Be Aware of Wire Transfer Fraud

Wire transfer fraud has made its way to the top of the list of risks that banks and other financial institutions face. Showing up in a number of different forms, wire transfer fraud has evolved into a multi-platform threat that doesn’t seem to be going away.

Recently, the Federal Bureau of Investigation put out a report and warning about a current fraud making its way through the United States. So far, this $12 million scam has affected more than 41,000 Americans by obtaining business email information and targeting business data. While this risk is still on the move, it’s important for banks and credit unions to safeguard not only their business, but the integrity of the funds and information they store for consumers.

There are options to protect against possible wire transfer fraud. There are many types of insurance for banks, including cyber liability and commercial crime coverage, which can provide support in times of trouble. But beyond insurance and hearing horror stories about current scams, it’s also important to know the impact of these scams and read the warning signs to fight against them.

The Major Impacts

The FBI has also reported that small business wire fraud alone has cost U.S. companies around $3 billion. This number has been rising significantly in recent years and doesn’t look like it will be slowing down.

Scams usually work like this:

  • First, cyber hackers will send out phishing emails to small companies and infect the computer system, once opened, with malware, which gains access to the network.
  • Then, the hackers can gain access to every bit of data included, such as email information of CEO’s and CFO’s. After that it’s a locked-in expansion of money scamming that can bleed any entity dry.

Wire fraud stacks up to about $65,000 per instance. Compare that to credit card fraud at about $700 and you can see the severity of the issue at had. Furthermore, million-dollar scams are quite common when it comes to commercial accounts and banks and businesses can be decimated overnight.

The Warning Signs

With this in mind, it’s important to see the possible warning signs and be aware of what can possible be a scam. Warning signs for wire transfer fraud are everywhere, so banks should be diligent about how to handle them.

Here are some:

  • Urgency for sending a wire: When a scammer insists on urgency or secrecy banks should resist this. Oftentimes a scammer will fake like there is no time to waste and insist on the transfer, especially if the request comes in on a Friday. Banks should always use verbal verification before processing a transfer.
  • Recipient claims they haven’t received a transfer: Banks should never send a duplicate transfer through. Even though glitches can sometimes happen, banks should always use caution and do any research possible to verify that the original wire did not arrive.
  • The sender refuses phone calls: Scammers will insist on communicating through email only and make up any excuse to stay off the phone. You or your bank should stress that you should be hearing directly from the person requesting funds. If they do happen to provide a phone number, always make sure it matches up with a customer records on file with the bank.

Always be up to date on the latest news and scams to understand their impact on who they affect. Banks are not as safe as they would like to be when it comes to protecting against wire fraud.


About Financial Guaranty Insurance Brokers

Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.