Unfortunately, fraud is a part of everybody’s life these days. This goes for individuals and businesses. One of the most pervasive and damaging fraud these days is wire fraud because it can be so well camouflaged, and fraudsters can target so many victims at one time. The fraudsters can also operate in foreign countries, making any recovery for victims even more difficult. Fortunately, HR departments can help minimize the frequency of wire fraud and the fallout when it happens for their companies.
What is wire fraud?
Most of us have heard the term wire fraud, but necessarily know what it means. According to US law, 18 U.S. Code section 1343, wire fraud involves:
having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire . . . communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice.
In addition to the federal laws governing wire fraud, states may also have laws that makes wire fraud illegal.
In layman terms, wire fraud involves 1) a scheme by a person or people with the intent 2) of robbing victims of money 3) using any communication 4) asking the victim to transfer money using a bank wire transfer.
Common types of wire fraud
Some common types of wire fraud include:
- Business email compromise
- Phishing attacks
- Advance-fee scams
- Ransomware attacks
- Telemarketing fraud
How wire fraud impact businesses
Businesses are no different than individuals when it comes to wire fraud. In fact, businesses can be a more tempting fraud targets, because the fraudsters can leverage the businesses or their management’s credibility to trap employees and clients in the schemes.
For example, a scammer can get the email addresses from employees of the company and send out an email requesting that employees transfer either business or personal money to a fake business account. Because the email has the business’ or a manager’s name, the employee does not think twice, clicks on the link in the email, enters then necessary financial information, and hits send. And once the employee hits send, neither the company nor the employee may be able to get the money back.
How HR can help prevent wire fraud
Defending against wire fraud requires the involvement of several different business departments including finance and information technology. The HR department also has a role to play.
Strategy
The HR departments roll in wire fraud prevention may include participating in discussions with other departments about the business’ fraud prevention strategy. Part of this may be advocating the company buying business fraud or crime insurance.
Training
They will also be responsible for training employees on how to identify and avoid wire fraud scheme as well as How Tech Tools Catch Wire Fraud and how to use any fraud prevention technology implemented by the company.
Types of technology the company may use that employees may need to understand includes:
- Email tracing software
- Data mining programs
- Call analysis tools
- Forensics kits
Fraud Response Policies
All the training in the world may not prevent employees from getting snared by a wire fraud scheme. Because of that, HR may want to have an established fraud response policy that helps the company and employees mitigate the negative impact of the fraud. Elements of the policy may include:
- Having a designated person responsible for notifying the bank or financial institution from which the money was taken.
- Having a designated person responsible for notifying local and federal authorities.
- Having a designated person responsible for contacting the insurance company responsible for fraud loss policies.
- If money was taken from an employee’s personal bank account, instruct the employee to contact their bank and provide the employee with sufficient time to follow the bank’s instructions.
- Notify the IT department so they can make the necessary changes that will protect the company from ongoing fraud attempts.
- Have investigation procedures in place so that the root cause of the wire fraud can be ascertained so future fraud can be prevented.
- Notify employees of the fraud and provide written reminders about how to prevent future fraud.
Conclusion
It is reasonable to believe that every company will have to face wire fraud at some point, and if not prepared, the damage of a successful fraud scheme may be catastrophic. However, hope is not all lost. With preparation and good planning, companies can significantly reduce the risk one of their employees will fall for fraud. To that extent, HR departments play a critical role in strategizing, planning, and implementing fraud reduction and response policies.
