What is Wire Fraud? Common Scams, Penalties & How to Protect Your Business

Wire fraud under federal law (18 U.S.C. § 1343) is when criminals use email, phone, or internet communications to deceive businesses into transferring money or revealing sensitive information. The FBI's 2024 IC3 Report documents $16.6 billion in total cybercrime losses, with an average loss of $19,372 per incident. This guide covers how these schemes target growing companies, the prevention strategies that actually work, and what to do the moment fraud is discovered.

What is wire fraud?

Wire fraud under 18 U.S.C. § 1343 is when someone intentionally uses email, phone calls, or internet communications to defraud a business of money or property. The wire communication doesn't need to contain the fraudulent statement itself, just be part of the scheme. This means virtually any business fraud involving email or phone calls falls under federal jurisdiction.

To convict someone of wire fraud, prosecutors prove four elements: deliberate lies about material facts, specific intent to defraud, use of interstate wire communications, and intent to obtain money or property. Federal jurisdiction applies because wire communications cross state lines. Maximum sentences reach 20 years for standard wire fraud and 30 years when affecting financial institutions, with each separate email or phone call constituting a distinct federal offense.

Wire fraud statistics and impact

The FBI's 2024 IC3 Report documents $2.77 billion in Business Email Compromise losses across 21,442 incidents, representing a significant portion of all cybercrime losses. This concentration indicates attacks target high-value transactions, exactly the type mid-sized businesses process regularly. According to the Federal Reserve's fraud analysis, Business Email Compromise now represents 73% of all reported cyber incidents affecting business accounts.

Mid-sized businesses occupy a dangerous middle ground where they're large enough to process substantial payments but lack the dedicated cybersecurity teams that Fortune 500 companies deploy. The harsh reality is that stolen funds are rarely recovered. Prevention remains the only realistic defense, which is why strong financial controls become mandatory as payment volumes increase.

How wire fraud works

Fraud operations follow a consistent pattern across cases we've tracked. Understanding these phases helps finance teams spot attacks before money moves.

Criminals execute wire fraud through four coordinated steps:

• Target identification and research where attackers identify businesses processing significant wire transfers and research organizational structures through LinkedIn, company websites, and social media, with companies employing 50 to 500 employees making particularly attractive targets
• Email compromise and surveillance where they compromise email accounts through phishing campaigns and malware deployment, then study operations for weeks or months to understand payment workflows and approval processes
• Fraudulent request deployment where they craft convincing fraudulent requests using knowledge gained from compromised accounts, referencing real projects and using familiar terminology timed for when teams are least likely to scrutinize carefully
• Rapid fund movement where once the fraudulent transfer is initiated, criminals move funds rapidly through multiple accounts across different banks and countries, often converting to cryptocurrency within hours to avoid recovery

These phases explain why the FBI's 2024 report shows Business Email Compromise generating billions in losses. Attackers invest time studying their targets before striking.

Common wire fraud scams targeting businesses

These six scams represent the highest-risk patterns for companies managing significant payment volumes, based on what we've observed across finance teams at growing companies.

Business Email Compromise: The $2.77 billion threat

Business Email Compromise occurs when criminals compromise legitimate business email accounts to request unauthorized transfers, redirect payments, or steal employee information. The Federal Reserve's fraud analysis shows this tactic now represents 73% of all cyber incidents affecting business accounts.

Watch for these patterns when processing payment requests:

• Unexpected changes to vendor payment instructions where legitimate vendors rarely change banking information via email without advance notice
• Urgent requests for wire transfers that create artificial pressure to bypass normal verification procedures
• Requests to skip established approval procedures which should trigger immediate verification regardless of apparent sender authority
• Email addresses that closely mimic legitimate ones with subtle variations like replacing letters with numbers or using similar domains

These warning signs appear consistently across successful BEC attacks. Training your team to recognize them creates a human firewall that complements technical controls.

Executive impersonation

Criminals impersonate CEOs or CFOs to request urgent wire transfers for "confidential acquisitions" or emergency payments. They've often compromised legitimate accounts through phishing and malware, allowing them to mimic writing styles and reference actual projects. The pressure comes from apparent executive authority combined with urgency, where employees feel compelled to act fast by someone who appears to be their boss.

Phishing and credential theft

Phishing remains the primary method criminals use to gain initial access and start the Business Email Compromise problem. Employees receive emails appearing to come from IT departments or business partners requesting password resets. The FBI identifies multi-factor authentication as the highest-priority defensive measure, making it essential rather than optional for all businesses processing wire transfers.

Vendor fraud

This occurs two ways: criminals intercept legitimate vendor communications and send fraudulent invoices with altered banking information, or they compromise actual vendor email accounts. Banking changes should always be verified through a phone call to a number from existing records, never using contact information from the email requesting the change. Protecting vendor payment processes requires systems that demand multi-step verification.

