Wire fraud: definition, examples, and prevention

Fraud has always been a risk to virtually any type of financial activity or transaction, but the growth of digital technology and the Internet in all our lives has massively expanded the potential risk of this kind of crime. For many fraudsters, the ability to obtain even small amounts of personal information - even data that isn’t directly connected to bank accounts or monetary affairs - can allow them to wreak havoc on a victim’s finances and life.

As a result, it’s never been more important for people all over the world to be aware of the threat of wire transfer fraud and take steps to keep themselves, their data, and their money safe. This guide explores the issue in detail, including some typical examples of wire fraud attempts and the best methods of wire fraud prevention.

What is wire fraud?

Generally speaking, the wire fraud definition extends to any attempt at fraudulent activity that involves any sort of electronic communication. While in the modern day, this will typically involve emails, phone calls and online transactions, it also includes telephones and other traditional forms of communication that rely on electricity.

The use of electronic means is the key distinguishing factor between wire fraud vs. mail fraud.

What are typical examples of wire fraud?

There are lots of different types of scams out there, and the types of messaging and tactics they will use can vary significantly. However, most of them can be placed into one of these four categories:

Money advance/wire transfer scams

This is probably the first type of scam that people think of when considering wire transfer fraud. The fraudster will pretend to be an impoverished person from overseas and will invent a story of hardship that is intended to invoke sympathy and dupe the recipient into sending them funds through a scam bank transfer.

This might purportedly be as payment so that they can fly to the recipient’s country or as a loan for a business opportunity, but the outcome is the same - the fraudster will take the money and then immediately block all contact.

Phishing attacks

Phishing attacks uses emails or social media messages to trick recipients into sharing personal information with the fraudster. They will often be impersonating a trusted person or business, such as a family member or friend or the recipient’s bank.
The email or message will contain a link to a web page that looks just like that of a particular business or organization but is a very convincing fake. A user may only be asked to put in their banking username and password, and that is all the fraudsters would need to gain access to their bank account and seize funds.

Employment and hiring scams

Some of the principles of phishing and wire transfer scams have also been applied to the job market. Fraudsters will use platforms like LinkedIn for hiring scams where they send job offers or adverts that highlight exciting opportunities that would appeal to the recipient, often with promises of high salaries.
Fraudsters then ask for personal data and information that would ‘enable them to continue the application process’ or may even ask for spurious processing fees. In either case, any companies that have complicated application processes or that have a limited or very vague online footprint should be treated with extreme caution in this regard.

Related activity

Often, wire fraud activities are used as part of wider and more coordinated criminal activities, like Ponzi schemes and money laundering. These crimes generally involve many different people and layers of activity, where money that is taken through wire fraud then passes through several other parties in an attempt to reduce the risk of detection by the police and other investigative bodies.

What are the potential consequences of wire fraud scams?

Firstly, it’s important to note that authorities around the world work tirelessly to uncover and punish cases of wire fraud, which can have huge effects on everyone involved:

For the perpetrator

The penalties for those caught are extremely severe. For example, in some countries, being found guilty of a single case of wire fraud can result in a prison sentence of up to 20 years, with hefty fines on top to ensure that no profit remains with the criminal. Given that many fraudsters are often convicted of multiple offenses, this can make the punishment life changing.

For the victim

More importantly, people who are victims of wire fraud or a wire transfer scam can often find that their lives are upended. Potential ramifications can extend across:

• Finances: the material loss of hard-earned savings or the most recent pay packet can put people and their families under real short-term financial stress.
  
• Day-to-day disruption: having to freeze accounts, change passwords, and re-establish control over bank accounts can affect everyday activities as simple as buying groceries or getting to work if payments can’t easily be made.
  
• Fund recovery and credit rating: while all good financial institutions have anti-fraud teams and security measures in place, the process of recovering any lost funds can be complex and difficult. In some cases, even if the victim is not at fault, a wire fraud attack can have an impact on their credit rating, which may take time to dispute and resolve with credit agencies.
  
• Emotional upheaval: all the above can be extremely stressful and upsetting for the victim, as well as having to deal with the violation of knowing that personal information has been compromised by a stranger for criminal ends.

What should I do if I am a victim of wire fraud?

If you have fallen victim to wire fraud, it is critical to act immediately. The faster you respond, the better the chance of help being effective and the effect being minimized. We recommend the following four steps in the following order:

Contact the financial provider of the account involved

Alert them to the fact that you believe you have been a victim of wire fraud. Their anti-fraud measures will then swing into action, and they may be able to recall any fraudulent payments that have been made from your account. They may also be able to freeze access to your account in the short term to prevent any further fraudulent withdrawals.

Contact other financial providers

You may want to consider contacting all the banks and financial providers you deal with so that they’re aware of the situation. At the very least, you should use this opportunity to update all your passwords and ensure these are strong, and access credentials in case your leaked information could allow fraudsters to access multiple accounts.

Contact authorities and law enforcement

With your banking providers now working fast to limit the impact of the breach, you should now contact the relevant authorities. This can include the police and any specific financial and anti-fraud bodies in your country.

Work with trusted people for short-term funds if required

If the breach causes short-term financial hardship, then ask family and friends you trust for help (it’s a good idea to have this arrangement in place in advance). They will ideally be able to give you funds or access to a safe account to keep you going day-to-day. You may also want to speak to your employer about having your wages advanced and/or paid into a different account if your usual destination account has been affected.

What are the best methods of wire fraud prevention?

There are many different things you can do to reduce the risk of wire fraud or a wire transfer scam affecting you. Some of them are human, and some of them are technological, but all of them have their part to play in helping you stay as safe as possible from all the main examples of wire fraud:

• Minimize exposure to personal information: do not give out any personal information online unless absolutely necessary. This includes protecting credit card and bank account details, date of birth, full name, and any social security numbers or credentials you may have.
  
• Assess banking provider protections: banks and financial institutions are legally required to put robust measures in place to prevent fraud, from security features like Multi-Factor Authentication to compliance processes like Know Your Customer. If you have any concerns, it’s worth looking for information from your providers for peace of mind in this area.
  
• Verify identities of contacts: many phishing attacks, in particular, can be very convincing in saying that they’re a person or a business you can trust. Make sure that you’re 100% certain you’re dealing with a legitimate person or organization, including checking email addresses.
  
• Exercise caution with links and attachments: never open any attachments or links in emails or social media messages from any sources whose identities cannot be fully verified. You should assume that those links and attachments cannot be trusted unless and until this can be proved otherwise.
  
• Deploy strong anti-virus software: many of those links and attachments can lead to viruses taking root within a computer or smartphone, which can then seize personal information and bank account credentials. Anti-virus software can detect these viruses and help shut them down quickly in the event of a breach.
  
• Avoid using insecure internet connections: public Wi-Fi and other insecure connections are often used by fraudsters and other cybercriminals to seize sensitive data. You should avoid using these or use a Virtual Private Network solution, such as Kaspersky VPN Secure Connection.
  
• Explore identity theft protection solutions: many security solutions have identity theft protection functionality built-in to help cut off the risk of wire fraud before any attempts can have an impact. For example, Kaspersky Premium includes anti-virus, anti-hacking, anti-ransomware, and identity protection features to proactively shut down any potential wire fraud attempts.

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