The Impact of Wire Fraud on Businesses and How to Prevent It

Introduction

Wire fraud is a global business threat affecting many businesses within our markets. According to the FBI’s Internet Crime Complaint Center (IC3), losses tied to cybercrime have climbed sharply, jumping from $10.3 billion in 2022 to $16.6 billion in 2024. Wire fraud plays a big role in that increase. These scams lean on urgency and trust. Someone receives what looks like a routine request and acts before they think twice. By the time the mistake is identified, the money is usually long gone.

Now that so much business happens through email, apps, and online systems, scammers have more places to hide. They slip into payment workflows, fake messages, and everyday communication. In this piece, we explain how wire fraud actually happens and share steps that can help keep it from happening to your company.

What Is Wire Fraud?

Wire fraud happens when someone uses electronic communication — email, phone, text, or any internet-based channel — to trick a person or business into sending money under false pretenses. Wire fraud thrives in email-driven environments and virtual platforms where hackers easily interfere with communication between individuals transferring money electronically. Scammers especially like wire transfers because the money moves fast, and once it’s sent, it’s almost impossible to pull back. However, wire fraud is not limited to wire transfers — it is increasingly occurring with ACH payments as well. It is important to handle ALL banking details with caution.

The Tactics Scammers Rely on Most

Business Email Compromise (BEC): The scammer pretends to be an executive or vendor and sends what looks like a routine request. The employee thinks it is legit and sends the money to the scammer’s account.
Vendor Impersonation: Attackers send fake invoices or request changes to banking details. This usually happens after a criminal gets into someone’s email through a phishing scheme.
Phishing and Malware: Attackers steal credentials or install malicious software via deceptive emails.
Deepfake Scams: AI-generated audio or video is used to impersonate executives during virtual meetings.
CEO Fraud: A scammer pretends to be a senior leader and asks for a quick payment or a change to banking details.

The Scope of the Threat

Wire fraud is pervasive across all industries. In a 2024 Core Bank survey, 90% of U.S. companies said they’d been targeted by cyber fraud, and 63% had dealt with at least one wire-transfer scam. While large corporations often attract a lot of attention from scammers, small and mid-sized businesses take the biggest hit because they don’t have the same resources to fight back and usually have weaker controls. Scammers tend to focus on large-money moments — real estate closings, legal settlements, things that move quickly and involve a lot of trust.

Consequences Beyond Financial Loss

The damage from wire fraud doesn’t stop with the lost money. It can ripple through almost every part of a business.

Damage to your Reputation: Clients and partners may lose trust in your ability to safeguard sensitive data.
Impact on Operations: Once a wire fraud incident hits, normal operations get pushed to the side. The investigation eats up time, energy, and attention.
Legal and Regulatory Exposure: And then there’s the legal side of things. You could find yourself facing a claim or hearing from regulators because of rules like General Data Protection Regulation (GDPR), Sarbanes-Oxley, or certain state privacy requirements.

Why Wire Fraud Works

There are a few reasons these scams continue to succeed, even inside well-run organizations.

Speed and Irreversibility: Wire payments are fast and final. Unlike an ACH payment, there’s no built-in pause that lets you catch a mistake.
Human Error: Red flags get overlooked all the time — usually because the person feels pressure to act quickly or doesn’t realize anything is wrong.
Advanced Deception: Fraudsters use spoofed domains, social engineering, and deepfake technology to manipulate targets.
Remote Work Risks: Virtual environments reduce face-to-face verification, increasing vulnerability.

LBMC’s Recommendations for Preventing and Detecting Wire Fraud

Implement Payee Validation Procedures

Requests for wire transfers, set up of ACH information for new vendors, or change of ACH banking information for existing vendors should require phone validation of the payee using a known contact person at the requesting company using a verified phone number obtained from official sources. Also consider the following:

Often the best person to validate the contact of the payee is the requestor who has developed a relationship with the payee.
If no relationship exists, Companies should use the website of the payee to identify a general phone number of the payee and make contact.
Never use the phone numbers listed on invoices or in email threads as those are easily spoofed and increases the risk that bank instructions are validated directly with those committing the fraud.
Document the validation process, including date, person contacted, phone number used, and method of verification.
Once the wire has been sent, the responsible party should ask for the requestor to confirm the payment has been received by the intended payee.

