Wire transfer fraud: how does it work?
Wire transfer fraud is a popular type of payment fraud. In happens when fraudsters ask you to send money to their bank account under false pretenses. It’s a form of online theft that usually uses spoofing (or identity theft).

They do it by impersonating someone you trust, like a supplier, or people with innate authority, like a representative from a government agency or the CEO of your company.

Scamming scenarios are often elaborate and convincing: for example, they ask you to urgently wire money to an account to finalize a strategic deal. There is often an element of pressure to it, so their unsuspecting victim doesn’t take the time to rationally think about what’s being asked.

In 2015, Xoom lost more than $30M through CEO fraud. One of their financial executives got tricked into transferring this money to an account, thinking their boss was asking for it.

Wire transfer fraud works because of its immediacy. Once the funds have been transferred, they land almost immediately in the malicious hacker’s account.

Although traditional wire transfers take 1 to 2 business days, the recent move towards instant payment methods means the funds can be credited in a matter of seconds.

Wire transfer scam: what to do when it happens?
When you discover the fraud, it’s a race against time to start the fraud recovery process. You need to act fast before:

The funds are transferred to other bank accounts,
Withdrawals are done to begin laundering the money,
The funds are converted to cryptocurrency.
If any of that happens, you are even less likely to recover funds.

Of course, imposters know that, so they try to slow down your response time even further. They commit wire transfer scams on a Friday afternoon and even go as far as contacting you pretending to be your bank investigating the matter — giving them further time.

Wire transfer fraud: what are the prevention strategies?
We’ve seen it: recovering funds from this type of fraud is complicated and without any guarantees. What you can control, however, is ensuring that you adopt adequate fraud prevention measures to avoid wire transfer fraud. It’ll save you from future financial (and reputational) losses.

Increase your safety measures and internal controls
Working with your IT team, you can start improving your cybersecurity protocols. That looks like:

Setting up strong password requirements so hackers cannot guess or hack them too easily.
Adopting multi-factor authentication to ensure the person logging into your network and key software has authorization to access it.
Requesting your employees never reveal any personal information like their phone numbers or social security numbers to any unknown or phony-looking sender.
Besides direct cyber security, it’s important to adopt better safety processes.

Adopting the concept of segregation of duties in your departments ensures no one person has too many responsibilities. It’s harder for online scammers to be successful when several people are involved. Furthermore, it’s a good way to prevent and reduce internal fraud risks.

When it comes to fraud detection, the 4-eye principle will also work in your favor. Requiring a minimum of two people (so, four eyes) to verify your transactions and other key operations reduces the risk of fraud.

Last but not least: make sure your team receives regular and up-to-date security awareness training. It should be given several times a year by security experts, and include real-life examples of the most recent scams. Teach your team to spot phishing emails, to watch out for too-good-to-be-true offers, or what to do when they have a scam artist over the phone (hang up!).

The more effort you put into your prevention, the more fraud-aware your team will be. Your employees are a good barrier against fraud — but they’re not infallible.

Use anti-fraud software
Fraud prevention software like Betafort is an important element of your fraud prevention (and detection) plan.

Humans are, after all, quite vulnerable to mistakes as well as social engineering tactics. Often, the breach comes from someone from your team who didn’t think twice about a dangerous action they were taking.

42% of employees admitted taking dangerous action online according to the State of the Phish report (actions like clicking on a malicious link, or downloading viruses).

To protect yourself against cyber attacks and social engineering attacks, it’s necessary to use anti-fraud software.

Indeed, fraud prevention and detection software are more efficient in preventing wire transfer fraud and have access to data your employees cannot access on their own.

Betafort has access to hard-to-find international databases that ensure even your international wire transfers to your overseas suppliers are secure. Our solution continuously audits your third-party account number in real time. We use three-way matching to ensure the funds you send always reaches its intended beneficiary. Each request for a banking information change is thoroughly analyzed before the banking details are changed. Fake account numbers and suppliers won’t go through!

Betafort blocks any fraudulent transaction before it is sent to unauthorized third parties. Our software includes a machine learning component that:

Detects suspicious patterns,
Blocks the correspondent transfer and
Raises the alert.
Using Betafort means completely eradicating the risk of fraud in your company — so you never have to deal with wire transfer fraud recovery!