Common Cents

Don’t Lose your Life’s Savings with the Click of a Button.

Preventing Wire Fraud by Jennifer Hudson

Unfortunately, wire fraud is becoming more and more prevalent in our world.  And yes, even in industries that are predominately cash based.

It’s unfortunate that we even need to have this discussion today, but in instances regarding your financial safety… I would rather be safe than sorry.

Recently, I heard a story from someone and thought I would take this chance to share some common-sense ideas we have to prevent this tragedy from happening again.

If you have bought or sold a company or bought or really made any major purchase lately, then you likely transferred funds with the use of an electronic wire transfer.

As the world turns to wire transfers more and more, there is a new scam that is taking place and costing some people their life savings.

What is the scam? How does it work?

Well, let’s say that you are going to purchase a cannabis company.  You work through the purchase contract with your attorney and then get an escrow account set-up and opened, so that everyone can wire their funds safely through this account.

Right after the account is opened, usually the person responsible for setting up the account sends out wire instructions to you by email.  This could be a third party or even an attorney’s office who handles the funds.

Now, enter the hacker.

The hacker knows a lot of their clients send money online.  They have been spying on this escrow company and watching their emails come and go for a while now without being detected.  Once they see instructions were emailed to you to transfer your whole savings account with the click of a button… that is when they go to work.

See, the hacker has been watching and reading your emails from behind the scenes.  Now that the has time come, they get ready to pounce.

Before you actually send your wire from the bank, they will email over an emergency email with a change in instructions.  The email looks legit, since it actually came from the escrow account that you are using.  The people’s names are still the same.  Nothing looks like it has changed.

Either way, you don’t give even a second thought to this change and you head to the bank to send your wire.  Everything at the bank seems to be ok too.  The account numbers were real, they hand you a confirmation for your transfer, and you head on back home thinking you are that much closer to owning your new company and getting to work.

Then, a little bit later the escrow company asks if you were going to send the wire. 

What?  That can’t be right.  You already sent it.  They must not be looking at something correctly.

After a lot of frustration and panic, you go back and get your confirmation and instructions for account you sent all your money too.

Only, that account was the scam.

See, the hackers changed the instructions on you last minute, hoping you wouldn’t notice.  It’s hectic at the end of a transaction.  There is a lot of shuffling of paperwork and waiting for documents to record.  People are always in a hurry to transfer money, because it means something big is happening.  They were counting that you wouldn’t double check anything with real living people since you would be in a rush.

But, by now your money is long gone.  The bank can’t call the wire back, it’s already been transferred to the hacker.  For all you know, that hacker just bought their new private jet.

Do we need to be afraid of wire transfers and never use them?

Of course not!

There is a very simple solution.

Want to know what this small basic precaution is that could prevent you from losing your life’s savings?

Send a test wire.

It’s that simple.

Instead of wiring $100,000 at once, send $10. 

Then, check to make sure the escrow company received your $10 before sending the rest.

This will require a little pre-planning, so you aren’t waiting until the last possible moment.

Make sure to think ahead.

Will you pay two separate wire fees from your bank?

Yeah, you will.  No way around that that I can see.

Is that an extra and unnecessary cost?

That depends.  I don’t think I’d call it unnecessary.

I promise you that second wire fee will sound a lot more affordable if your $10 ends up in the wrong account of some hacker.  Think of the pain and suffering that small additional fee could save you if it ends up in the wrong hands!

Unfortunately, thousands and thousands of people would probably give anything to be able to send that test wire instead of losing it all with the click of a button.

Next time you want to send a wire, just send a test first.  Once you know the account is the right one, then you are off and running and will be able to do some real business moving forward.

Personally, I would rather by safe than sorry.  How about you?

Heck, you could have just saved a million dollars.  

You’re welcome.

Common Cents Rules.

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