How to Spot and Prevent Wire Fraud

“Show me the money!” Everyone wants their payments, and they want them now.
But of course, they also want their payments to be delivered securely.
The convenience and frequency of wire transfers attract a great number of bad guys who want to trick and exploit businesses into mistakingly transferring money where it should not be going.
As the risk of wire fraud increases, there’s a great need to know how to spot and prevent wire fraud. This guide will highlight how cybercriminals commit wire fraud and share actionable tips to safeguard your business from these horrible losses.

How Cyber Criminals Get Away with Wire Fraud

1. Phishing Scams

Phishing scams involve bad guys lying and pretending to be legitimate. They work to trick you into divulging sensitive information, such as login credentials or wire details. Criminals often use email or fake websites that look convincingly similar to genuine ones. According to the FBI, phishing was the most common type of cyber crime in 2020, with over 241,000 cases reported.
Once their phishing emails trick you into believing they are legitimate, they will then lead you all the way down the path to wire fraud. 
Learn more: How to Avoid Phishing Email Attacks

2. Business Email Compromise (BEC)

In a Business Email Compromise scheme, fraudsters gain access to a corporate email account and impersonate the account holder to intercept wire transfers. BEC fraud can be particularly damaging, as it involves large sums of money. The FBI reports that BEC scams cost businesses approximately $2.9 billion in 2023 alone.

3. Man-in-the-Middle Attack

This tactic involves bad guys intercepting communication between two parties, such as a buyer and seller, to alter payment instructions without either party realizing it. By gaining access to a network or using a phishing attack to gain credentials, criminals can quietly monitor and manipulate transaction details to move money into their accounts while employees think they are wiring to a legitimate account.

12 Tips: How to Spot and Prevent Wire Fraud

1. Educate Your Employees

Training employees is key to knowing how to spot and prevent wire fraud. Employees must know the risks of wire fraud, how to recognize phishing emails, and understand security best practices. Regular security awareness training, phishing training, workshops, and updated training on security practices can help your team recognize potential threats and know what to do about it.

2. Verify Payment Requests

Always verify payment requests through a secure secondary channel. Before processing any wire transfer, confirm the legitimacy of the request by contacting the requester with their official phone number or a face-to-face conversation and carefully verify all details of the accounts. Many wire frauds are successful because the bad guys are meticulously altering information in only the slightest way. Their effort to look legitimate avoids suspicion and decreases their chance of getting caught. Don’t let them slip one past you.

3. Implement Two-Factor Authentication (MFA)

Enable two-factor authentication (MFA) on all financial accounts, email platforms, and accounts payable software tools. Equally important, is to provide training on the two-factor authentication tool and never approve an MFA request unless you are absolutely sure you triggered the authentication. We sometimes get in the practice of swiping away unwanted notifications and if we’re not careful, this could inadvertently allow a bad guy access to a program or account they shouldn’t have.
When properly trained, employees can count on MFA as an extra layer of security, making it more challenging for bad guys to access sensitive information.
For an in-depth look at MFA: Get the Multi-Factor Authentication Lowdown

4. Monitor Financial Activity Regularly

Consistently reviewing your business accounts, can help quickly identify unauthorized transactions. Early detection of anomalies can prevent further fraudulent activities. Your accounts payable team needs to have context and understanding of the accounts in your organization and their lifecycle. What are the typical payment calendar cycles? What are the typical payment amounts? Who are the people behind the transactions? Who are the salespeople, account managers, or project managers handling the account? Knowing the context of the accounts that make up your business and their payments, better prepares you to spot when requests aren’t looking quite right.

5. Use Encrypted Communications

Conduct all sensitive communications, especially those involving financial transactions, over encrypted platforms to protect against interception by bad guys. Never use unapproved methods of communication, even if the person on the other end of the communication is asking for an exception, “Just this one time.”

6. Set Up Transaction Alerts

Configure transaction alerts with your payment systems and software to receive notifications for all wire transfers. If a transaction is initiated that you weren’t aware of, immediate alerts allow for swift action.

7. Limit Access to Financial Systems

Restrict access to financial systems and sensitive data to only those employees who require it for their roles, and have completed security best practice training. Regularly review and update access permissions especially when handling the onboarding and offboarding of employees, customers, clients, partners, or contractors.

8. Never Share Accounts or Passwords

Are you interested in saving a few hundred dollars by sharing logins to your accounting software or are you interested in preventing wire fraud scams that can lose hundreds of thousands of dollars? Some smaller businesses share seats when it comes to expensive accounting software. This introduces a great deal of risk. Sharing software seats or passwords can allow for mistakes to slip through the cracks. If changes are made, there’s no way to track which user made the change, resulting in employees always assuming it was another employee rather than raising suspicion if it was legitimate.

9. Limit Communication to Approved Systems and Networks

Avoid conducting financial transactions over public Wi-Fi networks. Use a virtual private network (VPN) to secure your connection when accessing sensitive information remotely. Also, always store data, documents, and files in secure locations that have been vetted and approved by your security team or IT service provider.

10. Update Software Regularly

Keep your software, including antivirus and firewall protections, up to date. By running updates regularly, you will ensure to have the latest patches for newly discovered vulnerabilities that could be exploited by bad guys.

11. Report Suspicious Activity Promptly

If you suspect any suspicious activity, report it through your organization’s proper methods. Quick reporting can help prevent fraudulent activity, recover funds, and assist in preventing future fraud.

12. Conduct a 3rd Party Vulnerability Assessment

Many bad guys will find success in their wire fraud efforts because they first found vulnerabilities in your organization. They will exploit vulnerabilities, by sneaking in, hiding out, and collecting valuable information regarding the tools, practices, and information used within your organization to conduct wire transfers. Imagine how easy it would be for a bad guy to get the info needed to impersonate a wire request if they could monitor the email inbox of one of your accounts payable team members.
By conducting a 3rd party vulnerability assessment, you will expose weaknesses that bad guys would exploit as they work to commit wire fraud. Identifying weaknesses and closing security gaps in your organization will greatly reduce the risk of wire fraud.

With these tips on how to spot and prevent wire fraud, business owners and accounts payable teams can create a more secure environment and enable their teams to protect themselves from the growing threat of wire fraud.

If your business needs assistance in advancing some of these security best practices you can reach out to us at anytime. At Snap Tech IT, we conduct vulnerability assessments that follow the NIST framework, analyzing every layer of your business for cyber threats, weaknesses, or vulnerabilities. Stop worrying about the consequences of wire fraud. Be proactive and reach out to us to discuss building a strategic technology plan.