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6 Ways to Protect Your Business From Wire Fraud

For banking customers, wire transfers — which see funds sent electronically from one bank account directly to another — deliver a fast and convenient way to send and receive funds in the digital age. Adding to their appeal for businesses and everyday consumers alike, they’re also considered to be highly secure when the proper precautions are in place, and they carry relatively low fees compared with other methods of payment.

But as with most any modern monetary transactions, wire transfers also present an alluring target for cybercriminals, who leverage wire fraud and other e-crime scams to steal billions of dollars from U.S. residents and businesses each year. According to wire fraud prevention firm CertifID, on average, the FBI receives more than 2,400 complaints of wire fraud each day — and the number of reported incidents increased by 10% between 2022 and 2023.

But by implementing the right security measures, businesses can better protect themselves from cybercrimes like wire fraud … and greatly reduce their chances of falling victim to these ill-intentioned schemes.

What is wire fraud?

According to the U.S. Department of Justice, wire fraud is defined as any type of fraud involving the “use of an interstate telephone call or electronic communication made in furtherance of the scheme.” It typically sees a scammer use telephone, text or internet technology to steal money from a business.

The most common ways cybercriminals use wire fraud to steal money from a business include:

  • Using email, phone or text communications to deceptively harvest login/password information and gain access to a business’s financial account(s), enabling them to transfer funds out without the business’s knowledge. These scams often use social engineering tactics such as phishing or smishing to trick message recipients into providing the sensitive information needed to infiltrate accounts and send wire transfers.
  • Tricking businesses into sending a wire transfer under false pretenses, such as sending a fake invoice disguised as an invoice from a legitimate vendor, only with false account information provided that directs the funds to an account that the cybercriminal controls.

Because the funds delivered by wire transfers are considered verified, they can be immediately withdrawn by the recipient once they’re delivered to the destination account. So once a wire transfer is sent, it can’t be recovered — even if it’s discovered that fraud was involved in the transaction. This makes adding in extra layers of precaution especially important when sending wire transfers.

6 wire fraud prevention tactics

For businesses wondering how to prevent wire fraud, the following six tactics are designed to strengthen protections against cybercriminals who try to employ the deceptive scheme:

  1. Put a clear process in place
    Develop and implement a clear and well-defined process for initiating wire transfers, making sure to put a strong emphasis on documentation and verification when any wire transfer is requested. (This is especially critical when there is a change in the recipient’s routing information or when the transfer request is coming from a new recipient.)
  2. Ensure the identity of every wire transfer recipient
    To ensure the authenticity of any wire-transfer requests you receive, it is important to include a requirement for verbal verification of such requests. This can be achieved by placing a direct call to the client or vendor making the transfer request to confirm its legitimacy. When doing so, be sure to use a known phone number that you have on file for the client or vendor, or one that you’ve tracked down via an official source such as a business website or an official business directory. (Any contact information provided in fraudulent requests for wire transfers is unlikely to actually be that of the business or vendor being impersonated, making it important to use a number known to be accurate and trustworthy.)
  3. Be especially leery of any changes or other outside-the-norm requests
    The verification process outlined above is especially critical when a change in a payment request is received from a client or vendor, or when any out-of-the-ordinary instruction is made with a request. These can be signs that a user’s information or access has been compromised by a cybercriminal, and they should serve as red flags that additional verification/confirmation may be called for.
  4. Educate your employees
    Once you have a process for initiating wire transfers in place, make sure your entire team is familiar with it, especially any employees who might be directly involved in fielding and facilitating wire transfers for your business. Further, it’s also wise to ensure your employees are well-informed on how to identify and report phishing attempts and other tactics cybercriminals might employ in an effort to commit wire fraud.
  5. Implement dual control
    When dual control measures are implemented for wire transfers, one employee might have the authority to initiate a wire transfer, while another might act as the approver for the release of the payment. Having such dual control measures in place can reduce the chances of successful wire fraud attempts, elevate employee accountability and add an extra layer of protection against any wire fraud schemes.
  6. Employ cybersecurity best practices
    In general, many of the same best practices used to ensure the overall cybersecurity of your business can help protect you against wire fraud, too. To keep your business and its sensitive information safe, make sure that your employees know and employ the best practices for staying safe online.

