Do Your Homework to Help Avoid Wire Transfer Scams

Scott was crossing the finish line on his first home purchase. His home inspection was complete; closing funds wired to an out-of-state settlement company; and a final walkthrough that showed his new home to be move-in ready.

Instead of settling into his new home, though, Scott lost more than $55,000 – the victim of a wire scam from a phony settlement company. Scott is fictional, but the scam is real and Scott’s story is one that PNC Bank works to prevent customers from experiencing every day.

Fast, Final & Safer

Dating back to the late 1800s – when they were communicated via telegraph wire – wire transfers are a popular way for consumers to send larger quantities of money to an individual or business recipient. They are popular forms of payments when closing real estate transactions, automotive purchases, legal fees or when sending money internationally.

Better known now as electronic funds transfers, consumers value wire transfers because they are: 

Fast – with funds generally available within hours; 

Final – once funds are deposited into a recipient’s account, they are available for use and cannot be revoked;

Safer – transfers move across a secured network and most often have the human element of fraud prevention analysis acting as a second line of defense.

Analyst Vickie Peck is part of that second line of defense for PNC customers. Peck and her teammates in PNC’s Branch Internal Control perform fraud reviews on all wire transfers initiated in PNC branches. They validate recipients, review account histories and evaluate a transfer’s intended use to determine the risk for fraud. If fraud indicators are uncovered, the team conducts further follow-ups with both the sender and the recipient.

“In the extreme majority of cases there are no red flags to prevent us from proceeding with a transfer,” Peck said. “We’re really looking for that needle-in-the-haystack in order to protect our clients and the bank.”

Rare but Real Threat

Although rare, the instance of wire fraud is not insignificant. Through the end of June, PNC’s Internal Control Group has stopped more than 400 cases of wire fraud and averted more than $12 million in losses to the bank and its clients.

Many instances of fraud originate from a sender or recipient with a compromised email account posing as a trusted business associate in need of money. Known as a Business E-mail Compromise, the growing threat prompted a warning from the Federal Bureau of Investigation in May calling it a “5 Billion Dollar Scam.” Additionally, scammers posing as long lost relatives promising an inheritance, a remote love interest in need of cash or a phony title company can pose a risk to well-intended consumers.

Despite the risks, Peck said that there are simple steps consumers can take before executing a wire transfer to stay safer from scammers:

• Verify that what you’re Paying for is Real – When making a large purchase with wired funds, it’s important to know that the item or real estate exists beyond just a photo on the internet. Confirm in-person or with a trusted third-party that what you’re paying for will really be yours.
   
• Don’t be Rushed into Initiating a Transfer – Because wire transfers are irrevocable, fraudsters are incentivized to make you act quickly. Don’t be rushed by a recipient pushing an urgent or unrealistic deadline.
   
• Know Who You’re Dealing With – In some instances, scammers will spend a lot of time and effort building relationships with victims, just to get a large payout. Make sure the person you’re working with has a legitimate product and is the appropriate person to receive payment.

“This is a tough situation because victims often feel like they do know [the scammer],” Peck said. “It’s a hard conversation to have because in some instances you’re breaking someone’s dream when you tell them that they’re being scammed.”  

• Do not Deal through E-mail Only – If a transfer recipient is unavailable for a phone or in-person meeting, there is a good chance they may not be legitimate. Insist on having a conversation outside of email before transferring funds.
   
• Don’t Allow Yourself to be Coached – If a recipient asks you to send funds to an intermediary or coaches you on how to respond to questioning from a fraud prevention analyst, there is a chance they may have something to hide.

“These people are good at what they do because they’ve built a full time job from scamming people out of their money” Peck said. “If your interactions don’t feel right, do more research to make sure you’re dealing with a legitimate person.”

By taking a few extra steps, consumers can enjoy the fast and secure delivery that electronic transfers offer – and prevent the fictional Scott’s plight, from becoming a personal reality.

For more information, visit our Security & Privacy Center »