Account takeover

Criminals gain direct access to banking portals through compromised credentials, allowing them to initiate wire transfers or change payment instructions directly. Business Email Compromise represents the more prevalent threat, but account takeover attacks target banking systems themselves. Daily bank account reviews become essential for catching these attacks early, which integrates naturally with cash flow forecasting processes.

Real estate wire fraud

Real estate wire fraud occurs when criminals hack email accounts of real estate agents or title companies to send last-minute wire instruction changes just before closing. Commercial real estate transactions and large escrow payments face this risk directly, with attackers timing their intervention for maximum confusion right at the moment when multiple parties expect last-minute communications.

Federal penalties and consequences

Under 18 U.S.C. § 1343, standard wire fraud carries maximum prison sentences of 20 years per count and fines up to $250,000 for individuals. When wire fraud affects financial institutions or involves presidentially declared disasters, maximum sentences increase to 30 years and fines reach $1,000,000. Recent prosecutions show perpetrators receiving 10 to 12 year federal prison sentences for schemes ranging from hundreds of thousands to millions of dollars.

Wire fraud losses are difficult to recover through insurance, with most organizations recovering little to nothing. All businesses sending ACH payments must comply with new NACHA fraud monitoring requirements by March 20, 2026, making strong preventive controls mandatory. When fraud is discovered, notify the cyber insurance carrier immediately and follow the carrier's specific claim procedures.

Red flags and warning signs

In our conversations with finance teams who've caught fraud attempts, these patterns appear most consistently. Recognizing them early gives teams time to verify before authorizing transfers.

• Email address anomalies where fraudulent emails often use addresses with subtle variations invisible without careful inspection, including replacing letters with numbers, using similar domains, or using free email services for business communications
• Unusual urgency where legitimate business transactions rarely require immediate action without normal approval processes, with phrases like "Need this wire sent TODAY" serving as classic fraud indicators
• Requests bypassing normal procedures where executives or vendors suddenly request different payment methods or want payments sent to new accounts "just this once," requiring out-of-band verification
• Pressure for specific payment methods where fraudsters strongly prefer wire transfers because they're fast and difficult to reverse, making requests to switch from checks to wire transfers a verification trigger
• Last-minute instructions where attackers wait until transactions are nearly complete before inserting themselves, with banking information changes arriving right before payment deadlines

Email systems should be configured to add external email warning banners, and staff should verify sender addresses character-by-character when processing payment requests. These warning signs connect directly to the prevention strategies that stop fraud before transfers go out.

Wire fraud prevention strategies

These controls create overlapping layers of protection for businesses processing regular wire transfers. No single control stops all wire fraud attempts, which is why these strategies work together.

Multi-factor authentication: Highest priority

The FBI emphasizes that Business Email Compromise has resulted in billions in losses, making multi-factor authentication essential for all business email accounts. Within 30 days, enable MFA for:

• All executives and senior leadership
• Accounts payable staff and finance team members
• Employees with wire transfer authority
• Anyone with banking portal access

Complete company-wide implementation within 90 days to close access gaps that attackers exploit.

Segregation of duties and dual approval

The same person should never both request and approve wire transfers. For businesses with 50 to 200 employees, dual authorization works well for transfers exceeding $5,000. Companies with 200 to 500 employees should use dual authorization for transfers above $10,000 and three-layer approval for transfers exceeding $50,000.

Additionally, these separations protect against fraud: vendor setup separated from payment approval (the person who adds vendors shouldn't approve payments to those vendors), payment initiation separated from payment approval (one person enters payment details, another reviews and approves), and bank reconciliation separated from payment processing. These controls become mandatory as companies scale and are essential components of financial controls for growing companies.

Wire transfer verification protocols

Out-of-band verification policies can stop Business Email Compromise attacks before they succeed. Every payment request requires verification through a different communication channel than the original request.

Implement these verification requirements:

• Email requests verified by phone using pre-established numbers from your records, never contact information from the suspicious email itself
• Phone requests verified in person through face-to-face meetings or video calls that confirm identity
• All banking changes require dual verification where two different people confirm the change through two different communication methods
• Never send wiring instructions via email because email is inherently insecure for transmitting sensitive financial information

Communicate wiring instructions exclusively through phone calls to verified numbers, secure vendor portals with multi-factor authentication, or encrypted messaging systems. This layered approach prevents attackers from using a single compromised channel to authorize fraudulent transfers.

Vendor verification and management

One designated person should be responsible for vendor master file updates, and this person must not have payment approval authority. This separation prevents fraud by ensuring different people control vendor setup and payment approval.

