Wire fraud is a scheme to obtain property or money by electronic communication, intending to defraud people or organizations. It is outlined as a federal offense in the United States under 18 U.S. Code § 1343. The law reads, “Wire fraud takes place when any person uses electronic means of communication, like emails, faxes, telephone calls, or other activities through the internet, in the execution of a scheme to deprive others of money or property.” It is a very serious crime, with provisions for heavy punishments.
The Common Tactics That Wire Fraudsters Use
Phishing
Fraudsters send users deceiving emails or messages that seem to be of legit origin, which might lead to methods aimed at getting a user to reveal personal information or perform some unauthorized transaction.
Business Email Compromise (BEC)
Criminals will spoof or hack into business email accounts and pretend to be an executive or even a vendor, demanding urgent wire transfers. Learn more about Business Email Compromise.
Lottery and Prize Scams
The victims are claimed to have won lotteries or prizes and need to wire some money to the scammers for taxes or fees associated with receiving one’s winnings.
Romance Scams
These criminals would pose as online girlfriends to their victims and then, in the long run, demand money on diverse pretexts.
Investment Scams
Frausters push bogus investment deals talking people into sending money for stocks, bonds, or other money stuff that doesn’t exist. They convince their targets to wire cash for financial products that are fake.
Wire Fraud Prevention Measures
Wire fraud is a high concern for people and businesses since it involves unauthorized transfers of funds from one bank account to another. The prevention of bank wire fraud rests on a foundation of security measures, training, and staff awareness. Following are the possible key strategies for preventing bank wire fraud:
Multi-Factor Authentication
Enforce MFA for access to bank accounts and the execution of wire transfers. This includes forcing a user to authenticate themselves with at least two of the combination methods, which may include a password and an OTP delivered to the user via their mobile device.
Keep Updating Passwords
It should be ensured that the users use strong, unique passwords which are updated regularly to protect against unauthorized access.
Fraud Awareness Training
Hold regular training sessions to teach employees how to spot and steer clear of phishing tricks and other fraudulent activities. They should be kept updated about trendy frauds and particular actions in case of suspicion.
Simulation of Phishing Attacks
Conduct simulation exercises of the phishing attacks from time to time; this will help in checking on the preparedness and responsiveness of employees against potential threats and fraudulent activities.
Encrypted Communication
The communication of sensitive information, such as wire transfer instructions, needs to go through encrypted emails or secure channels. This basically protects the information from hijacking for use by fraudsters in pursuit of their interest.
Secure Web Portals
Be sure that wire transfers are initiated through secure online banking Web portals and not via email or fax requests.
Dual Authorization and Verification Calls
Establish a dual-authorization procedure for wire transfers, whereby two authorized persons must approve a transaction in order for the processing to begin. The result of this action will be that no one person shall be in a position to execute a fraudulent transfer under solitary control.
For wire transfers through a contact number, always verify by calling a number that you know, not the telephone number that may be provided in the request. This helps confirm the legitimacy of the request.
For wire transfers through a contact number, always verify by calling a number that you know, not the telephone number that may be provided in the request. This helps confirm the legitimacy of the request.
Regular Audits and Reviews
Routine audits of the process for wire transfers and their related controls ensure that the event is in compliance with security protocols and that weaknesses can be identified. Review and revisions to the procedures of wire transfer should be done periodically to keep pace with fraud changing tactics and regulatory requirements.
Conclusion
Knowledge of the common tactics engaged in, implementation of robust security measures, and creation of an atmosphere of vigilance are major ways to understand and prevent wire fraud. Individuals and businesses can, thus, significantly reduce the risk of becoming a victim of wire fraud.
