How to protect from wire transfer fraud ?

Since the global health crisis, wire fraud increased massively. Only in the first half of 2021, authorized push payment fraud increased of 71% in the UK according to LexisNexis’s report. Globally, financial scams increased against individuals and businesses.

Most popular scams

Cybercriminals use mostly the same methodology to perform their scams. Whether it’s aiming at a person or a business, they impersonate a third party like a known company or a bank so that the victim lowers their guard and proceeds to a fraudulent payment. This technique is chosen according to the target and the type of fraud used.

Here are some of the most popular scams fraudsters use:

Very similar to bank account scams, fraudsters collect information on their target in order to contact the person in charge of payments and bank transfers. The first time, they ask them to change the supplier’s bank details. This way, the company sends a fake invoice and the fraudsters receive the fraudulent payment.

Based on the same technic, this time fraudsters impersonate the CEO of the targeted company and contact the person in charge of bank transfers. It is the urgency feeling that is used to pressure the employee into making a fraudulent payment, without him noticing.

One of the most used technics in scams, as dangerous for a company as for a consumer. The phishing is materialized by a text message or an email containing a fraudulent link/attachment. When the victim clicks the link, the scammer can get sensible information and proceed to a full scam in order to get money out of it. Whether it’s money from an invoice or a ransomware or else.

Mostly oriented towards consumers, this type of fraud consists in selling false goods online to get the money from the transaction. It can also appear as credit card fraud, scammers steal credit card information and use it to impersonate the victim.

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Wire fraud recovery is difficult, but possible

When the scammer succeeds in their attack, they receive the money in the bank account indicated for the wire transfer. Instantly, they divide the funds and sends them to different accounts abroad to make them disappear. This makes it very difficult for the authorities to trace the funds and the fraudster. It’s also complicated to recover the funds, the recall procedure can be applied, but there is no guarantee of success.

In order to maximize chances of success, companies and individuals have to be quick:

  • Indicate to the bank there is a problem with the wire transfer, if it’s still transferring it can be intercepted on time.

  • Otherwise, contact the authorities to report the fraud

  • Then it’s possible, depending on the amount of money stolen and the situation, to get a refund for wire transfer fraud.

The key to recover from wire fraud is to be reactive and prepared. Every company should have a Business Continuity Plan (BCP). In order to have a good BCP, there are good practices to prepare and apply:

  • Anticipate the risks and potential impacts they could have on the business.

  • Organize and plan an effective response to those risks and impacts.

  • Have people prepared to execute the plan and deal with an eventual crisis.

  • Prepare a crisis communication to inform any third party of the situation and how it is handled.

  • Finally, test the effectiveness of the business continuity plan.

How to prevent wire transfer fraud?

Whether it is applied to businesses or for private use, it is important to protect oneself from wire transfer fraud. To do so, here are some advices easy to apply.

For businesses:

When you create or modify a supplier’s information in the system, it is important to verify by contacting a known person.

You must apply the security process strictly in every situation. And if you have a doubt, check for validation from a manager before proceeding.

Organize regular training and sensibilization sessions about the risks, fraud technics, and security processes inside the company.

Before clicking on a link or opening an attachment, control the identity or the authenticity of the sender.

For individuals:

If you notice something wrong on your account statement, canceling your credit card is the first thing to do. Then contact your banker and check the anomaly.

This way, the bank can apply the recall process and try to recover the funds.

Check the authenticity of a website when you are about to put your bank details on it.

How to react to wire transfer fraud as a business?

 The reactions to adopt when you have a doubt about being victim of fraud are quite similar for a business or a person. But the processes must be known and applied by everyone in the company.

Here are the good practices:

If the transfer is still in transit, you have to cancel it so no more money is transferred to the fraudulent bank details.

By noticing a fraud case, the bank can start a recall process and try to recover the funds.

Once identified, you can inform your coworkers, partners or clients not to trust those bank details. This way you protect your company and others from being victims of fraud.

Authorities will need every proof they can find to go through with the investigation.

If the fraudster had access to a password, he could still log in and proceed to another fraud attempt.

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