“Wire transfer fraud? That’s something that will never happen to me!” Does that sound familiar to you? If yes, then you're accurately mirroring the mindset that many business owners and leaders operate with. Unfortunately, this exact line of thinking is what commits cybercriminals in their fraudulent endeavors.
Let's dig into the matter as we dissect what wire transfer fraud is, how to prevent it, and the value of cyber insurance should such unfortunate incidents occur.
What is Wire Transfer Fraud?
This type of fraud involves a cybercriminal or scammer tricking someone within your firm into transferring funds by pretending to be a vendor or client. This normally happens over email and shockingly, it is seldom verified by the business owner or decision maker, making the scam, devastatingly, a cakewalk.
Example - “The CFO or company accountant receives an email seemingly from a vendor. The email asks for a change in account details for the next payment transfer. To add a touch of 'credibility', the fraudster provides an accurate invoice number and amount due for the next payment.”
Sound terrifyingly plausible, doesn't it? The question that arises here is, how does the fraudster know such specific information? The likely answer is shameful - they've infiltrated either your email system or the vendor's and have been keenly monitoring your email exchanges.
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Unforeseen Aftermath and The Bank’s Stance
Cease to assume your bank would come to your rescue in such scenarios. Your financial institution does not bear any responsibility in wire transfer scams since, essentially, you or a firm member has voluntarily parted with the money under assumption of legitimate circumstances. Consequently, recovering fraudulent funds is quite challenging, as typically, once funds enter the fraudulent account, the account closes, and the funds vanish.
Counteracting Wire Transfer Fraud
Okay, enough of the hair-raising stuff, let's discuss ways to prevent such situations.
The formula is not overly complex - all it takes is a well-defined control. A "control" here refers to a standard procedure that should never be deviated from.
Here are some steps to follow:
1. Always authenticate the party: Before changing account numbers with any party, regardless of if you're exchanging for the first time or amending existing data, make a verification phone call.
2. Cross-verification: To add an extra layer of protection, have another person in your office verify the same information.
3. Special attention to foreign requests: Foreign vendor requests demand extra scrutiny due to their higher risk factor.
If there's a sudden request to wire funds from within your firm, follow these steps:
4. Verify the email address: Cybercriminals often manipulate a single character in email addresses hoping their victims will overlook the alteration.
5. Confirm with the originator: Always call the person who supposedly sent the email to confirm the request.
Ensure you have wire transfer coverage in your cyber insurance policy. Speak to BimaKavach experts for best assistance. It's important to note that if you fail to follow the required procedures and fall victim to wire transfer fraud, your claim may be denied. Set up control measures, educate your employees, and continuously discuss phishing and other cyber risks. If you have more questions on cyber risk or cyber insurance not covered here, feel free to reach out. Remember, prevention is better than cure. Thank you for reading, and if you found this informative, please give it a thumbs up!
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