How to prevent wire fraud scams
With digital payments being processed in seconds, fraudsters are getting bolder and more sophisticated in their efforts to trick individuals into wiring money.
Updated 
1 min. read
Rita recently moved from Spain to Canada for a well-paying job and she often sends money back home to help support her family.
One day, Rita receives an unexpected email from her aunt, explaining that a flood has occurred in the family home and they urgently needed an extra $3000 to help with the cleanup. Rita’s aunt also mentions the family banking details have changed and provides instructions for a wire transfer to be sent to their new account. Rita doesn’t hesitate and sends the money right away.
The next day, Rita calls her aunt and asks if she’s received the money. Her aunt is shocked to learn about the wire transfer. She explains there hasn’t been a flood, there isn’t a need for an extra $3000, and she didn’t send Rita an email in the first place.
By the time Rita and her aunt contact their banks and the appropriate authorities, a fraudster has already transferred the money to a new account. The money is long gone. Rita has just become a victim of a wire fraud scam!
What are wire fraud scams?
Wire fraud scams involve the transfer of money from an individual or organization to a fraudster using telecommunications (e.g. phone calls) or electronic communications (e.g. emails or text messages). Wire payments are often the vehicle of choice for fraudsters to move money, as they’re considered cleared funds once they reach the beneficiary bank and are less likely to be recovered. Wire fraud scams are one of the primary threats to individuals and organizations in today’s evolving global financial landscape.
What is social engineering
Rita didn’t think she could be scammed. She knows the tips on how to spot phishing scams, understands how to protect yourself online and has the highest privacy settings active on her social media. However, the fraudster didn’t rely on common cyber tactics to trick Rita into sending money; instead they used social engineering.
Social engineering is the exploitation of human psychology to manipulate someone into performing a desired action. In Rita’s case, the fraudster researched her financial habits and personal background.
They learned that Rita often sends money overseas and manipulated her by creating a sense of urgency and playing on her sympathy. The fraudster created a valid email address that looked identical to her aunt’s, took advantage of the different time zones between Canada and Spain, and fabricated a scenario to convince her into sending the wire to an unfamiliar account.
Types of wire fraud scams
Rita’s situation is not unique. There are many ways fraudsters lure victims into wiring funds. The initial hook can take many forms but, in every case, the scam ends the same way. You’re asked to wire money and once you do, it’s usually gone for good. Here are common types of wire fraud scams to look out for:
Emergency scam
In this type of scam, a fraudster – maybe impersonating someone you know – will claim that there’s some type of emergency and they need financial help. They’ll often make the request by email, prey on your feelings of sympathy and create a sense of urgency.
How to protect yourself: If you know the person, always contact them to confirm that the story is true, using a phone number or email address you know to be genuine. If you don’t know the person, do your research. Verify names, facts and details about the emergency. Reach out to the contact to confirm what they’re saying is true. If the person refuses to talk over the phone or doesn’t reply, it’s likely a scam.
Romance scam
You receive a message from an admirer on social media or a dating site. This person strikes up a conversation and after chatting for several days, they seem like the perfect match for you. Sometime into the online relationship, the person makes up a sob story about how they need money for a personal tragedy, or that they want to visit you but can't afford the travel costs.
How to protect yourself: Don’t send money to a stranger under any circumstance. Only send funds to someone with whom you’ve developed a long-term, trusted relationship. Keep in mind: when meeting someone online, do your research by doing an image search to see if their photos belong to someone else. They may be stealing someone else's identity. Look out for inconsistencies in their profile and in your conversations, this may point to a big lie. Check out other ways to help stay safe from romance scams.
Investment scam
A fraudster claiming to be a stockbroker or portfolio manager offers you the chance to invest in an overseas company, product or property that will earn huge rewards with little risk on your part. The fraudster’s offer seems legitimate and they have resources to back up their claims such as a fake website or call centre.
How to protect yourself: If the offer seems too good to be true, it probably is. Never invest in a company, product or property that doesn’t have a solid reputation. If you’re unsure about the legitimacy of the offer, do your research. Verify the contact’s name, professional background and company details. Contact the person over the phone and if they refuse to talk or don’t answer, its likely a scam. When in doubt, get a second opinion from a financial expert.
Learn more about other common scams you should watch for.
Watch out for the red flags of wire fraud scams
The best way to avoid wire fraud scams is to familiarize yourself with the ways fraudsters conduct an attack. These common red flags should raise suspicion in a wire transfer request:
The request is...
- Urgent or made right before the end of the business day
- Inconsistent with previous requests for funds, e.g. large amount, different recipient
- Too good to be true
The individual requesting money...
- Is someone you don’t know
- Refuses using other common payment methods
- Insists on communicating via online platforms only
The email...
- Has an incorrect return address e.g., 0 instead of o, 1 instead of l, extra underscore, altered domain name
- Contains odd or incorrect words, spelling, or phrases
Download this fast facts sheet for a quick guide on common wire fraud scams, red flags and tips on how to protect yourself.
The bottom line
As in Rita’s case, a wire fraud scam can happen to anyone. Although she missed the red flags, she contacted her bank as soon as possible to report it, ensuring her remaining funds were protected, and avoiding future losses. Making sure you’re educated on common scams will help protect your finances.
If you think you may be a victim of a wire fraud scam, contact your bank immediately. For additional resources, the Competition Bureau of Canada offers a great resource for recognizing the latest types of fraud scams.
