Database examples

Wire fraud: definition, examples, comparison

  • Electronic fraud is the use of electronic communications with the intent to commit financial fraud.
  • Although wire fraud encompasses minor crimes like phishing emails, it is often linked to larger white-collar crimes like investment fraud or money laundering schemes.
  • Electronic fraud describes the method of fraudulent activity, while bank fraud describes the target of the fraud.

No, you don’t have a long-lost uncle who wants to bequeath his immense fortune to you before he dies. There is no wealthy tycoon who lost his passport while traveling and needs your help to get back home. And no, a royal family member in a foreign country isn’t counting on you to get their fortune out of the country.

Often when we think of email fraud our mind jumps to these low level email scams. But wire fraud often plays a role in larger financial crimes.

What is Electronic Fraud?

Wire fraud is the use of electronic communication, whether social media, telephone, email, or even fax, across state lines with the intent to deceive to make a profit.

Wire fraud is a federal crime that can carry a maximum prison sentence of 20 years in addition to fines. “Penalties can be quite severe,” says Eric Young, senior managing director at Guidepost Solutions. The penalties escalate because each act of wire fraud – each separate email or phone call – is a separate act of wire fraud.

The statute of limitations for wire fraud is generally five years, unless the wire fraud was associated with a financial institution, in which case prosecutors have 10 years to bring a lawsuit against the defendant. Young says cases involving financial institutions have a longer statute of limitations because those investigations often involve money laundering, terrorism or other financial crimes and often take longer. In addition, prosecutors could also impose penalties on these financial institutions for failing to implement precautions for this type of fraud, such as know-your-customer (KYC) standards.

What is a wire fraud conspiracy?

If two or more people come together with the intent to use electronic communication for a criminal purpose, this is classified as a conspiracy to commit electronic fraud. An actual act of wire fraud does not necessarily need to be committed to be convicted of wire fraud, only clear intent to commit fraud is all a prosecutor needs.

Types of Electronic Fraud

Even apart from these larger operations, wire fraud attempts against individuals can be extremely damaging. A 2021 Ponemon study found that in 2021, large US corporations would lose a total of $15 million to


Phishing

attacks each year. 92,000 seniors over the age of 60 reported losses of $1.7 billion to the Internet Crime Complaint Center in 2021.

Here are some of the common scams to watch out for:

Advance Scams: Often referred to as the Nigerian prince scams due to the number of these fraudulent emails mentioning Nigerian royalty, advance scams usually come in the form of an email with a fantastic story, maybe that a wealthy tycoon has had his passport and phone stolen or maybe a Nigerian prince is trying to get his wealth out of the country.

The story doesn’t matter. What matters is that they need your help and they are ready to pay you for it, provided that you first transfer money to them, an advance of costs. The fees can be high, but the scammer *ahem* the wealthy businessman assures you that it’s nothing compared to what they’ll give you to help them.

Phishing: Instead of stealing money from you, phishing emails trick you into giving private information to these scammers. This may take the form of an email notifying you that your online banking account password has expired with a link to update it. They include a link to a convincingly designed website that asks you to enter your username and old password. They now have what they need to connect to your bank.

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

Hiring scams: These scams target people looking for a job. Scammers often reach out to their victims with high-paying roles on hiring platforms such as LinkedIn. These scams may try to steal applicants’ personal information such as birthdays or social security numbers. Others operate as an up-front scam, asking applicants to send money for a vague processing fee.

Learning from these common scams, it’s important to refrain from disclosing private information, including your social security number, credit card number, or date of birth. Also, if someone you know asks for information, make sure the person you think you’re talking to is on the other end of the conversation. This is especially important if someone asks you to transfer money, as it is extremely difficult to undo such transactions once they are complete.

What is the difference between bank fraud and electronic fraud?

While electronic fraud describes the method of fraud, bank fraud describes the target of fraud. During bank fraud, a fraudster may also come across a charge of wire fraud, as in the money laundering case we discussed.