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Protecting your clients and business from wire fraud

Protecting your clients and business from wire fraud

As a techie with experience in cybersecurity, understanding how things can go wrong and learning to avoid it is very important to me.

As soon as the internet became a thing, scam artists jumped on board. Everything from emails pretending to be wealthy long-lost relatives, people building relationships with another in a foreign country whom they’ve never met, and receiving threats to expose deep dark secrets are communications to keep your eye on.

Financial fraud doesn’t stop at personal interactions, business owners and clients are at huge risk when performing transactions online. As an entrepreneur, real estate, or service-based business owner, chances are you’ve accepted payment through an online source at some point, whether through an e-transfer, PayPal, Stripe, or wire transfer.

If so, this is for you.

There are many ways to commit fraud. The simple act of pretending to be another person is fraudulent, but we’re going to focus specifically on cybersecurity and wire fraud.

Wire fraud is a huge problem that impacts many industries, especially real estate. As of late, wire fraud scams in real estate have increased over 45% from this time last year.

The act of wire fraud often involves pretending to be one party of the transaction. Using real estate as an example, the fraudster may pretend to be the title company, mortgage lender, or attorney involved in the purchase or sale of a property. They are able to interrupt an email server and scan content for words like Contract, Closing Date, or Clear to Close and know that in the near future you’ll be sending your money along.

Click here to check out my client Jenette, the broker and owner of Elite Property Sales, story about how her client narrowly avoided being scammed out of their down payment when buying a new home in Clermont, Florida.

Email accounts from free providers like Gmail, Hotmail, and Yahoo are significantly more susceptible because their accounts run on a single server, rather than having a private server set up for your business domain emails. If a business has an email address like mine hello@hillaryrobert.ca, you can ask if they use a private server to host their emails and if that server is secure. A secure server has an added layer of encryption which makes it more difficult for hackers and fraudsters to intercept and read information off their servers. But keep in mind, it takes two to tango. Your email server must also be secure.

The next step is often the most frightening. A fraudster can clone your email server and send a message that appears to be coming from you or one of your business partners. In real estate, this can include the title representative or lender. Their email will likely have the instructions for payment.

If you typically accept payments through wire transfer, the fraudulent email might include an account or routing number that appears to be local, but in fact is a shell that transfers out of the country. If you accept payments through services like PayPal, the email might include a link to a platform that looks like PayPal but instead sends the money to another account or processes the transaction as payment to another gateway. If you accept payments by credit card through Stripe, Square, or other similar programs, the email might include a link to a fake website where a user would enter their credit card details and be charged by the fraudulent account.

Credit card payments are often the safest way for a consumer to protect their money because companies like Visa and Mastercard have systems in place to reclaim funds and return them to the customer if they’ve been defrauded.

For larger transactions, it’s sometimes not possible to use a credit card, therefore, it is important to make sure you communicate with clients the proper steps to send a wire transfer and what they should look out for to avoid being scammed.

If you suspect someone is trying to commit fraud or scam your business or clients, even if they haven’t made a transfer or incurred a loss, immediately report it to your local FBI field office in the USA or to the RCMP in Canada. Both are working hard to solve this crisis but can’t do it without reports and new information.

 To protect your clients and your business, have a discussion about what your invoicing looks like or how a high-value money transfer should be made. Ask them to contact you upon receiving an invoice, payment instructions, or wire transfer instructions to confirm the information they’ve received is legitimate.

A lot of times, when the money is gone it’s gone forever.

It is our responsibility as business owners and service providers to keep our clients informed and help protect them from the real dangers of financial fraud.