 

Proudly serving South Carolina since 1933, Arthur State Bank offers accounts and services to meet a variety of financial needs. To help you achieve all your financial goals, the bank offers in-person service as well as a range of convenient digital solutions. To learn how Arthur State Bank can help you with banking needs ranging from checking and savings to retirement accounts, mortgages, other personal loans and more, visit arthurstatebank.com.

Man doing his banking online

AnnualCreditReport.com is the only source for free credit reports authorized by the federal government. Every 12 months, you can get a free copy of your credit report from each agency.

Your credit report has your credit history for all of your credit accounts as well as any credit inquiries and public record court information such as collections. In addition, the report provides personally identifiable information such as your name, address, and employment.

Be sure to carefully review all three reports to identify any problem areas that you may need to clean up prior to applying for a mortgage. If there is any incorrect information, follow the reporting agency’s rules to correct it or add a notation to the report to explain the situation.

Your FICO Score is a score combines data from several areas include payment history, the amount owed, length of credit history, new accounts. Many lenders use this score as a guide. This score is not provided as part of the free annual credit report.

Learn more about how your credit score impacts your ability to secure a loan.

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Couple looking over finances

Primary considerations for setting your housing budget require an assessment of your income, debt and current savings for the down payment on the home. The following are generally recommended guidelines; however, you should meet with an Arthur State Bank lender to get personalized mortgage information.

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Couple meeting with lender

The pre-qualification/pre-approval letter is included with any offer you make on a house to inform the seller that you have met with a mortgage lender and you are prepared to make an offer. The letter states that based on certain assumptions, the bank is prepared to lend you up to a specified amount of money for a home mortgage.

When choosing a loan officer, we recommend going local to work with someone who understands your community’s real estate market. This blog on first-time home purchases includes questions to ask your lender that may be helpful when preparing for your meeting.

Helpful Resources:

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Realtor shaking hands with a client

When a house is sold, the seller typically pays real estate commission to both the listing agent and the selling agent. It is extremely beneficial for the buyer to use their own real estate agent. Loan officers can often recommend selling agents in the area; ask your officer about realtor referrals when discussing your loan.

A good realtor will know the local market and can help you find an ideal home based on your budget, location and desired features. During your search, understand that you will most likely need to compromise on some items, so it’s important to identify your critical needs versus your wants.

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Couple searching online for a home

Additionally, when you start with the house search and work backwards, homes can often go off the market while you’re completing steps 1-4. While browsing homes immediately can be tempting, we recommend following these steps in order so that, once you find your dream home, you’ll be well-positioned to take action immediately.

When you find the home you want and you think you are ready to put an offer on it, you will want to make sure you have all the information you need to make a solid offer.

  • Evaluate the neighborhood.
  • Drive by the house at different times of the day.
  • Examine how other houses in the neighborhood are maintained.
  • Consider any potential traffic or other disruptive noise.
  • Is there ample parking for you and visitors?
  • Read the details in any Homeowner Association agreements (HOA fees and rules).

Make sure to do a preliminary check of house details:

  • Check the water:
  • Does it have good pressure?
  • How long does it take to get the water hot?
  • Is it well water or city water?
  • Turn light switches on and off.
  • Open and close doors and windows to make sure they work properly.
  • Review previous utility bill expenses.
  • Consider the property tax bill.

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Family meeting with realtor at new house

When writing an offer contract, be sure to pay attention to all of the details.

Offer Price:

Your agent should do a market analysis that pulls data on recently sold comparable houses. The best comparisons will come from the same neighborhood.

