One of the biggest offenders in the industry has  become wire transfer fraud. This is where money wiring instructions are  altered so that funds get diverted to the criminal instead of the  intended recipient. Criminals can carry out these schemes multiple ways  and use business email compromise tactics to get into a company’s  systems. Examples include email phishing, identity theft, hacking, email  spoofing, and malware. With so many vulnerable areas open, companies  can never do too much to understand wire transfer fraud and prevent  losing thousands of dollars at a time.

For more clarity, we sat  down and spoke to Hannah Gresty, PitchPoint Solution’s Vice President of  Product. Gresty’s been with the company for 10 years, focusing  specifically in the fraud detection industry with the goal to enhance  lender productivity through dynamic fraud prevention tools.

So she provided answers to some of the most common questions lenders have on the subject so they can protect themselves better.

1. For  the industry as a whole, how serious should lenders be taking wire  transfer fraud? In other words, how worried should they be?

Gresty:  Wire transfer fraud is the fastest growing real estate cybercrime in  the United States. It’s a prevalent attack that many lenders have  already faced and will in the future. There’s been a 480% increase in  wire fraud complaints filed with the Internet Crime Complaint Center  (IC3) in 2017 over the previous year. Wire transfer fraud proves to be a  pervasive and prolific problem. Lenders should absolutely perform their  due diligence before funding to a new bank account or they risk losing  thousands, maybe millions, of dollars in the blink of an eye.

1. How does wire fraud work?

Gresty:  There are two common scenarios where wire transfer fraud occurs. The  first one occurs between the settlement company and the lender. The  criminal penetrates the settlement agent’s system and, posing as the  settlement agent, sends “new” wiring instructions to the lender. The  second can happen between the seller and the settlement agent. The  criminal spoofs the seller’s email and sends “new” bank account  information to the settlement agent. In both cases, if the counterfeit  wiring instructions aren’t discovered prior to funding, the money will  be transferred to the criminal’s bank account and re-routed. On top of  the lost funds from a fraudulent wire, a victimized lender may have to  contend with other costs, including 100+ hours of investigation time,and  litigation fees.

1. How can you prevent wire transfer fraud?

Gresty:  Having a confirmation process is key. Whether the wire transfer  instructions come from a trusted familiar party or a new party, you need  to verify any new wiring instructions received. For instance, this  verification process can involve verbal communication using a telephone  number that you verified with the other party. While this option is  effective, it can also be time-consuming and resource-draining.  Especially if the recipient party can’t answer your call in a timely  manner. Alternatively, a Commercial Bank Account Verification service  can often provide an instant validation of bank account  ownership and account status to avoid delayed funding. This service  automatically identifies inaccurate input and fraudulent account number  manipulation without the need to wait for anyone to verify manually.

1. What are some red flags of wire transfer fraud that lenders can look out for?

Gresty:  To start, lenders should be wary of last-minute wiring instruction  changes. Additionally, look out if the account holder you’re trying to  confirm with only wants to communicate non-verbally, like via text  message or email. Or if they only make an outbound call to you to verify  the wiring instructions. That is a big red flag. You should be able to  confirm wiring instructions by calling them using that party’s known  phone number, not a phone number on an email or the wiring instructions.

To learn more about how you can prevent wire transfer fraud, click here.