What is wire fraud?

If you’re like most individuals, you use the internet, social media, and other forms of electronic communication. Whether you know it or not, you’ve probably been the victim of attempted wire fraud attacks. What really is wire fraud? Wire fraud is a type of financial fraud that involves the use of telecommunications, often crossing state lines or involving interstate or foreign commerce.

In 2023, the FBI’s Internet Crime Complaint Center (IC3) reported a record 880,418 complaints from the American public, with potential losses exceeding $12.5 billion. Wire fraud schemes are continuing to grow in prevalence, making it important to find ways to safeguard your personal information. Let’s explore the different types of wire fraud scams and how you can protect yourself from wire fraud attempts.

Understanding Wire Fraud in Interstate or Foreign Commerce

When it comes to wire fraud, scammers will usually seek out information such as bank account details, your identification number, your address, and/or credit card information. Here are some of the crimes that cyber scammers will attempt:

• The Nigerian Prince Scam – This is one of the oldest types of wire fraud scams where the criminal poses as a member of a royal family. The scammer then tells an elaborate story and asks for money.
• Phishing – This type of wire fraud offense occurs when a scammer impersonates another individual and tricks you into giving out personal or financial information. These scammers can impersonate co-workers, family members, and friends. More recently, scammers have been able to use voice-converting software to actually sound like individuals you know.
• Telemarketing Fraud – This type of phone scam occurs when an individual contacts you over the phone and asks you to purchase a good or service, upgrade your account, donate to charity, or give up some type of funds.
• Ransomware – Criminals contacting you over the phone to transfer money-extorting malware is another type of wire fraud. This ransomware makes it impossible for you to access your accounts. Ransomware can occur when you give the scammer access to your online accounts.

Wire Fraud Definition and Elements

Wire fraud is a type of financial fraud that involves the use of telecommunications or the internet to commit a crime. This can include phone calls, faxes, emails, texts, social media messaging, and other forms of communication. The key elements of wire fraud are:

• Intent to Defraud: The perpetrator must have had the intention to deceive someone or some entity in order to obtain money or property. This means they knowingly planned to trick the victim.
• Knowledge of Fraudulent Communications: The perpetrator must have known that the communications being sent were fraudulent. They were aware that the information they were sharing was false or misleading.
• Use of Interstate Wire Communications: The perpetrator must have used interstate wire communications, such as phone calls or emails, to commit the fraud. This means the fraudulent activity crossed state or national borders, making it a federal crime.

Understanding these elements can help you recognize and protect yourself from potential wire fraud schemes.

Types of Wire Fraud

Wire fraud can take many forms, each with its own unique approach to deceiving victims. Here are some common types:

• Investment Scams: Scammers promise unusually high returns on investments or claim that an investment is risk-free. They lure victims with the prospect of easy money, only to disappear with the funds.
• Phishing Emails: These emails appear to be from legitimate sources, such as a bank or financial institution, but are designed to steal personal or financial information. They often contain links to fake websites that look real.
• Business Email Compromises: Scammers hack into a business’s email account and send fraudulent emails that appear to be from the business. These emails might request wire transfer payments or sensitive information.
• Ponzi Schemes: Scammers promise high returns on investments but use the money from new investors to pay off earlier investors. This creates the illusion of a profitable investment, but it eventually collapses when new investments dry up.

By being aware of these types of wire fraud, you can better protect yourself and your financial information.

Factors Contributing to the Rise in Wire Fraud Cases

The rise of technological advancements is undoubtedly a contributing factor to the rise in wire fraud cases. Scammers can find information online about which financial institutions or credit card companies you use to pose as a representative. In addition, employment information and lists of family members and friends are easily accessible with the rise in social media.

Accessing your personal and financial information from online sources adds to the ease of sounding legitimate. Moreover, many companies still contact customers over the phone, adding to the perceived credibility of scammers. Voice-changing software programs have also contributed to the authenticity of these wire fraud schemes. Additionally, the Emergency Assistance Act imposes harsher penalties for fraud committed during major disasters or emergencies.

Furthermore, individuals place more reliance on digital transactions, with 75% of all financial transactions worldwide conducted through digital means. With more transactions facilitated over telecommunications, the risk of accidentally purchasing through a fake website or remitting your information to a fraudulent representative increases.

Another factor contributing to the rise in wire fraud cases is the lack of awareness and education surrounding cyber threats. Wire fraud scams conducted over telecommunication weren’t an issue 20 years ago. The newness of these wire fraud scams leads to minimal education and awareness training, especially in older generations.

Recognizing and Avoiding Wire Transfer Scams

There are steps you can take to recognize and avoid wire fraud scams. Here are some red flags to watch out for:

• Strange Emails – If you don’t recognize the sender of an email, odds are it’s a wire fraud attempt. Additionally, be sure you check the email address and not just the contact name. Oftentimes, scammers will copy the name of a co-worker, family member, or friend to make the email seem legitimate. Verifying the actual email address is a great way to recognize a scam attempt.
• Urgent Requests – Scammers prey on the sense of urgency, hoping you give out information without thinking twice. Any type of email, text message, or phone call that has a sense of urgency is most likely a scam.
• Emotional Requests – Manipulation is a top tactic used in wire fraud offenses. Scammers will pose as a loved one, stating they are in trouble. In many cases, scammers will call older individuals and pose as their grandchildren, asking for money to get out of trouble. It’s always best to hang up and call the number you have for that individual to verify.
• Confidential Information Requests – Companies will generally not ask for confidential or identifying information right away or over a text message. Any time you receive a phone call from a company you work with, hang up and call the number listed on the company’s website.