If you are asking for the seller to pay some of the closing costs, remember that this cost plus the sales commission determines the net amount you are offering the seller for the house.

Work with your agent on your negotiation strategy. There are many things to consider, such as how badly you want this particular house, whether it is a buyer’s or seller’s market and an assessment of the seller’s motivation to get the property sold.

There isn’t one best strategy.

Be sure to document in writing everything you want included with the house, such as appliances, etc. Your agent should guide you through the contract step-by-step.

Contingencies:

  • Home inspection.
  • Mortgage.
  • Final walk through (24 hours prior to closing).

Proposed closing date. Typically, this is 30-45 days from an accepted offer.

A good-faith deposit is required for the offer. This is typically between 1-10% of the purchase price of the house. The deposit is kept in escrow until closing and the money is applied to the purchase price of the house at closing. If the house does not close due to one of the contingency clauses, the buyer receives their money back. However, if the buyer decides not to close on the property, the seller may get the deposit money.

Attach your pre-approval letter to the offer.

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Two people in professional meeting

The clock starts ticking for everything documented in the contract, including mortgage application, inspections and closing date.

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Woman advising other woman on mortgage application

You will need to decide which mortgage to select prior to the application.

Plan for the following potential fees:

  • Application fee (many banks and mortgage companies charge an application fee; however, there is not an application fee at Arthur State Bank).
  • Credit check.
  • Appraisal (may be paid at closing).
  • Loan origination fee (paid at closing).

Once you have approval for your loan, make sure you don’t change anything that will impact the status of your mortgage. Banks do a final check on credit and jobs just prior to closing, so now is not the time to change jobs or make another purchase on credit such as a car or furniture.

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Home inspector going over findings with home owner

Depending on the size of the house, an inspection can cost on average between $300 to $1000.

Many real estate contracts specify how problems uncovered in the inspection will be resolved, up to a certain dollar amount. Should necessary repairs exceed that amount, the buyer has the option to cancel the contract without penalty and receive their deposit money back. Another option is for the buyer and seller to renegotiate who will pay for additional repairs.

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Woman happily holding keys to her new home
  • Homeowner’s insurance is required by the lender prior to closing on the loan.
  • Turn on utilities in your name, effective the closing date.
  • Change your address with the U.S. Postal Service.
  • Make moving arrangements.

Three days prior to closing:

  • You should receive your final Closing Disclosure from the closing agency. The final Closing Disclosure shows a column for the seller and a column for the buyer. All closing charges and credits for both the seller and the buyer are documented in the closing statement.
  • Review the closing statement for accuracy prior to coming to closing.
  • The final amount in the buyer’s column shows you the amount of money you need to pay at closing.

The closing office will provide specific payment instructions. Closing funds have become recent targets for cybercriminals. If you are asked to use a wire transfer, call the office and ask to speak to someone you have been working with to double-check the instructions.

Closing day:

In South Carolina, the closing will usually take place at the attorney’s office. Everyone signing for the mortgage must be present to sign the closing paperwork. Make sure you bring the following:

  • Cashier’s check or proof of payment for wire transfer.
  • Driver’s license.
  • Checkbook, just in case there are any additional items that were not on the closing statement.

Be sure to understand this information:

  • How and when you will pay:
  • Your mortgage.
  • Your property taxes.
  • Your homeowner’s insurance.
  • Any HOA dues.
  • Who to call with any questions.

The best practice is to go through the homebuyer’s roadmap in this sequence. However, if you jumped ahead early in your journey, just circle back to address the steps you missed.

Arthur State Bank’s loan officers are closely tapped into local real estate markets and experts at helping clients get what they need on terms that work for them. We also offer mortgage specials for first-time homebuyers.

To start planning your journey to your dream home, try out our mortgage calculator. If you’re ready to talk to a loan officer, contact Arthur State Bank to request personalized mortgage information today. Don’t forget to ask about our first-time homebuyer offer.

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