Can Fintech Companies Address Email Wire Fraud Scams?

Protecting consumer funds is the number one priority for established financial institutions, and new Fintech solutions will help reduce the number of fraudulent transactions in the long run. Companies are faced with email wire fraud scams, which force company staff to transfer funds to accounts owned and controlled by internet criminals.

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Email Wire Fraud Scams Are A Big Threat

Impersonating someone else on the Internet is not the hardest thing to do these days, as most people communicate with others they have never seen in real life. Spoofing an email address can let people impersonate just about anyone, including company CEO’s who are allegedly directing their staff to transfer funds.

According to the FBI, close to US$2.3bn in funds has been lost through these scams since October 2013. Although it seems rather strange for executives to email staff about a change in bank accounts, most employees do not question these orders, and chaos ensues. What is even more concerning is how these types of scams seem to take place all over the world and are a direct result of business emails being compromised.

Looking at this from an internet criminal perspective, there is a lot to gain by executing these email wire fraud scams. Sending an email is relatively easy, and there is no loss for doing so. The worst case scenario will lead to no funds being transferred at all, after which the criminals can target the next employee or company. However, hitting the jackpot can be quite a lucrative business, to say the least.

Fintech businesses can help address these issues by coming up with new solutions for businesses to transfer money across accounts. Putting a strong focus on security and authenticating legitimate transfers is a key focal point. Although common sense is the best way to avoid email wire fraud scams in generals, technology can help prevent fraudulent transfers as well.

Some banks have started to use two-factor authentication when completing a wire transfer, which is a concept worth exploring further by Fintech companies. In fact, a feature could be added to these solutions which require the person requesting the transfer to sign off on the transaction as well, as it would be pretty much impossible to spoof that information.

Source: Reuters

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Originally published at Fintechist.