Protecting Your Southern California Business from Wire Fraud
Wire fraud is prevalent and, and when it happens, it causes costly damage to businesses. It is one of the things you would not think would happen to your company, but you should not bury your head in the sand about it. The FBI reported that businesses lost more than $4.1 billion in 2020, an approximately 69% increase from the incidents reported in 2019.
The most prevalent cybercrime that contributes to these losses is business email compromise, which includes wire fraud. The problem is prominent and makes it impossible for companies to recover their money once it leaves their accounts. The best way to deal with wire fraud incidents is to avoid becoming a victim by understanding how the actors operate. You should also learn to identify the warning signs, and train your employees on how to avoid becoming the targets of the crime.
What is Wire Fraud?
The U.S. Department of Justice defines wire fraud as a scheme cybercriminals use to defraud organizations by false pretense. The criminals use the interstate wire communication systems to trick their targets into sending them money through wire transfer.
One factor that makes wire fraud so popular among cyber thieves is that it is easy to accomplish, happens instantly, and is impossible to reverse. Once the target initiates the process, the money is transferred from one account to another spontaneously. The transfer occurs regardless of the bank account or location.
Consequently, cybercriminals get hold of your money long before you realize you have been tricked. Once they access it, you have no way of getting it back, as they immediately transfer it to a different account. Electronic money transfers can be hard to track or reverse. What makes the situation more complex is that the criminals sometimes commit crimes from locations outside the country.
Wire frauds victimize two parties, one being the company that was expecting to receive money. The other party is the organization that was sending the payment. Wire fraud has led to many contractual disputes between the victims of the crime, with disagreements on who should bear the loss.
Common Wire Scams
Companies that have been conned into wiring money to malicious actors often do so through licensed money transmission platforms like MoneyGram and Western Union. Common wire fraud scams happen through:
Business Email Compromise
Business email compromise (BEC) takes many forms, but the typical approach entails targeting employees within the target company, especially those with access to the company’s finances. The criminal poses as a trusted business partner or an authority figure within the establishment. Once they gain the trust of the target employee, they authorize them to transfer funds or download malicious malware.
The actors use the malware to further spy on email communications within the business. In other cases, the actors will infect the business systems with ransomware. It holds the business systems and networks hostage until the company makes a payment to regain access.
The process of BEC scams entails:
- Identifying the target: A hacker carries out simple research on your company through professional connection platforms like LinkedIn. Then, they only need one person in the company to click on a fraudulent link, and the rest becomes easy.
- Grooming the target: This entails employing methods like social engineering, email spoofing, spear-phishing, or attaching malicious files to emails. The process can take weeks as the hacker tries to gain the trust of the target. They then strike at a time when the victim least expects it.
- The target falls for the trick: Despite adequately training your staff, they may still become victims of wire fraud. They may receive a legitimate-looking mail confirming the wiring instructions to a new account. The hackers sometimes call the target with a spoofed phone number.
- Funds are wired into the criminal’s account: Once money leaves your company’s account into the criminal’s, it is usually almost impossible to recover. The money quickly gets transferred to other accounts, and tracking them is a complex task.
Businesses should be on the lookout for this common scam and enact stricter wire transfer policies. Other common wire frauds include:
- Utilities: The scammer tells the victim that their power, cable, or water will be shut off if they fail to send money immediately.
- Lottery prize: Scammers lie to their victims about winning prize money, but the victim must send money first to receive it.
- Debt collection: A fraudster may pose as a debt collector to make the victim settle a fake debt.
Red Flags to Look Out For
While cybercriminals try their best to conceal their wire fraud efforts, there are telltale signs you can look out for to know when something is wrong. Some common ones include:
- Wrong account number: If the account number the person on the other end provides does not match the one your businesses regularly sends money to, always call to confirm.
- Request to change or confirm the bank information: Changes in the bank account information or confirmation of the same should be communicated officially and not through email correspondence.
- Strange behavior: If your head of department or CEO randomly asks you to wire money to their account, check out for red flags in the email address.
- Slight differences in email address: These may be hard to spot, but you can always check previous email correspondences to see if the email is coming from whom it purports to be coming from.
- Poor grammar: Glaring spelling, grammar, and syntax mistakes in the email should be a red flag.
Defending Your Business from Wire Fraud
The surest way of protecting your business from wire fraud is stopping it in its tracks. With the proper safeguards in place, you will eliminate the malicious activities before they create a dent in your business financials. A few ways to strike back against wire fraudsters are:
- Train your employees to identify phishing attempts, not to click on malicious links, and to avoid downloading files whose source they don’t know. They also should hover over suspicious links before clicking to see the entire URL. They should be sure they are visiting a secure site. If in doubt, they should learn to consult the security team.
- Update your OS, browser, and all business apps promptly to patch the security flaws.
- Conduct a security check up on your data systems and networks
- Be suspicious of all communication, including Facebook and all social media platforms, text messages, phone calls, and emails
- Back up old emails.
Most importantly, it’s crucial to hire an IT consultant to help with the overall security of your business data and sensitive information. Working with an IT service provider can be the most fruitful way to set up a security plan and ensure your systems are constantly monitored for vulnerabilities. An IT consultant will also offer solutions to configure your servers for enhanced security.
IT experts at Technijian provide technology support to small and mid-sized companies, and we are here to extend the support to your business. If you are looking for reliable solutions to enhance your business security, we are your go-to IT service provider. Talk to us today to schedule a consultation for this and all of your business IT needs.