudster is less concerned about long-term concealment and more worried about getting large lump sums of money from one account to another without triggering any holds or fraud alerts from any of the banks involved in the transaction.

This has led to the rise of the money mule, a carrier or account holder who can get funds from point A to point B without arousing suspicion. It’s an important role, but anyone can do it—even if they don’t entirely realize what they’re doing.

What Are Money Mules?

A money mule is anyone who receives money from a third party and conveys it to a new location on their behalf. So, a money mule could be somebody who receives an envelope of cash in Barcelona and hides it in their carry-on bag so they can fly it to Houston without reporting it.

A money mule could also be somebody who receives an electronic transfer of funds from an unknown source and transfers it to a different online bank account.

It doesn't matter if the muling happens in-person or online, how long the funds are in the mule's possession, whether or not they know where the funds originated or where they are ultimately headed, or if they are even aware that they are being used as a money mule.

The point of the operation is to make it appear as though the funds are coming from a legitimate source by passing them through a seemingly unconnected third party, which also makes it harder for investigators to track and follow funds that may be tied to illegal activity.

How Does Being a Money Mule Work?

The reason people become money mules is usually that the fraudster has offered them a cut of the funds. For instance, a fraudster might send out a phishing email claiming that they have received a large inheritance and need help moving it out of their home country.

This is a common setup for other types of scams, but in this case, the payment will be valid. Once the transfer is complete, the mule will usually get paid as promised, but it is not at all uncommon for mules to be hacked or impersonated after they have revealed some of their personal information and account details in the course of participating in the scheme.

Manage Chargeback In-House Or OutshoreSome mules know they're mules, advertise themselves as such on illicit forums like the dark web, and knowingly engage in criminal activity. Others are unwittingly duped into becoming mules and may be threatened or blackmailed into continuing to perform the role if they decide they want out.

In addition to suitcases of cash and online bank accounts, mule fraud can be accomplished with the assistance of gift cards, cashier's checks, cryptocurrencies, and other methods.

Who Gets Targeted for Mule Fraud?

Potentially, everyone is a target for mule recruiters. Mule fraud is a common end goal of phishing attacks. However, there are some people who may be more likely to be approached. In person, solo travelers who read as inexperienced will probably be targeted before somebody who looks like a seasoned business traveler, or a group of people.

Romance scams are often a vehicle for mule fraud—the recruiter will contact their target on a dating site, win their trust, then ask them for a small "favor."

Statistically speaking, the elderly are far more likely to fall victim to this kind of scam. Youth alone, however, doesn’t make you immune. Fraudsters are increasingly targeting younger people, especially those in financial distress. In these cases, being a money mule is often presented as a lucrative work-from-home job opportunity. 

If you get caught muling, ignorance about your true purpose will not be enough to save you from consequences. In addition to the legal ramifications of aiding and abetting a money-laundering scheme, mules may find their credit destroyed, their existing accounts closed, and that no mainstream banks will allow them to open a new account any time soon.


A good rule of thumb is that if somebody you've met online offers to send you a bunch of money unexpectedly, there are probably a lot of strings attached—and sometimes those strings can get you tied up in money-laundering charges.

Most e-commerce merchants will not find themselves affected by mule fraud, but it may impact you if you sell gift cards or allow users to store funds in their customer accounts, as these can potentially be of use in muling operations. Such activity may not lead to chargebacks, but it’s always a good idea to look out for your customers and be mindful when accounts start exhibiting unusual behavior.

Thanks for following the Chargeback Gurus blog. Feel free to submit topic suggestions, questions, or requests for advice to:
Get the guide, Chargebacks 101: Understanding Chargebacks & Their Root Causes

Ready to Start Reducing Chargebacks?