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Best Practices

Mitigating the Risk of Wire Fraud

Implementing these best practices will help companies avoid falling victim to wire payment fraud schemes.

By Ronald Plesco & Guido van Drunen | Updated on May 21, 2015
One of the most popular areas for payments fraud is wire transfers. That’s partly because criminals have limitless options for perpetrating wire fraud. There are many combinations of fraudulent approaches, and various points of compromise—such as malware transferred from a vendor to a customer, an email misleading an employee, or a call from the CEO requesting a transfer of funds—all can result in a wire initiation that transfers funds fraudulently to criminals.

The result can be hugely damaging to the company that the fraudster targets. One recent example occurred when a U.S.-based escrow firm transmitted fraudulent wire payments to accounts in China and Russia totaling more than $1 million between December 2012 and February 2013. Less than a third of the lost funds were recovered, and the escrow firm was forced out of business.

Even when a wire fraud scheme doesn’t result in significant monetary losses immediately, the ripple effects can be serious. Costs incurred after a fraudulent wire transfer can include investigation of the crime, remediation for the account holder who suffered the loss, and litigation. There are also intangible costs such as eroded brand and reputational value, which can result in customer attrition—customers or account holders may cut ties with companies they do not trust to adequately protect their assets.

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