As the internet was becoming global in the 1990s, there emerged a cyber scam popularly known as the “Nigerian Prince Scam” or “419 Scam”. The scam was intended to get the personal information of the victims and sometimes directly steal the money. The victims received an email from a supposedly exiled Nigerian royal, government official, or higher executive whose fortune is hostage to war and needs to be wire transferred to an overseas account for safekeeping. They ask for a small advance payment before the transfer, and in exchange, some of their millions will be transferred to the victim for their good deed. As odd and ineffective as it sounds, hundreds of people fell for this scam. It has now re-emerged and has become much more technologically advanced.

After the pandemic, the quick shift of businesses and financial activities to the digital space has led to an increase in cyber fraud, especially wire transfer fraud. According to the Federal Trade Commission, in the year 2020, roughly $314 million was lost to fraudulent wire transfers and this number has been on the rise since then. Fraudsters can target anybody from commercial businesses with frequent large transactions to vulnerable senior individuals. The victims are usually the disadvantaged or the elderly people who are more gullible to such frauds, but many highly capable people get snagged too. This article will help you understand how a wire transfer fraud happens and if you’ve become a victim, what you can do about it.

What is wire transfer fraud and how does it happen?

Wire transfer fraud is essentially manipulating somebody psychologically to make a wire transfer to the scammer’s bank account instead of the rightful party’s. However, wire fraud can also occur when a scammer is able to get remote access to a victim’s computer so that they can wire out funds without the victim’s consent.

Many times, the scammers pose to be a trusted source, an employer, a business partner or a family member. They often emotionally manipulate the victim by claiming an emergency or a fake scenario to build urgency. Sensing the urgency of the request, the victims send the money in an extreme hurry and do not realize the questionable nature of the scenario until the money has been sent, received and probably distributed in different untraceable accounts.

Insurance policies often use the term “social engineering” for it. This term covers a wide range of malicious activities carried out by human interaction. It can happen in multiple ways, without the victim having a clue.

For example, you are excited to have sealed the deal for your new home and have prepared everything for the final transaction. A hacker gains wrongful access to the email address of your real estate agent or escrow company. The hacker monitors your conversation and then slides in with their own email address. Their email address has a minor difference, like a single letter different from your agent’s correct email address, which often makes it indistinguishable from the original address. The hacker even duplicates the writing style, signatures and other specifications to make it seem authentic. At the perfect time, the hacker sends you an email with wire transfer instructions and details of an account that belongs to the hacker. It is difficult to not fall for a scam as unsuspicious as this so you send the large sum of money believing it’s your real estate agent. One doesn’t always have to be in the middle of transacting business, it can happen via a phone call pretending to be some institution you are signed up with (your bank, insurer, phone company etc.). As one can imagine, these hacks cause massive losses at a moment’s notice, not to mention the mental agony that comes with it.

Another example that frequently occurs is website mimicking. What happens is the consumer visits a website that is designed to mimic the original legitimate website. These can include a fake Amazon website, fake Facebook, or a fake financial institution’s website. Hackers have copied the website of Chase, Bank of America, Coinbase, and many other financial institutions. Once on the fake website, the hacker will either get the individual to click a link that gets the hacker remote access to the user’s computer, or the hacker will trick the consumer to log in to the fake site so that the hacker now has the login credentials. Then once the hacker has what they need, the hackers wire out money to a different bank account belonging to them.

How to prevent getting scammed?

