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Preventing Wire Fraud Doesn’t Have to Be a High Wire Act

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October 27, 2015

Preventing Wire Fraud Doesn’t Have to Be a High Wire Act

Prevent Wire Fraud - Online Lockbox

By now, being in the know about fraud is old hat. We’ve all been around the block a couple of times when it comes to detection and prevention. It’s kind of like the commercials with that endearing English gecko—unless you’ve been living under a rock for the past 16 years, you know well that you can save 15% on your car insurance by switching to Geico.

But we’re willing to bet you didn’t know this: 76% of fraud attempts feature a wire transfer. Really. We don’t mean to worry you about yet another point of vulnerability, but fraudsters are only becoming more cunning, persistent, and determined. Despite growing consumer savvy and technological security advances, fraud still results in $200 billion in losses annually in the United States. And to add insult to injury, attorneys are at particular risk.

Why Wires?

Wire transfers are fraudsters’ target of choice because they are often used to transfer considerable sums by businesses with large account balances, move money quickly, and are difficult to reverse or trace. What’s more, many scams originate in places where U.S. law enforcement has no reach or influence, so criminal prosecution or the recovery of funds is the exception, not the rule.

In short: originating a wire is like sending cash, and the savvy con artist can pocket your money and run—with you being none the wiser until it’s too late. Wire transfers are two tickets to criminal paradise.

Here a Scam, There a Scam

The first step in preventing wire fraud is to know what you’re looking for. Scammers come in many guises, attacking every possible point of compromise via every conceivable channel. Because the potential payoff is a gold mine, criminals will do just about anything to convince you to wire them money. Thwarting a threat like that may seem nearly impossible, but we can help unmask the criminal. Keep your eyes peeled for:  

The Nigerian Scam: This classic scam works by asking for an inch— and ultimately taking a mile. Scammers will begin by asking you to wire a small amount of money for things like taxes and bribes and government fees. And then they’ll ask for a little more for travel expenses, attorney fees, and larger bribes. Since you’ve already given a little, what’s a little more? This cycle can go on and on until you’re in the hole for thousands.

The Overpayment Scam: The fraudster sends a check for your services for more than the amount due. He or she asks you to deposit the check and send a wire transfer for the difference. Surprise: the check is bogus— and you’re still responsible for the money, even though your bank may have advised you that the funds were “available” before you initiated the wire transfer.      

The “CFO” Scam: In an exceedingly popular scam, you receive an email from the “CFO” or another senior executive requesting an immediate wire transfer from the firm’s account to another account—usually overseas. You initiate and approve the outgoing wire transfer and thousands of dollars are sent directly to the coffers of a criminal who has compromised the boss’s email account.

The Attorney Trust Account Scam: Masquerading as an overseas company, the scammer retains your U.S. law firm as a settlement agent to collect a debt from a debtor and insists that it’s urgent. You receive a check from “the debtor,” deposit it into a trust account, and then wire the funds to the purported client. You soon discover that the check is counterfeit, and the bank debits your trust account for the lost monies.                

Identifying Red Flags:

Sometimes, fraudsters are so devious they’re difficult to spot. But when it comes to emails, these red flags should be dead giveaways.

Instead of being addressed to you, the email opens with a generic salutation. The whole thing is generally vague, employing terms like “your jurisdiction.”

  • The request is outside your area of expertise.

  • The email contains strange or awkward legal jargon. It is riddled with typos and grammatical errors. Dollar amounts are perfectly round numbers.

  • The sender asks you only to collect, receive, or transfer money.

  • The sender asks that you keep the request confidential.

Wire Fraud Prevention: DIY

Preventing wire fraud doesn’t have to be a high wire act. Follow these easy, Do-It-Yourself tips to safeguard your firm.

 

  1. Know whom you’re dealing with. Take reasonable steps to verify the identity of your client, especially ones outside of the country. Even if an email is purportedly sent by someone you know, confirm wire transfer requests via a second channel, like a phone call.

  2. Be wary of urgent requests. Scammers will often pressure you to wire money quickly—before you discover that their counterfeit check has bounced.

  3. Wait for a check to clear before using the funds. It can take weeks to detect a good forgery. Verify the authenticity of the check with the original issuing institution and confirm with your depository bank that it has cleared.

  4. Implement a dual-control system for large financial transactions. A dual-control system helps protect against errors, employee misconduct, and external fraud. You can also require that wire transfer requests over a certain dollar amount be matched to a reference number to ensure that they are linked to a previously approved service.

  5. Involve your technology experts in the process. Spoofed emails leave clues behind like a near-invisible trail of bread crumbs. But your technology experts know what they’re looking for, and they can determine whether the email is actually from where it claims to be.

  6. Secure your tech. Ensure that your computers are updated regularly with the latest versions of anti-virus and spyware detection software. We suggest that you select the level of security most appropriate for your browsers. Also, install a dedicated, actively managed firewall, which reduces the chance for unauthorized access to your network and computers.   

Take Back Control

At its heart, wire fraud prevention is about trusting your gut. If a wire transfer request sets your spidey-sense a-tingling, something’s not right. Prevention comes down to two very simple things: common sense and awareness. All you have to do is pay attention.

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