Always verify wire instructions directly with the recipient to avoid falling victim to scams.

When verifying the legitimacy of requests and transactions, it’s always best to double-check the number, account, or email address being used. If you have any suspicions, go to the company’s website, stop in a local location, or verify with a family member. Falling victim to federal wire fraud can have serious repercussions, such as lost money and compromised accounts.

Warning Signs and Red Flags

Recognizing the warning signs and red flags of wire fraud can help you avoid becoming a victim. Here are some key indicators to watch out for:

• Unexpected Requests to Wire Money: Be cautious of unexpected requests to wire money, especially if the request is from someone you don’t know. Always verify the legitimacy of the request before taking any action.
• Unusual or Suspicious Emails: Be wary of emails that appear to be from a legitimate source but contain spelling or grammar mistakes, or ask for personal or financial information. These are often signs of a phishing attempt.
• Pressure to Act Quickly: Scammers may try to pressure you into acting quickly, without giving you time to think or verify the information. If you feel rushed, take a step back and verify the request through other means.
• Unusual or Suspicious Phone Calls: Be cautious of phone calls that appear to be from a legitimate source but ask for personal or financial information. Legitimate organizations typically do not request sensitive information over the phone.

By staying vigilant and recognizing these red flags, you can protect yourself from wire fraud attempts.

Steps to Protect Yourself from Wire Fraud through Your Financial Institution

Just like it’s important to recognize potential wire fraud, it’s also important to take action to prevent scammers from gaining access to your sensitive information. Here’s what you should do:

• Be cautious about personal information shared online: don’t post your address, companies you work with, or other identifying information. The less information scammers can gain from the internet, the better.
• Implement multi-factor authentication (MFA): Each of your online accounts should have a two-step authentication process. This might include entering a password and providing a security code sent to your phone or email. Adding this layer of security can safeguard your account from fraudulent attempts if your password becomes compromised.
• Regularly update personal devices: and passwords should be updated on a regular basis. Holding the same password for years at a time increases your risk of being the victim of wire fraud. You should also check on your accounts on a regular basis.
• Strengthen your online security: Passwords should be unique for each account. Don’t duplicate passwords across all of your bank accounts. If a scammer gains access to one, they could access all of your other accounts.

Always verify unexpected requests for money transfer to ensure they are legitimate.

If you’re a business owner, you need to take the necessary steps to protect yourself and your company from wire fraud. This relies on having the right resources working in the background to monitor your payments, like Eftsure. We help business owners prevent and detect payment fraud through rigorous vendor checks and comprehensive payment controls.

Wire Fraud Penalties and Consequences

Wire fraud is a serious federal crime that can result in severe penalties and consequences. Here’s what you need to know:

• Imprisonment: Those convicted of wire fraud can face imprisonment of up to 20 years. The severity of the sentence can depend on the amount of money involved and the impact on the victims.
• Fines: Individuals convicted of wire fraud can be fined up to $250,000, while organizations can face fines of up to $500,000. These fines are intended to punish the perpetrators and deter future fraud.
• Restitution: Convicted individuals may also be required to pay restitution to their victims. This means they must compensate the victims for their financial losses.
• Damage to Reputation: A conviction for wire fraud can severely damage your reputation, making it difficult to find employment or obtain credit in the future. The long-term impact on your personal and professional life can be significant.

Understanding the serious consequences of wire fraud underscores the importance of protecting yourself and your financial information from these schemes.

Reporting Wire Fraud Incidents as a Federal Crime

If you’ve been a victim of wire fraud, it’s crucial that you report the incident to the proper authorities and organizations. In many cases, you aren’t the only individual or business that’s been targeted for wire fraud. Reporting the incident to the proper channels can help prevent the scam from happening to other businesses and individuals. Victims of a wire fraud scam often face significant challenges in recovering their funds. Here’s what to do if you’ve been a victim of wire fraud:

1. Change passwords – First, change the passwords or lock your other accounts. If a scammer has gained access to one account, they might try to access your other accounts.
2. Report the incident – Next, report the incident to the necessary companies and federal agencies.
3. Rework Safeguards — Now, you want to implement the necessary safeguards to prevent wire fraud from happening again. This could be investing in a business accounts payable platform, like Eftsure, or implementing multi-factor authentication on your personal accounts.

Taking a proactive approach going forward is important. Once a scammer is able to access your information once, they might try to gain more information through future scams.

Resources and support for victims of wire fraud

There are organizations dedicated to supporting victims of wire fraud. This can include your local authorities, the International Association for Asset Recovery, and the International Association of Prosecutors.

When it comes to recovering wire fraud charges, you want to get in contact with a local lawyer or legal professional. They can help you walk through the necessary steps to recover losses from scammers. Legal professionals can provide guidance on how to recover losses from a wire transfer scam.

Summary

• Wire fraud occurs when a criminal gains access to your personal and financial information using telecommunications.
• Strange emails, urgent requests, emotional ploys, and confidential information requests are ways that scammers try to carry out wire fraud.
• Consistently reviewing your accounts and investing in the right software are two ways you can protect your online accounts from wire fraud.