Detect Wire Fraud before it is Too Late

Wire fraud is one of the preferred methods criminals have for accessing your funds. Wires are an attractive target because they are often used to move large sums, move money quickly and are difficult to reverse. In fact, 76 percent of all fraud attempts feature a wire transfer, according to a survey from the Financial Services Information Sharing and Analysis Center.

How it happens

Most of the time criminals start wire fraud attempts by gaining access to a business executive’s email account or by creating a spoof account that looks very similar. A typical scenario goes like this: The fraudster sends an email to the CFO from the CEO’s fake account requesting a wire transfer. The CFO goes through the company’s standard protocols for initiating and approving wires—perhaps she initiates the wire and the comptroller approves the request. Typically the bank will call the comptroller to verify that the request is legitimate. At this point, the comptroller may call the CFO to make sure that she wants the wire to go through. The CFO double checks the email and confirms that the CEO does want that amount to go to that account.

The problem is that the fraud attempt starts early in the process with the initial request. Unless the trail is followed all the way back, the fraud attempt is not discovered.

How to prevent it

Here are some red flags to watch for in wire requests and other ways to prevent your company from becoming a victim of wire fraud.

• Double check the email address. Criminals are tricky and can create email addresses that look very close to the legitimate account. They often find naming conventions for a company’s email accounts on its website (firstname.lastname@companyname.com) and use that same formula but with two letters transposed or an “m” instead of “rn,” which look very similar unless you inspect closely.
• Beware a sense of urgency. Usually fraudsters will write that the funds need to be wired right away. These requests often ask that the client be contacted only through email instead of other channels.
• Do not respond to email to verify. Don’t reply to the requester by email. The fraudster either controls the spoof email account or has gotten access to executive’s email account and can write back that it’s legitimate when it’s really not.
• Call to confirm. Before the wire request goes to the bank, call the original requester to verify. Be sure to use a phone number you know or have in your contact list for the requester. If the person who sent the email works in the same building, walk to their office to confirm that they sent you the wire request. If you don’t already have a policy in place for confirming wire requests, create one.
• Create a special template or code. You can use a secret code that only wire initiators/approvers know to confirm that the wire is legitimate. But don’t use the code in emails! If the criminals hacked into an email account, they now have access to that information.
• If anything is different or out of the ordinary, call. Follow your intuition—if something doesn’t seem right, call the requester to confirm.

Pinnacle also monitors wire requests for anything out of the ordinary. You may get a call from us to verify certain transactions—perhaps if the dollar amount is larger than usual or doesn’t follow the typical pattern for your business—but these calls can’t uncover all fraudulent activity. Be vigilant and know the warning signs to help prevent a loss at your company.

David Sturdivant can be reached at 615-744-3726 or by email at David.Sturdivant@pnfp.com.