Wire transfers are a quick and convenient way for businesses to send and receive funds without the delay and hassle of paper checks. And compared to putting checks in the mail, these electronic transactions between bank accounts are considered highly secure. But no form of payment is completely immune to bad actors – and wire transfer scams targeting small and midsized businesses are on the rise.
Let’s take a look at a few prevalent forms of wire transfer fraud and some best practices for keeping your hard-earned money safe.
Wire Transfer Scams to Watch Out For
Generally speaking, wire transfers are secure as long as you know who you’re doing business with. The danger comes when scammers impersonate a trusted entity and convince owners or employees to initiate a wire payment. Once the scammers have your money, it can be very difficult or impossible to get it back. Here are four infamous swindles to know and avoid:
- The Tricky “Taxman”: Contacting you out of the blue via letter, phone, email, or text, a scammer will pose as an IRS agent and demand immediate payment of taxes or fines via wire.
- The Bogus “Boss”: A criminal impersonating a senior staff member will send an urgent email to your CFO, saying that a deal is going to fall through unless funds are wired right away.
- The Lookalike “Lender”: After submitting a loan application, you get a request to wire a processing fee. You might also be asked to confirm your bank account information, only to get robbed again.
- The Villainous “Vendor”: Exploiting a security loophole in your computer system, a fraudster gains access to your vendor list and generates phony invoices or alters your records to reroute payments to their account.
- The Crooked “Customer”: Someone sends you a check for services rendered, but they overpay and ask you to wire the extra amount. Then their check will bounce, and you’ll be out both sums.
Red Flags
Scams involving impersonation can be very convincing, but there are a few telltale signs you can look for:
- Urgent demands that give you no time to investigate and verify.
- Callers that threaten you if funds aren’t wired immediately.
- Requests for payments to cash pickup locations instead of bank accounts.
- Vendor invoices that don’t provide payment options other than wire transfer.
- Messages that are full of spelling mistakes or peculiar phrasing.
- Emails that come from free clients (like Gmail) instead of a company domain.
- Slight variations in business names or addresses (like citizensbucom).
How to Protect Your Business
Here are some steps you can take to safeguard your enterprise from a potentially irreversible loss of funds:
- Limit the number of employees who are authorized to initiate wire transfers.
- Implement multifactor authentication for your business’s email and file systems.
- Look up numbers and addresses yourself instead of using provided contact info.
- Scrutinize and verify any request to change payment instructions.
- Check your bank statements for suspicious transactions on a regular basis.
- Don’t click on links or attachments unless you are confident in the source.
- Don’t send wire transfer instructions via unencrypted email.
What to Do If Your Business Is Targeted
If you believe you’ve been the victim of a wire transfer scam, it’s important to take action quickly:
- First, call your financial institution.
- Next, contact any other entity that’s been impersonated or compromised.
- Then, report the incident to the FTC.
Fight Fraud with Our Treasury Team
A lot has changed over the 88 years that Citizens Bank has been in business. That’s why we’re committed to offering the latest technological tools to help you streamline your finances and stay safe from scammers. With Cash Manager, you can easily initiate electronic funds transfers and set user controls from our secure digital banking platform. Plus, you can access advanced security features like Positive Pay, account reconciliation services, IBM® Security Trusteer Rapport™, and IntraFi® Network Deposits℠.
Want to learn more? Reach out to our Treasury Team today!