Wire fraud is a virtual crime that costs businesses millions of dollars every year - and it's on the rise.
According to a report by J.P. Morgan, 60 percent of businesses faced payment fraud in 2013 and roughly 95 percent of those endured financial losses that year. There is a growing trend toward cyber criminals targeting smaller businesses with respect to payment fraud. Some of our own customers this year have experienced wire fraud, resulting in lost dollars and a lot of frustration.
How are they doing it? Email.
Email is one of the most often used channels for wire fraud, providing an easy way for a fraudster to anonymously imitate a customer's communication. Fraudsters often use malware to steal email login credentials; then disguised as clients, they contact your business with new wiring instructions to send payments.
What's the best protection. Verify.
Educate your employees to review all email communication for any red flags that might make the email seem suspicious. Here are common things to look for. You should always speak directly with clients over the phone or in person to validate any new wiring instructions through email. Your knowledge of your client's voice and ability to ask personal questions that only he or she can answer serve as important protection.
There is no insurance for wire fraud. Once the money has left your account, it's very difficult to get it back. The best protections is to be proactive in verifying your customer or vendor information prior to sending the wire. If you do suspect fraud, time is of the essence. Contact the bank immediately. If your accounts have been compromised, they will need to be closed and new accounts established.