What Is Wire Fraud (2024)

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• Wire fraud is the use of electronic communication with the intent to commit financial fraud.
• Wire fraud includes smaller crimes like phishing emails and larger crimes like money laundering.
• Wire fraud describes the method of fraudulent activity, while bank fraud describes the target of fraud.

No, you don't have a long-lost uncle who wants to bequeath to you his immense fortune before he passes away. A wealthy business magnate didn't lose their passport in a foreign country and doesn't need your help to get home. A member of the royal family in a foreign country isn't counting on you to sneak his fortune out of the country.

Often when we think about wire fraud, our mind jumps to these low-level email scams trying to cheat you out of money. However, fraudsters can also target your financial information and even your identity. Knowing how to spot wire fraud can reduce the risk of identity theft.

What is wire fraud?

Wire fraud is the use of electronic communication across state lines to deceive and make a profit. Communication can take place through a wide variety of methods, anything from social media to fax. Phishing emails are a common form of wire fraud.

Wire fraud is a federal crime that can land someone in prison for a maximum 20-year sentence in addition to fines. "The penalties can be quite severe," says Eric Young, senior managing director at Guidepost Solutions. The penalties compound as each act of wire fraud — each separate email or each phone call — constitutes a separate count of wire fraud.

The statute of limitations on wire fraud is typically five years unless the wire fraud was associated with a financial institution, in which case prosecutors have 10 years to bring legal proceedings to the defendant. Young says that cases involving financial institutions have a greater statute of limitations because these investigations often involve money laundering, terrorism, or other financial crimes and often take longer. Additionally, prosecutors might also bring penalties to those financial institutions for failing to implement precautions for these kinds of fraud such as know-your-customer (KYC) standards.

Types of wire fraud

Scammers have a wide variety of tactics to ensnare their victims and continue to develop new tricks all the time. Here are some of the common scams to look out for:

Advance-fee scams: Often referred to as the Nigerian prince scams because of how many of these scam emails mention Nigerian royalty, advance-fee scams usually come in the form of an email with some fantastical story, maybe some rich tycoon had their passport and phone stolen or a Nigerian prince is trying to sneak their wealth out of the country.

The backstory doesn't matter. What matters is they need your help, and they're willing to pay you for it, as long as you wire them an advanced fee first. They might ask for a large initial sum, but the scammer *ahem* the wealthy businessman assures you that's nothing compared to what they'll give you for helping them out.

Phishing: Instead of stealing money from you outright, phishing emails bait you into giving private information to these scammers. This is also known as a social engineering attack.

Phishing may come in the form of an email that notifies you that your online bank account password has expired with a link to update it. They include a link to a convincingly designed website that asks you to plug in your username and old password. Now they have what they need to log into your bank.

There's a wide variety of phishing scams that can get very advanced. It's best to refrain from clicking on any links or downloading any software you receive in these emails.

Hiring scams: These scams target people looking for jobs. Scammers often reach out to their victims with high-paying roles on hiring platforms such as LinkedIn. These scams can try and steal personal information from applicants such as birthdays or Social Security numbers. Others operate like an advance-fee scam, asking applicants to send money for vague processing fees.

Some telltale signs of a hiring scam include unrealistically high salaries, obscure companies, and a complex onboarding process.

How to avoid wire transfer fraud

Even separate from these larger operations, wire fraud attempts made against individuals can be incredibly damaging. The Federal Trade Commission received 2.6 million fraud reports in 2023, with a $500 median loss. Imposter scams alone cost consumers nearly $2.7 billion.

As a general cybersecurity rule, refrain from giving out any private information online, including your Social Security number, credit card number, and birthday. That said, there are more specific ways you can prevent fraud.

If a friend or family member is asking for your personal information, ensure you're actually talking to that person by establishing several points of contact. For example, if a family member is messaging you over Facebook for personal information, call or text their phone number to ensure their Facebook account hasn't been hacked.

Fraudsters may also send a phishing email posing as a business you're already associated with, such as your energy provider or bank. Before clicking on any links within the email, double-check their email address to ensure it's correct.

If you're concerned about potential scams, it may be worth your time to subscribe to an identity theft protection service. These companies monitor your personal information and alert you of any breaches to your identity. You can find our guide on the best identity theft protection services here.

Wire fraud FAQs