Wire fraud. We hear about it on the news and perhaps from friends or family members who have fallen victim to it, but what exactly is it? And why do high-net-worth individuals need to be especially concerned, and more importantly, how can they be protected?
What is Wire Fraud?
At its most basic level, wire fraud is a criminal offense that involves using some form of electronic communication – like phone calls, emails, or texts – to defraud someone. And it happens more often than you might think. According to the FBI, wire-transfer fraud causes approximately $2 billion in losses annually – and this has only been increasing in recent years.
Different Types of Wire Fraud
There are different types of wire fraud perpetrated by criminals. These include activities such as:
- Phishing: Imposters send fake emails appearing to be from legitimate entities with the goal of capturing personal or financial information.
- Identity theft: Criminals steal someone’s social security number or bank account information.
- Investment scams: Offers of fraudulent investment opportunities are made via email or phone, often with a promise of high returns or guaranteed profits.
- Business email compromise: Criminals gain access to an employee’s email account and use it to transfer sensitive information or funds to themselves.
Wire Fraud and High-Net-Worth Individuals
HNWI and UHWNI can be especially vulnerable to wire fraud for a few main reasons:
- Their extreme wealth makes them a target for criminals.
- The average age of a HNWI living in the United States is between 70 – 74, which is another group widely targeted by criminals.
- Criminals assume that these people won’t notice or miss if/when funds go missing.
Because of these reasons, providing safe and secure financial services to high-net-worth clients is vitally important. Understanding the warning signs of a wire fraud attempt, and what to do to prevent them, is a key component to ensuring this protection.
{Read more about how we securely handle wire transfers, ACH, and check payments for our high-net-worth clients here.}
Wire Fraud Red Flags
The expert accountants and executives at Plumb are highly educated in how to spot wire fraud, and they undergo monthly training sessions to ensure that they are up to date on any recent wire fraud developments.
Here are some signs that might indicate a wire fraud attempt:
- An urgent request for funds. This is especially concerning if it comes from a client who doesn’t typically place urgent requests – but any urgent request should be verified and vetted.
- “No verbal approval required” messaging. This is a definite red flag, especially if the client usually requires verbal approval.
- Small changes to a known email address. For example, perhaps there’s one letter missing in a name.
- Request to send to a foreign entity if the client has only ever sent funds domestically.
Our team is trained to look out for patterns, and if a pattern is altered, they pick up the phone to confirm. They are also trained to follow the pre-set guidelines and process in place – regardless of whether the amount is $100 or $1,000,000.
Best Practices for Protecting High Net Worth Clients
Some essential measures Plumb has in place to protect HNWI clients from wire fraud include:
- Implementing robust firewalls and intrusion detection systems.
- Regularly updating and patching software and systems.
- Conducting security audits and risk assessments.
- Encrypted email and messaging platforms.
- Multi-factor authentication for sensitive transactions.
Plumb’s strict firewall requires multi-factor authentication and encryption for all wire transfer instructions. Additionally, all new wire instructions must be verbally authenticated to ensure legitimacy.
Ongoing staff education
- Employee training on identifying and preventing wire fraud.
- Internal controls and checks/balances among team members.
At Plumb, the training starts from the moment a new junior team member begins their job, and it continues – consistently – from there. We also send members of our team for professional development specifically focused on cyber security and wire fraud so that they have certifications in Wire Transfers and Fraud.
The internal controls we have in place further help to protect our clients and their assets.
We take our role as stewards of our clients seriously, and we are proud of our impressive cybersecurity measures and education.
Take the Next Step Towards Safe and Secure Financial Services: Contact us at sales@thinkplumb.com to discuss how our outsourced bill payment services can enhance accuracy, save time, simplify record-keeping, reduce stress, and fortify the security of your financial transactions. Your peace of mind is our priority.