What is wire fraud: How to identify and prevent it

Kfir Yeshayahu

March 04, 2024

  • # Payment Protection
  • # Phishing Protection
  • # Fraud Prevention

Wire fraud uses electronic tactics, like deceptive emails or phone calls, to trick individuals or organizations into unlawfully transferring funds via wire transfer. This type of crime often uses phishing and other social engineering scams, where cyber criminals use fake texts or emails to coerce people into sending money or sharing sensitive banking information that allows the criminal to access their target’s banking accounts.

You may recall the once-popular Nigerian Prince scam — a classic ruse where a fraudster would pose as a prince in a financial bind and promise a large reward in exchange for a smaller upfront payment. While this scam may seem old hat to some, cyber criminals are constantly inventing new gimmicks to trick new populations into sending them money. To protect yourself from present and future wire scams, here’s a guide on what wire fraud is and the risks it carries.

Defining wire fraud

Wire fraud falls under the category of white-collar crime, which is non-violent, financially motivated crime typically committed by individuals, businesses, or government professionals.

For an act to be considered wire fraud, it must involve the electronic exchange of information, data, or messages between individuals or systems with the intent to deceive and gain financial benefits. Electronic exchanges like emails, social media messages, and phone calls are common in wire fraud.

Typical wire fraud acts include telemarketing scams soliciting funds, online investment schemes that trick people into sending money, and credit card fraud that seizes victims’ card details to use illegally. 

Elements of wire fraud

Understanding the broad scope and specific elements of wire fraud can help individuals and businesses recognize and protect themselves from this crime. Here are a few key components:

  1. Intentional deception: The core of wire fraud is the intent to deceive. This means the person committing the fraud deliberately plans to mislead others for personal gain.

  2. Use of electronic communications: Wire fraud involves using electronic means to communicate the fraudulent scheme. These channels include emails, phone calls, and SMS messages — basically, any medium that can transmit information electronically.

  3. A scheme to defraud: The ultimate goal of a wire fraud scam is to trick people into giving the scammer funds. The whole plan could be as simple as sending a phishing email to try and steal banking login information as a means to wire money. Or it can be as elaborate as impersonating someone trustworthy to lure the target into wiring funds to the defrauder.

  4. A victim suffers or is at risk of a loss: For wire fraud to occur, the victim doesn't always have to lose money. The mere fact that the fraudulent act put them at risk of a loss is enough to categorize it as such.

How to prevent wire fraud scams

Knowing how to prevent wire fraud can help safeguard you from potentially devastating financial and reputational impacts. For individuals, falling victim to wire fraud can mean substantial monetary loss and long-term financial insecurity. And for businesses, the consequences can be even more severe, including significant financial losses, legal repercussions, and loss of customer trust.

Here are some comprehensive safety practices you can implement to better protect yourself from wire fraud:

  • Use multi-factor verification for wire transfers: Implement a robust verification process for wire transfers. Make sure each transfer has at least two separate instances of verification — like an SMS code verification and a selfie for biometric authentication. You also want to avoid completing any money transfers based solely on telephone instructions, especially when dealing with vendors or unknown parties.

  • Stick to secure communication methods: Use encrypted email services for business communications, which code all transmissions in transit so only the sender and recipient can read the message. The encryption can help prevent scammers from intercepting your sensitive information.

  • Keep a close eye on your email accounts: Avoid using public domain email accounts (like @gmail.com or @yahoo.com) for conducting business, as hackers target these more frequently than emails from business domains (like @ironvest.com). If you’d like to conceal your email address for added security, use masked emails from IronVest. For added security, use IronVest's masked emails to conceal your real email address. You'll receive emails sent to the masked address at your actual email without ever having to reveal your true contact information to others.

  • Regularly review your financial transactions: Keep a close eye on all your financial transactions. Quick detection of any irregular activity can reduce your risk of significant losses. You also want to check your bank's security features to understand how they monitor transactions and when they send alerts, to ensure their safety practices support you in case of any missed irregularities. 

  • Partake in or promote employee education: Whether you’re an employee or an employer, regular security training should be a part of your digital safety plan. Take all security training seriously, and educate others about recognizing scams and protecting sensitive data.

By implementing these proactive strategies, businesses and individuals can create a strong shield against financial fraud, ensuring better security and peace of mind.

Most common examples of wire fraud

Wire fraud exploits electronic communication to defraud victims, but it can take on many forms. Understanding these common examples can help you identify and avoid such scams:


Phishing is a deceptive practice where scammers send emails or messages imitating legitimate organizations to manipulate the recipient and steal their personal data. These emails often appear genuine and may ask for sensitive information like login credentials or credit card details, but they ultimately put the target at risk of identity theft or financial loss.

Real estate wire fraud

In real estate wire fraud, scammers impersonate real estate professionals or title companies to misdirect funds during property transactions. They often send fraudulent (yet convincing) instructions for wiring down payments or closing costs, leading unsuspecting home buyers or sellers to send money to the criminals instead of their real estate agents.

Telemarketing fraud

Telemarketing fraud involves callers pretending to represent legitimate businesses or charities to deceive people into sending money or personal information. This scam frequently targets vulnerable populations, such as older adults, and can result in substantial financial losses.

The “Nigerian Prince” scam

The Nigerian Prince scam is a well-known fraud where scammers, claiming to be foreign dignitaries, promise victims large sums of money in exchange for a small upfront fee. Victims who pay this fee typically receive nothing in return, and the scammer may continually target them for additional payments.

Penalties for wire fraud

The severity of wire fraud penalty highlights the gravity of this federal crime. These penalties serve as a deterrent and a form of justice for victims:

  • Misdemeanor or felony charges: Someone who commits wire fraud within a state’s borders may face misdemeanor charges, which are offenses punishable by fines, probation, or short jail terms. But if the fraud involves crossing state or national borders through electronic communications — aka interstate and international communications — it escalates to a felony, which can carry a more severe prison sentence.

  • Lengthy prison sentences: Conviction can lead to long prison terms, sometimes decades, particularly in cases involving large sums or especially vulnerable targets. 

  • Fines and restitution to victims: Courts frequently order perpetrators to repay the money they stole. This restitution helps compensate victims and attempts to alleviate their financial damage.

  • Loss of licenses and personal freedom: Beyond fines and imprisonment, individuals may face other legal consequences, including probation and loss of professional licenses. These additional penalties can affect a person's career and personal life.

Wire fraud has no boundaries and can extend far beyond national borders, impacting individuals and businesses globally. Its international nature can sometimes make it difficult to enforce justice without international cooperation, but countries are slowly starting to improve their collaboration efforts to trace and prosecute wire fraudsters.

Prioritizing online safety in the age of wire fraud

As the number and complexity of digital scams continue to grow, individuals and businesses must prioritize their online safety to keep their data and money out of the hands of criminals. Having the right tools in place to safeguard your personal information and prepare you for potential attacks can be the difference between a fulfilled or foiled scam.

To significantly reduce your risks of stolen personal information, consider using IronVest. With its bank-grade security and biometric fraud prevention technology, you’ll be well equipped to fight off any wire fraud or scam attempts. Explore IronVest's offerings to enhance your digital security and gain peace of mind in the face of increasingly sophisticated digital scams.

Get the app

Protect your accounts, data, and payments.