Required documentation for all new vendors:

• W-9 forms with verified tax identification numbers
• Signed vendor agreements on company letterhead
• Banking information on official vendor letterhead verified through independent phone call
• Quarterly vendor file audits that verify active vendors, check for duplicates, and confirm banking information hasn't changed without proper authorization

When vendors request banking changes, require verification through a phone call to a number from your existing records. Never use contact information from the email requesting the change, as this is a common fraud vector.

Employee training

Conduct mandatory quarterly Business Email Compromise awareness training for all employees with payment authority and finance staff. Training must include:

• Real-world BEC scenarios showing actual attack patterns
• Red flags like unexpected vendor banking changes
• Actual examples of fraudulent emails
• How payment fraud schemes work to empower prevention

Teaching employees how payment fraud happens gives them the context to recognize and report suspicious activity.

Cybersecurity policy and email security

Work with IT providers to enable email authentication protocols including SPF, DKIM, and DMARC. Email systems should flag external messages with warning banners on all messages from outside the organization. For remote work, require virtual private networks in addition to multi-factor authentication to encrypt internet traffic and prevent credential theft on public Wi-Fi.

Daily account reviews and audit trails

Assign a specific person to review all bank accounts daily for:

• Unauthorized wire transfers or unexpected ACH debits
• Check clearing anomalies and unusual transaction patterns
• Account balance discrepancies that signal unauthorized activity

Add alert thresholds with the bank for transactions above normal patterns. Each authorized employee needs maximum daily wire transfer limits, with $25,000 per person per day working well for most growing businesses.

Modern spend management platforms like Ramp automate much of this monitoring by flagging unusual transactions in real time, maintaining complete audit trails, and enforcing approval workflows that prevent unauthorized transfers. These systems track who initiated transactions, who approved them, when they occurred, and what information changed. This automated oversight integrates naturally with payment processing workflows and broader financial controls.

Insurance and backup controls

Cyber insurance coverage should be reviewed to verify wire fraud protection is included and understand the specific requirements for claims. Many policies require specific controls to be in place before coverage applies. Documentation of all security measures, training programs, and incident response procedures strengthens claims if fraud occurs despite preventive measures. For companies managing SaaS spend and vendor relationships across multiple platforms, centralized visibility becomes essential for catching anomalies.

Immediate response: What to do if victimized

Time is everything in wire fraud response. Actions in the first 24 hours determine whether funds can be frozen, though recovery remains extremely unlikely even with immediate action.

The moment fraudulent wire transfers are discovered, take these steps immediately:

• Call your bank's fraud department with the 24/7 number you should have pre-programmed, request an immediate wire recall or reversal with complete transaction details
• Provide the wire transfer reference number and ask the bank to contact the receiving institution immediately
• Contact the receiving bank's fraud department directly to attempt freezing funds before they move
• File a complaint at ic3.gov within 24 hours with complete transaction details, all email communications, and wire transfer reference numbers
• File a local police report to obtain an official police report number required for insurance claims

While pursuing recovery, prevent additional fraud by immediately changing passwords for all email accounts and financial systems. Enable multi-factor authentication if not already set up, and review all email accounts for suspicious forwarding rules. Criminals routinely set up email rules that automatically forward emails to accounts they control, allowing them to monitor communications and plan additional attacks.

Preserve all evidence including emails now recognized as fraudulent, take screenshots of banking transactions and payment confirmations, and save complete email headers showing sender metadata. Contact your cyber insurance carrier immediately with complete documentation and police reports, then follow the carrier's specific claim procedures.

Frequently asked questions

What's the difference between wire fraud and other types of fraud?

Wire fraud specifically involves using electronic communications like email or phone as part of the fraud scheme. It carries federal jurisdiction because these communications cross state lines, which means federal prosecutors can pursue cases with significantly higher penalties than state-level fraud charges.

How quickly do I need to report wire fraud?

Report suspected wire fraud to your bank within minutes of discovery, not hours. Contact the FBI's Internet Crime Complaint Center within 24 hours. The faster you report, the better your chances of freezing funds before they move through multiple accounts.

Can multi-factor authentication really prevent wire fraud?

Multi-factor authentication prevents the account compromises that enable Business Email Compromise attacks. While it won't stop every fraud attempt, it blocks the primary method criminals use to gain access to email systems. The FBI identifies MFA as the highest-priority defense, which is why it's required rather than optional.

What spend management tools help prevent wire fraud?

Modern spend management platforms like Ramp provide real-time visibility into all vendor payments and automate approval workflows that reduce fraud risk. These tools flag unusual payment patterns, require multi-step approvals for large transfers, and maintain complete audit trails that help detect suspicious activity before money leaves your account.