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Wire Fraud

Published: July 2021

According to the FBI, there were more than 450,000 wire fraud complaints in 2019 – and the reported losses were over $3.5 billion. Luckily, knowing what the scams look like and having the right protection in place can put you in a much better position to avoid them or quickly recover.

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What is wire fraud?

Wire fraud is the act of defrauding someone through electronic communication, including by phone or online, according the Legal Information Institute (LII). Examples of wire fraud can range from stealing someone's identity to receiving payment for a bogus service.

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Types of wire fraud

The most widespread examples of wire fraud, says the FBI, are phishing, non-delivery fraud, extortion and personal data breach. Here are the various types of wire fraud scams and how to help protect yourself from each.

Phishing

Phishing occurs when a scammer targets victims through text, email or phone, according to Phishing.org. They pose as legitimate businesses to trick victims into giving them sensitive data, such as banking or credit information, Social Security Numbers or passwords. The FTC says phishing emails may alert you of suspicious activity or payment on your account. The Cybersecurity and Infrastructure Security Agency (CISA) adds that phishing messages may link to a fake website that looks legitimate.

How to protect yourself from phishing

To combat phishing, the FTC recommends doing the following:

  • Use security software on your computer that updates automatically.
  • Allow your cell phone to update automatically to stay on top of new threats.
  • Use multi-factor authentication on your accounts (i.e., a combination of a password and a one-time code).
  • Back up your data onto an external hard drive or the cloud.
CISA also advises setting up a spam filter in your email. Be cautious with email attachments and avoid clicking links.

Non-delivery/non-payment

Non-delivery of merchandise is when an online seller accepts payment without shipping the item, says the FBI. They may try to sell the product again under a different account name.

A non-payment scam is when a buyer scams a seller by having goods sent to them but failing to successfully pay for them.

Interpol states that organized crime rings have developed sophisticated ways of making lots of money from this type of scam. Crime rings may use websites, bank accounts and customer service people to appear legitimate. They've also been known to create fake social media accounts to mimic legitimate businesses in great detail. They include the names of business associates, numbers and emails to further make it look like they're genuine.

How to protect yourself from non-delivery fraud

Interpol advises researching the company or person before you buy anything from them. Look at online reviews and check groups like the Better Business Bureau.

The FBI also recommends seeing if the company has a physical address as opposed to a P.O. box. Check if they have a phone number and see if it's connected. It may be a good idea to avoid sellers who don't offer this information.

Extortion

Extortion is when someone uses threats or violence to get property or money from someone, according to HG.org. Blackmail is a form of extortion. Threats can also include:

  • Causing physical harm
  • Damaging property
  • Exposing a secret
  • Causing someone to give up property
  • Cyberstalking can also lead to extortion or blackmail, says Safe Horizon. Reported cyberstalking has risen over the past decade as an increasing number of people have personal information online (e.g., social media). Online stalkers can use that information to intimidate, harass or make threats.

How to protect yourself from extortion

Look up your information online to help curb extortion, recommends Safe Horizon. This allows you to take control of your online footprint so that it's less accessible to extorters. Change your passwords frequently and don't accept friend or follow requests from people you don't know on social media.

Personal Data Breach

A data breach is typically when private or secure information is accessed and released by hackers, according to the National Institute of Standards and Technology. This may include names, phone numbers, login information or credit or debit card numbers.

Cyber Talk outlines several ways data breaches can happen:

  • Hardware theft
  • Computer viruses
  • Improper handling of sensitive personal information
  • Outdated security measures
  • Cyber attacks
Targets of data breaches range from medical and financial institutions to individuals.

How to protect yourself from data breaches

The US Government reminds consumers to read company privacy policies. Check for privacy statements and learn how organizations protect your information from hackers. Create strong passwords for online accounts and update them frequently. Also, use a VPN when on a public Wi-Fi network, so that anything you send over the network is encrypted.

The Consumer Finance Protection Bureau also recommends checking your bank statements regularly to check for fraudulent charges to your account.

Telemarketing fraud

Telemarketing fraud is any criminal scam done by phone, says LII. Criminals often pose as legitimate businesses to steal credit card information or the victim's identity. Some scams use deceptively friendly or helpful tactics, while others resort to forceful threats, explains the FTC.

How to protect yourself form telemarketing fraud

Knowing what phone scams sound like is critical in protecting yourself from them. The FTC outlines various common schemes, such as claims like:

  • You were selected for a prize: if the prize has a price, says the FTC, then it's not a prize.
  • There's a warrant for your arrest: real law enforcement, federal and immigration agencies won't call you to say you're under arrest.
  • This offer is only available now: legitimate companies will allow you to think offers over and to do research on the offer.
It's also worth noting that if your number is on the National Do Not Call Registry, then any call trying to sell you something is illegal.

