Wire fraud

Entersekt | Encyclopedia | Wire fraud
What is wire fraud?

Wire fraud is a broad category of fraud that involves the use of electronic communications, such as email, SMS, or phone calls, to defraud consumers or businesses. Fraudsters can implement this type of fraud through various attacks, such as phishing emails or investment scams.

What are the main types of wire fraud?

Wire fraud often takes the form of an investment scam, where the fraudster offers a “no risk” investment opportunity, often in cryptocurrency. The Nigerian prince scam is a well-known example. Romance scams are another form that illicit funds from victims who think they’ve found their ‘perfect match’. Other examples include business email compromise, where an employee clicks on a fake link in an email; phishing scams, or identity theft.

How does wire fraud work?

Wire fraud typically begins with a fraudster gaining access to sensitive information, such as login credentials or other personal information, often through phishing emails or malware. Once they have the data they need, the fraudster usually impersonates a legitimate persona, such as a vendor, client, or business executive, to request a wire transfer. By exploiting the trust and authority that persona is usually afforded, the fraudster convinces the victim to initiate the transfer, redirecting funds to their own accounts.

How FIs can prevent wire fraud

One way is with advanced authentication measures. FIs can implement multi-factor authentication solutions to verify the identity of the person initiating the wire transfer. By requiring additional authentication factors beyond passwords, such as biometrics, or behavioral biometrics, FIs can improve the security of their transactions.

Another way FIs can reduce the risk of wire fraud is by monitoring their accounts for unusual or suspicious activity.

ACH fraud vs wire fraud

ACH and wire fraud are not dissimilar. ACH fraud refers to funds illegally transferred through the Automated Clearing House network. Wire fraud is fraud committed using the wire transfers systems

Additional resources:


Wire fraud | Biometric authentication | Automated Clearing House Payments (ACH)