Put Wire Transfer Protocols in Place

ACHs should be preferred for electronic funds transfers unless a same day wire is necessary. The need for wire transfers to new payees should be communicated to the responsible party as early as possible. If adequate advance notice did not occur, Company’s should delay the wire transfer to ensure proper validation procedures.
The final decision to release a wire should be made by the party responsible for electronic payments. This may include opting to send multiple transfers with the first being an immaterial amount to test that the validation of bank instructions was successful. Once a wire has been sent, the responsible party should ask for the requestor to confirm the payment has been received by the intended payee in every case.
Require systematic segregation of duties whereby the person initiating the wire transfer cannot approve the wire transfer. This is a feature that most financial institutions offer. Otherwise, work with your financial institution that wire transfers should be confirmed by the financial institution via phone with a designated individual that is different from the person initiating the wire transfer.

Implement ACH Setup and Change Controls

The setup or change of existing ACH banking information should be validated by someone other than the person entering the information to ensure accuracy.
Prior to initiating payment processing, run a vendor change report to identify any changed banking information since the prior payment. Confirm that all changes were validated by someone other than the person entering the information to ensure accuracy.
After setup or change of existing ACH banking information, consider sending a transfer of an immaterial amount to test that the validation of bank instructions was successful. A responsible party should then ask for the requestor to confirm the payment has been received by the intended payee.
Consider using third party payment processing platforms where vendors can update banking information through a secure portal rather than email.

Provide Email & Phishing Awareness Training

Provide email and phishing awareness training to All Employees that covers the following:

1. Check the Sender’s Email Address Carefully

Fraudsters often use email addresses that look almost identical to legitimate ones (e.g., john.doe@companny.com vs. john.doe@company.com).
Try hovering over the sender’s name to see the real email address. It’s an easy way to spot if something doesn’t match.

2. Look for Urgency or Pressure

Scammers like to create urgency. You might see phrases like “urgent wire transfer needed” or “payment must be made today.”
If someone is trying to get you to ignore the normal process, pause before responding.

3. Pay Attention to Language and Tone

If an email doesn’t sound like the person who supposedly sent it, slow down. Maybe it feels too formal, oddly casual, or just “not how they usually write.” That’s often your first sign that something isn’t right.
Poor grammar or spelling mistakes are common in spoofing attempts.

4. Be Wary of External Email Tags

Many companies tag emails from outside the organization (e.g., “[External]”) in the subject line. That tag is there for a reason; this is a clue to be extra cautious.
If an email has an external tag, but the message looks like it came from a coworker, slow down and double-check it through another channel before responding or clicking on any attachments or links.

5. Don’t Click Suspicious Links or Open Unexpected Attachments

A link might take you to a fake login page or download malicious malware.
An attachment you weren’t expecting could easily hide malware or ransomware, and if it feels even a little strange, it’s best not to open it.

6. Report Suspicious Emails Immediately

If a message seems strange or just makes you uneasy, speak up. It’s far safer to ask than to assume everything is fine.
Most IT or security teams already have an easy way to flag questionable emails, and they’d rather look at too many than hear about one after it’s caused trouble.

Other controls suggested

Segregation of Duties: Separate roles for initiating, approving, and executing transactions.
Dual Authorization for big payments: Require at least two people to sign off on high-value transfers or changes to banking details.
Multi-Factor Authentication (MFA): Protect access to financial systems and email accounts.
Use Secure Communication Channels: Use encrypted or protected platforms for sharing financial details and avoid sending payment instructions through free email accounts.
Perform Regular Audits: A quick daily review of cash outflows or changes on vendor accounts can catch unusual activity early. Scheduled audits add another layer of reassurance and help confirm all changes were properly approved.

What you Should Do If Your Company Becomes a Victim of Wire Fraud

Freeze affected accounts right away.
Reach out to your bank and law enforcement.
Communicate internally and externally.
Conduct forensic investigations and update controls.

How LBMC Can Help You Navigate Wire Fraud

LBMC offers comprehensive services to help businesses prevent, detect, and respond to wire fraud:

Internal Audit Services: Independent assessments to strengthen financial controls.
Cybersecurity & IT Assurance: Penetration testing, risk assessments, and compliance audits (e.g., PCI, HIPAA, HITRUST).
Fraud Risk Consulting: Design and enforce controls like dual authorization and segregation of duties.
Technology Solutions: Secure system design, implementation, and managed IT services to support fraud prevention.

This article was contributed by Katie Maxwell, Manager in LBMC’s Audit practice, based in our Nashville office. You can reach Katie at katie.maxwell@lbmc.com to discuss how our team can support your organization.