There are ways to prevent losses, some general tasks that you can do to prevent fraud include:

  • Verifying the sender’s email address- It is necessary in cases where the hacker is able to identically spoof an address. It is suggested to check every letter of the email address sending the wire instructions in order to not miss the spoofed email address.
  • Verify the phone number and employee details- If you receive a call claiming to be representing any bank or government organization, never send any money requested. It is suggested to first verify the phone number by calling the office of the said organization and confirming the phone details and employee details.
  • Cross-check with the original receiver of the wire transfer before sending- In cases of receiving wire instructions via email, it is wise to cross-check with the person on a phone call.
  • Confirm the bank and account details in person- If possible, avoid any online requests and confirmations regarding the transaction. If you have personal contact with the receiver, confirm the details in person before a wire transfer.
  • Notify all parties if there is any hacking suspicion- On receiving any suspicious emails or phone calls, notify all the parties involved in the transaction.
  • Look for common red flags that are associated with any compromised email, such as misspellings, poor grammar, and emails sent outside normal business hours;
  • Verify the completed wire transfer immediately.
  • For businesses, real estate agents, and title companies, it is advisable to continuously caution all clients about the risk of wire transfer fraud.
  • Be careful of websites. Review the web address closely to make sure it is a legitimate website.
  • Never click links in emails or websites that you do not completely trust.

Wire fraud can occur from identity theft like many other cyber crimes. You can avoid it by following these tips offered by The Federal Deposit Insurance Corporation (FDIC)-

  • Avoid sharing personal information via phone or email with people you don’t know personally.
  • Always confirm the identity of any person who contacts you online and asks for personal information. They could be claiming to represent certain organizations or institutions, make sure to confirm with the claimed organization.
  • Avoid opening emails sent by suspicious email addresses or typographical errors in the name of the company.
  • Never share confidential information online such as social security number, financial account information and driver’s license number.
  • Carefully dispose of bills/receipts, credit card offers, account statements etc.
  • Use strong passwords that are not easy to guess or hack into. Avoid adding security questions with easily available information.
  • Always review account statements meticulously to not miss any unauthorized transactions.
  • Instantly report any missed account documentation from the bank as identity thieves often divert them to their address.
  • Do not leave mail in the mailbox that may give out confidential information and secure the mailbox against theft.
  • Review your credit history regularly.
  • Keep updating security programs on your computer and avoid using questionable and unsecured websites on your system.
  • Always do financial transactions on a secured and personal network. Avoid using public and unsecured WiFi to access financial accounts.

Who is usually liable in a wire transfer scam?

In most cases, banks will blame the consumer for the fraudulent wire transfer even though they had nothing to do with it. They will say that the consumer must have shared their login information with the fraudster, or the bank will point to an obscure clause buried deep in some terms and conditions that were located in some dark corner of the bank’s website.

However, what the banks do not want you to know is that they actually might be liable for their unauthorized transferring of your funds. Wire transfers between banks and commercial entities are governed by Article 4A, UCC.

If the wire transfer was not authorized by you and was not initiated by someone that was acting as your agent, then the bank is liable for processing a wire transfer that you did not authorize. The Uniform Commercial Code is designed to punish banks for not having rigid security procedures in place that are agreed to by both the consumer and the bank itself. Therefore, in many instances, the consumer will not be liable for the bank’s unauthorized transfer of the funds.

What can you do if you are a victim of a wire transfer scam?

Step 1- Call the bank immediately and inform them that you did not authorize the transfer. There is a small chance that they may be able to reverse the transfer. Also, get the information of where the money was wired to, and call that bank or institution to immediately let them know that the money they are about to receive is the result of fraud. Tell them to put a ‘fraud freeze’ on the account.

Step 2 – File a complaint with the FBI’s IC3, which can be found here.

Step 3 – If the bank can’t reverse the transfer and they claim your money is gone, then immediately write them a letter stating that you are not liable for the wire because you did not authorize the transfer. Include the IC3 complaint to support the validity of your claims. Give as much detail as you can in the dispute letter to prove why the transfer was unauthorized. Make sure you send this letter via certified mail. Templates can be found here.

Wire transfer fraud is a frightening and victimizing trauma to go through. Oftentimes when you are dealing with the banks, it can seem like it is one dead end followed by another. The businesses often refused to acknowledge your disputes and will blame you for the unauthorized wire occurring. However, with the help of an attorney, you can navigate through the process without confusion and have the best shot at getting your money back. Barthel Legal uses the law as a sword and goes on the offense for its client’s so that they can get their money back. Book a FREE consultation with an experienced attorney here.