Fraud Prevention: How to Protect Your Clients from Wire Fraud

Javelin Strategy and Research firm conducted a 2021 study into identity fraud and found that last year alone, 49 million American consumers fell victim to this crime. What is more, fraudsters amassed $56 billion by targeting the American public. Most losses came from identity theft, and around a quarter came from conventional identity fraud. The latter is when cybercriminals attain personal information which they can use for monetary gains. 

Scammers who typically infiltrate and access business emails have hit the business sector even harder. In 2020 firms lost a staggering $1.8 trillion collectively through this crime. Business Email Compromise or (BEC), as it is commonly known, is a growing problem for firms, but specifically for the realtor sector. This is because properties have a high ticket value. If fraudsters gain access to correspondence emails, their rewards can be significant.

Since the pandemic, more firms have been conducting business online because of the restrictions. This has meant that requests for wire transfers have been considerably greater. However, it has also got the attention of opportunistic cybercriminals. 

Tom Cronkright, who is a CEO of a firm that specializes in preventing real estate wire fraud, says consumers expect to make online payments. He mentions it is not uncommon for people to think that there is nothing suspicious about wiring funds through an email. Sadly, it’s this sentiment that is fueling cyber-crime.

Although, with the right wire fraud prevention advice, people can reduce the likelihood of being vulnerable to these types of cyberattacks.

You can help your clients by educating them on the methods scammers use and the measures they can take to reduce the likelihood of falling victim to cyber-crime.

What is Wire Fraud?

According to JPMorgan Chase and co, Wire fraud is any fraudulent activity that occurs over interstate wire communications, which includes the telephone and internet.

Sometimes, fraudsters may call and pretend to be someone they are not to trick the target into sending money electronically. Although, the preferred method for cybercriminals is email because they can target many individuals and businesses simultaneously. 

Wire Fraud Methods Used by Cybercriminals

Cybercriminals use various tactics to commit wire fraud. Here are the four primary methods:  

Phishing 

Fraudsters send emails that appear to be from a trusted source like a bank or company, for instance. Then they aim to direct the recipient to a false website that looks authentic. If the target enters their details, criminals can use that information to steal money. 

Voice Phishing and SMS Phishing

Cybercriminals use voice calls or messages to trick their intended targets. It may involve both live or automated calls or a text message. The content of the call or text message is typically intimidating as the intention is to cause alarm and to prompt the recipient into taking immediate action. For instance, the scammer might make an email look like it’s from the recipient’s bank, warning them they will freeze their account unless they respond immediately. If the intended target then follows the scammer’s instructions, they could access the target’s bank account. 

Malware 

This type of software damages a computer by infecting the operating system. It often occurs when someone opens a dishonest email or clicks on a link that directs the target to a malware website.

Email Account Compromise 

As the name suggests, hackers use this method to access the targeted email account. They achieve this by either using stolen data or by creating domains that look almost identical to the authentic ones. Phishing and spam tactics are also used to gain access to email accounts. In this scenario, fraudsters aim to make the email look genuine by posing as an authority figure like an executive officer.

Wire Fraud Prevention

Conveyancing fraud is on the increase, but here are three things you can advise your clients on to prevent them from falling victim to a scam.

1. Protect Personal Identity

Encourage clients to protect their personal information by ensuring that their digital devices are using the latest operating system. This means doing software updates when necessary and using a virtual private network (VPN) to increase online security. 

Also, make them aware that it’s unlikely that a legitimate caller would ask for personal details over the phone. Before discarding any other forms of personal correspondence like physical letters, it is wise to shred them. Email passwords should be unique. If a client uses the same password for all their accounts, one security breach could lead to many. 

2. Identify Key People 

Be sure to mention who the key people are in the home buying process. If possible, introduce any significant people to the client directly so that they know who they are. If this is not possible, advise your client to ask their lawyers for their contact details as soon as they hire them. This way, they will recognize the phone number and email address when the lawyer makes contact. 

3. Protect Payments

The best way to protect payments is to identify the person who will receive the money. If it is a solicitor, for instance, send a small amount of money to their account and wait for them to confirm that they have received it before wiring larger funds. For added security, talk to them just before and as you are sending over the money.

Wire fraud prevention methods can reduce your likelihood of falling victim to a scam.

Fraud Detection and Response

If you suspect or know that a client is a victim of wire fraud, encourage them to act quickly. When you report fraud within 24 hours, sometimes the banks can recall the wire transfer. Although, this is not a guarantee that they will return the funds, around a third of wire fraud victims will have their funds recovered.

As a broker or investor, you can help to protect your clients by informing them of wire fraud prevention procedures.