A Layered Approach to Prevent Wire Fraud

Despite increased regulation and enforcement, costly cyber attacks exploiting businesses are on the rise for the fourth year in a row. In fact, the majority of surveyed companies–5,000 businesses of all sizes and industries–experienced an attack according to the 2023 Hilcox Cyber Readiness Report. Fortunately, powerful safeguards do exist to protect businesses from becoming one of the statistics. We’ve compiled this four-part Guide to Fraud Prevention for business leaders taking proactive steps to secure their clients, revenue, and reputations. 

The most effective IT departments will customize their cyber security strategy to the specific kind of data they’re protecting and their unique tech stack, but they all address four fundamental pillars of fraud prevention:

1. Hardware
2. Software
3. Procedure
4. People

Take a look at the big picture in this article, and then deep dive into each strategy. By attending to every pillar in the series, you’ll be layering your protections to serve every cyber crime contingency.

Meeting the Moment

Before you overhaul your fraud prevention strategy, refresh your understanding of the leading motivations and methods scammers use to exploit vulnerable businesses. An effective cyber security strategy succeeds when it is tailored and prioritized according to the current fraud threat landscape.

Mainstream depictions of cyber crime feature shady hooded figures operating on the fringes, aggressively hacking in and draining bank accounts, but social engineering, including business email compromise, is much more prevalent as the tactic of choice for today’s perpetrators. Social engineering involves manipulating humans to voluntarily wire funds to cyber criminals impersonating legitimate businesses, or to divulge sensitive information that can be used to commit wire fraud, like username and password details. In their 2023 Threat Report, Kaspersky catalogs real examples, showing just how convincing social engineering can be.

These cyber criminals operate more subtly, and potentially more insidiously, by effectively mimicking legitimate mainstream business practices. According to the 2023 Data Breach Investigations Report, they frequently act from within companies or in cooperation with staff who, intentionally or not, misuse their login credentials. They also operate at an unprecedented pace and scale thanks to the advent of marketing automation tools, AI and machine learning technology, and similar solutions for accelerating business practices–both good and bad.

Use this four-part guide to armor your business and your clients against the latest in cyber crime and fraud.

Pillar 1: Hardware

Hardware can be a “set it and forget it” investment for entrepreneurs growing their businesses, but the probability of cyberattacks rises as companies expand their staffing and tech stack. Leaders can minimize the risk of an attack by auditing and improving their hardware on pace with the rest of their business.

Start with an advanced perimeter security system like Cisco or Watchguard to keep your enterprise data secure. They include essential components like web content filtering, antivirus scanning, and advanced threat protection for zero-day exploits.
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Next, consider adopting physical devices like YubiKey, which plug into your other hardware and require pin codes or biometrics to grant access. If one of your business devices is lost or stolen, fraudsters still won’t be able to access the data without the YubiKey. You’ll learn more about two-factor authentication software in Pillar 2 of the Guide to Fraud Prevention, but physical keys offer an additional safeguard that, unlike software, isn’t vulnerable to human error.

Statista predicts that the number of active IoT hardware (connected devices like routers and cameras) will exceed 29 billion by 2030. That’s a lot of tech infrastructure to track and upgrade, even if your business tech stack accounts for less than a fraction of those 29 billion tools. Use our full guide to hardware fraud prevention to make sure you’ve covered all the bases.

Pillar 2: Software

Emerging software is revolutionizing the ways we do business, across industries–from AI to automation and from remote collaboration to instant money transfers. Cyber criminals will exploit these same tools for their own ends unless business leaders take action to secure their software against fraud.

The first line of software defense is a respected antivirus solution. One of the bigger antivirus players, Kaspersky, protecting 400 million users annually, reports that they detected an average of 411,000 malicious files every single day in 2023. Even one malicious file can result in a catastrophic data compromise or financial loss and liability. A multi-faceted antivirus solution shields your business from such a relentless threat.

Next, bring mobile device management (MDM) software to the top of your checklist. The accelerating pace of business and the prevalence of remote work means that more employees than ever are logging in and closing deals on their phones. According to Cyber Insiders, 82% of organizations rely on a “Bring Your Own Device,” or BYOD program, enabling staff to use their personal mobile devices to conduct business. Similarly, the overwhelming majority of realtors (94%) prefer to communicate with clients via text message. MDM software protects client and business data, even when communications or transactions take place on personal employee phones.

While MDM and antivirus programs might already be standard practice in your industry, other essentials are not. Platforms such as CertifID, single sign on software, and encryption tools are important considerations for a robust fraud prevention software strategy. Learn more in our full software guide to fraud prevention.

Pillar 3: Procedure

The phrase “fail to plan and you plan to fail” is often repeated for a reason. Businesses that fail to implement security plans, protocols, and procedures in advance of a threat can expect a high risk of cyber attack. Even well-prepared businesses experience cyber crime at escalating rates, but they can fall back on their procedures to recover swiftly and prevent financial losses. 

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Basic procedures include identity verification at every phase and interaction–both physical and virtual. For example, in physical offices, procedures should require all staff, contractors, and guests to show ID proving their identities and their credentials. Staff should register and escort all visitors. Similarly, leverage CertifID software to  verify identities and sensitive data, like banking details, at every stage of a business transaction. The system will do the heavy-lifting and flag anomalies immediately so you can disrupt and report attempted fraud.

Validation procedures have the added benefit of building trust with consumers. They also reduce tedious manual work by automating necessary processes.

Part of systematizing fraud prevention is creating an airtight recovery procedure. By the time the dust settles after wire fraud takes place, it may be too late to salvage funds. Fraudsters divert suspicion with obscure money chains leading to dead ends. If you do identify fraud, you’d need to reverse the transaction quickly to succeed. Having a plan in place could mean the difference between retrieval and total loss.

Align your procedure with the expectations of law enforcement, your banking partners, insurance providers, and legal advisors. If you already adopted CertifID identity verification software from the Guide to Fraud Prevention, you’ll also have access to an experienced ally: a member of the 24/7 fraud recovery team trained by the secret service. Check out more detailed guidance on fraud prevention processes.

Pillar 4: People

Your hardware, software, and procedures are only as secure as the people using them. When it comes to wire fraud prevention, your employees are the first line of defense, but they often represent more than a few weak links in your security chain.  For example, 45% of employees don’t change their passwords, even after a data breach, meaning their employers remain at risk. All staff can do their part to prevent wire fraud by practicing good digital hygiene. Build fraud prevention training into your culture and reward compliance. 

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Similarly, extend the training to your clients. 71% of consumers expect businesses to educate them about fraud prevention. You can do your part to support your clients and protect yourself from liability if a customer falls for a scam.

Lastly, make sure you’ve picked the right people for the job. Whether you outsource IT to a provider or keep it in house, include people skills in your selection criteria so that the IT team can help you build a culture of security to complement the structure.

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Fraud prevention is a rigorous process, but can ultimately pay for itself. Take a deep dive into each cornerstone of cyber security in our full four-part guide to cement and sustain cyber resilience:

1. Hardware
2. Software
3. Procedure
4. People