Home Wire Transfers What is Wire Fraud?

What is Wire Fraud?

Wire fraud is a long-standing problem that affects millions of people around the world every year. The sophisticated nature of certain fraudulent activity means many unsuspecting people fall victim to the traps set by criminals, both on and offline. This guide to Wire Fraud aims to quell your fears and help you make correct, well-informed decisions when arranging your next money transfer.

Updated: 27/07/2022
Read time: 8 minutes
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A history of Wire Transfers

The old-fashioned telephone was responsible for starting wire fraud on a big scale. The anonymity of calling anyone up and pretending to be someone they are not was too easy. Nowadays, the internet provides countless means of communicating with potential victims. Further to that, online banking allows victims to be defrauded by getting them to access bank accounts under false pretenses.  

International money transfer customers have to be careful of wire fraud to avoid sending money to fraudsters. This article will explain what wire fraud is and how you can decrease the chances of being a victim. We will also share 3 money transfer companies that are set up to reduce the risk of wire fraud.  

What is wire fraud?

Wire fraud is a method of stealing money from victims by using the internet or some form of telecommunications. The type of communication method used by fraudsters includes social media messaging, text, email, fax, phone call, and much more. 

The U.S Department of Justice defines wire fraud as an individual who created or participated in a plan to steal money from a victim and interstate communications were used during the process. Suspects found guilty of wire fraud could face up to 20 years in prison and pay fines of up to $250,000. 

Communications sent by the fraudster are sufficient to prove the intent of wire fraud and for a penalty to be applied. The fines and prison sentences are even greater if wire fraud is committed relating to special circumstances. For instance, if the target of fraud is a financial institution or during a presidentially declared state of emergency. 

Examples of wire fraud

This section shares a few examples of wire fraud so that you can avoid the top scams. It will give you an idea of how fraudsters come up with elaborate plans to trick the unsuspecting public into sending them money. 

  • Phishing: the phishing scam is about retrieving victims’ personal information such as bank account numbers, credit card details and passwords. Typically, it is done in the form of an email phishing scam, where an email is sent requesting information. A link might be included that plants malware capable of stealing private details or it will take the victim to a fake website. 
  • Telemarketing: this scam type involves the fraudster calling potential victims and posing as an entity that is out to help them. For example, they might claim to be the Amazon security department or a utility company. The script a fraudster uses varies, but the idea is for the victim to send money to the fraudster’s account. Telemarketing fraud might also be called mail fraud and it is a federal crime. 
  • Nigerian prince scam: the infamous “Nigerian Prince Scam” is arguably the most well-known example of wire fraud. The scammer claims to be a Nigerian prince who has been kicked out of their country and now needs to transfer millions. Anyone who is willing to help will receive a percentage of the amount transferred. The victim must provide their bank account details and that is how the fraudster steals money. 

How to avoid wire fraud

This section covers a few simple strategies for reducing the chances of wire fraud. Nobody is safe from fraud because some schemes are so elaborate that anyone can be tricked. However, these tips will keep the majority of readers safe from scams. 

Trust the recipient

Most money transfer methods do not allow for a refund or cancellation once they have been initiated. Therefore, instead of seeking to retrieve lost funds, it is best to avoid getting scammed in the first place. The best way to do this is by trusting the recipient. Make sure that you know the person to who you are sending money. 

Keep in mind that banks, utility companies, and other services will not randomly call you or send an email asking for money. If you are being asked to send money, then you should investigate to ensure the recipient is who they claim to be. 

Login security protocols

Wire fraud is possible when a fraudster gains access to your bank account or money transfer service. Therefore, you should choose a service that offers excellent login protection and take advantage of those features. These include:

  • 2 factor authentication via SMS message or email. 
  • Face recognition
  • Fingerprint
  • Physical code generator

Money transfer companies like Wise offer 2-factor authentication with a unique added step. This asks you to select a recently completed transaction from a list of random ones. It will help deter fraudsters from potentially accessing your account. 

Background checks on money transfer companies

Fraudsters target specific banks and money transfer companies that have holes in their security. Avoiding these services will help you steer clear of potential scams. Take the time to research a money transfer company before registering for an account. Customer reviews may share instances of fraud that are worth knowing. TrustPilot is a good place to start researching because most services have an account and it is easy to see the overall score. 

Top 3 money transfer service that help avoid wire fraud

This section shares 3 money transfer companies that you can trust to send money internationally. They have features in place that can potentially reduce the chances of wire fraud such as secure login and helpful customer service.

1. Wise

Wise is a secure money transfer company that offers 2 factor authentication. Also, immediate notifications are sent after a transfer that informs you of the amount, transfer type and the recipient. The customer service department is also handy for helping you solve potential problems. Wise offers transparent fees and an intuitive mobile app that is perfect for international money transfers.

2. VertoFX

The completive FX rates and international mass payments for businesses are just a few of the reasons to choose VertoFX. They also come with a dedicated account manager that provides support. You can contact this individual if you suspect wire fraud or need help sending funds safely. 

3. Cornerstone FS

This money transfer service has a global coverage of 200 countries and offers competitive FS rates. Therefore, it is a good choice for customers who wish to send money internationally. Cornerstone also comes with a relationship manager who can help with security issues. They aid customers in managing their finances in a manner that reduces wire fraud. They can be a trustworthy and reliable source of information for safeguarding your personal information. 

Summary

Wire fraud is a big problem because many people fall victim to scams annually. However, with the steps outlined in this article you can significantly reduce the risks of losing money to wire fraud. Make sure you follow the advice and consider choosing one of the money transfer companies mentioned above. 

Read our other useful guides by visiting the Sending Money and Wire Transfer hub pages. While you’re here, why not also check out our comparison tool, to see the best offers available for your next global transfer.

Frequently asked questions

Can wire fraud occur when arranging a mobile money transfer?
What if my money was stolen?
Can I get my money back from wire fraud?

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Article Factchecked by Elliot Laybourne on 20th July 2022

Elliott is a former investment banker with a 20 year career in the city of London.

During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making.

During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others.

April Summers

April is a trained journalist and the Content Editor for MoneyTransfers.com. She has 10 years experience writing about a diverse range of subjects, from financial services to arts and entertainment. When she’s not writing about global remittances she can be found daydreaming about her next holiday abroad.

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