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Finance glossary

What is wire fraud?

Bristol James
6 Min

Wire fraud happens when cyber scammers use a variety of methods, including fake emails, text messages, and phone calls to ask for personally identifying information. In many cases, the cyber scammer will claim they are from the authoritative bodies, your credit card company, or another company you do business with.

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.

The Australian Competition and Consumer Commission’s Scamwatch recorded nearly 302,000 scams in 2023, with financial losses totaling $481 million. 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

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.

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.

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 Fraud 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.

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.

Steps to Protect Yourself from Wire Fraud

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.

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.

Reporting wire fraud incidents

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. 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.

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.

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