8 strategies for preventing wire fraud
13% of recent Abrigo fraud survey respondents indicated that they’ve been a victim of wire fraud, and the threat continues to rise. Americans rely on their financial institutions to help safeguard their money, so many institutions educate customers and members about wire fraud risks while implementing internal safeguards to prevent fraudulent transactions. Here are eight best practices for wire fraud prevention that banks and credit unions often implement:
- Educate clients on imposter scams
Fraudsters often impersonate trusted entities, such as financial institutions, vendors, or even executives, to deceive victims into wiring funds. Banks and credit unions should educate clients on how these scams operate and encourage them to verify all wire requests independently. Reach out to the community by offering complimentary fraud education opportunities at community centers and places of worship or invite attendees to a branch for an in-depth fraud session. This not only helps prevent fraud but also solidifies with valuable depositors the value of their banking relationship.
- Implement strong internal communication and security protocols
Develop clear policies for handling wire transfers, such as daily payment limits or the use of templates for recurring wires, and internal communications. Require staff to follow standardized procedures, such as dual authorization for high-value transfers, and regularly review security measures to close any vulnerabilities. Be sure to enhance controls to prevent internal fraud as well.
- Raise phishing awareness
Phishing scams—where fraudsters impersonate legitimate entities to steal sensitive information—are a primary tool for wire fraud. Teach clients and employees to recognize suspicious emails, texts, and phone calls, and warn them not to click on links or download attachments from unknown sources.
- Emphasize the sophistication of fraudsters
Scammers are professionals who meticulously craft fraudulent emails and messages that mimic legitimate communications. Institutions should stress that spotting grammatical errors is no longer a reliable fraud detection method. Instead, clients should verify all requests through trusted channels.
- Implement robust verification procedures
Encourage clients to confirm wire transfer requests using multiple channels, such as a direct phone call or in-person visit. Similarly, financial institutions should require verification steps, such as call-backs to pre-registered phone numbers, before processing high-risk wire or ACH transfers.
- Strengthen password management practices
Promote strong password hygiene by advising clients to use unique, complex passwords for each account, update them regularly, and enable two-factor authentication whenever possible. Strong authentication measures can prevent account takeovers that lead to fraudulent wire transfers.
- Monitor account activity for suspicious transactions
Encourage clients to review their account activity regularly and report any unauthorized transactions immediately. Internally, banks and credit unions should use fraud detection software to analyze transaction patterns and flag anomalies before processing a wire transfer.
- Foster a culture of skepticism
Encourage clients and employees to question unusual requests, even if they appear to come from a known source. Fraudsters exploit trust, so reinforcing a cautious, verification-first approach can be one of the most effective defenses against wire fraud.