Additionally, the FBI offers tips to avoid telemarketing scams:

  • Don't buy goods from companies you don't recognize.
  • Always ask for additional info about the offer or charity.
  • Check unfamiliar companies with the Better Business Bureau.
  • Get the salesperson's name, business ID, phone number and street address.
  • Verify phone numbers given to you.
  • Never give out credit card numbers, bank account info or social security numbers.

Ransomware attacks

>A ransomware attack is when a criminal tricks someone into clicking an email link or attachment to a website, according to the Wall Street Journal. The link installs software that encrypts files on the victim's computer. When the victim tries opening the file, words may be scrambled into gibberish. A message will pop up demanding money to unlock the files. Usually payment needs to be in bitcoin. Requested payment can range from $500 to $1000 – but sometimes even more.

How to protect yourself from a ransomware attack

Consumer Reports says that there are many effective ways to combat ransomware. The following are protective measures you can take.

Back up your computer. Consumer Reports recommends you back up your computer daily and notes that cloud backups might be safer than backing up on an external hard drive.

Beware of email attachments. CISA advises precaution when it comes to email attachments, even from someone you know. Many viruses impersonate email addresses, so make sure it's legit before opening the attachment.

Be cautious of links. Pay close attention to website links and their spelling, explains CISA. Sham website addresses use slight variations in spelling or domain name.

Update your operating system. According to Consumer Reports, updating your Windows PC frequently will help protect it from viruses. This is especially true for older systems.

The FBI also recommends not paying the ransom if you fall victim to an attack. It doesn't guarantee your files will be unlocked. Instead, contact the Internet Crime Complaint Center (IC3), which is a branch of FBI that helps investigators bring attackers to justice.

Mail fraud

The legal definition of wire fraud and mail fraud are similar, according to the Congressional Research Service (CRS). Both describe a scheme to defraud someone else. In this case the scheme is by mail.

Below are a few examples of mail fraud, according to the US Postal Inspection Service.

Employment fraud

People who are looking for work may be the target of check-cashing schemes, fake job offers and pyramid schemes. Fraudsters typically ask for personal information, bank details or money for employment.

According to the US Department of Labor , someone who hasn't made an unemployment claim but gets a debit card or unemployment insurance in the mail is likely the victim of a scam. It means their personal information is being exploited and is likely the result of a cyber-attack.

Telemarketing fraud

Telemarketing fraud is when a scammer attempts to steal money or personal data over the phone. In the context of mail fraud, explains the US Postal Inspection Service, the scam begins with postcards in the mail. It'll have an appealing offer and give a number to call. That's when the phone scam kicks in and seeks to get the victim's personal information.

Financial fraud

This type of scam often involves the promise of a new credit card, a loan advance or a too-good-to-be-true deal on goods or services. Typically, scammers require payment up front.

There's also an element of financial fraud called mass marketing fraud, says Victim Connect. It can involve fake checks, bogus charities, sham lotteries or club invitations. Again, these tactics are used to steal your private information.

Other examples of mail fraud

The Consumer Financial Protection Bureau (CFPB)says mail from psychics or religious figures claiming to change your life could be potential mail fraud. Same goes for prizes, sweepstakes or vacation offers, especially those asking you to send money.

In addition, the US Postal Inspection Service warns about cheap services, fake inheritance letters and notices charging money for the Do Not Call Registry, which is a free service.

What to do if you are the victim of wire fraud

The US Government advises victims of wire fraud to report the scam to their state consumer protection office. If you're a victim who lost money, also contact your local police.

The FTC accepts complaints about most types of wire fraud scams, according to the US Government. Go to the FTC complaint assistant or call them at 1-877-382-4357.

Victims of mail fraud can contact the US Postal Inspection Service through their website or at 1-800-372-8347.

The CFPB also recommends contacting credit reporting companies to put a fraud alert in your credit report.  Knowledge and awareness are critical to protecting you and your family from wire fraud. While no plan is fool proof, there are useful measures you can take.

Your home insurance company might offer identity theft insurance and/or an identity theft protection plan. They can help reimburse you for stolen funds, and restorative coverage can help you rebuild your identity and get back to normal. A protection plan offers preventative measures by monitoring your finances and flagging anything that looks suspicious. Reach out to your insurer to see if these are offered and ask what it covers.

Related Resources:

This content is for informational purposes only and may not be applicable to all situations. Features and coverage options described herein vary by provider. Please refer to your identity protection insurance policy or identity protection plan to review the actual policies for terms, conditions, and exclusions of coverage.

*Allstate Identity Protection is an identity protection service that is serviced and provided by InfoArmor, Inc., a wholly owned subsidiary of The Allstate Corporation. Allstate Identity Protection is not an insurance product. Identity theft insurance covering expense and stolen funds reimbursement provided for in Allstate Identity Protection is underwritten by American Bankers Insurance Company of Florida, an Assurant company. Coverage may not be available in all jurisdictions.
ECC Monitor: OK