Wire Fraud Laws – Part III

It’s a crime when you use interstate wire communications (e.g., phone, radio, television, internet) to engage in a scheme to defraud or to obtain money by false pretenses. Wire fraud is one type of cybercrime that takes place by using technology. In most cases, the culprit uses some kind of software or hardware technology to inject him or herself into the private computer network of a third party such as an escrow/title company or financial institution. The culprit spies on the third party’s internal communications to gain access to confidential information such as bank wire instructions.

Wire fraud is similar to mail fraud except that it requires the communications to be transmitted by wire rather than conventional mail. Generally, the plaintiff must prove the existence of a fraudulent scheme, usage of wire, radio, television, or internet communications to further that scheme, and intent to commit fraud. The culprit commits the wire fraud by deceiving the victim into thinking that he or she is dealing with a legitimate party. For example, the culprit intervenes in a pending real estate transaction by using a fake email account and sends a message to instruct the victim into transferring the funds to another bank account. The victim, who has been dealing with multiple individuals (e.g., real estate agent, broker) legitimately believes that he is sending the money to the right financial institution. However, unbeknownst to the victim, the culprit’s fraudulent scheme is intended to send the funds to a different bank or financial institution.

These situations are extremely time sensitive and complicated because the victims have a limited time to determine the facts – i.e., who, what, when, where, and how the wire fraud was committed without their authorization. The victims will need to contact law enforcement agencies and a qualified lawyer who know the intricacies of these matters. The government agencies usually collaborate with the victim’s lawyer to locate and identify the culprits. These government agencies include, but are not limited to, the local police, Federal Bureau of Investigation, United States Secret Service, or United States Treasury Department. Nonetheless, a tremendous amount of time and resources are necessary to initiate and finalize the investigations.

The wire fraud schemes that are used by the culprits utilize a common methodology. These schemes can be accomplished by phishing, vishing, smishing, pharming, spam, internet scams, and telemarketing fraud. They can be accomplished by targeting businesses that work with foreign suppliers or regularly perform wire transfer payments such as real estate brokerage firms, banks, or escrow companies – i.e., Business Email Compromise that’s also known as BEC. These schemes can be accomplished by targeting the individual’s email account via social engineering or computer intrusion – i.e., Email Account Compromise that’s also known as EAC.

The recent statistics show there was a loss of approximately $6.9 billion in real estate fraud last year. There were over 2,300 complaints being sent on a daily basis and more than 552,000 complaints were received per year for the last five years. These numbers are probably going to increase as time progresses. Therefore, it’s important to educate your agents and representatives about the risks. You must include a wire fraud notice in email communications. The experts recommend using a secure platform for electronic communications. You should not send wire instructions by electronic message as it can be intercepted by the culprits. It’s always recommended to independently verify the wire instructions by phone. It’s recommended to confirm the sender email address to make sure it’s not false or fabricated. Moreover, you should always use strong passwords, encryption, and two-factor authentication.

Our law firm can manage a legal action that’s related to mail and wire fraud in state and federal courts. We are ready to assist our clients in matters related to internet, technology, and wire fraud laws. Please contact our law firm to speak with an internet attorney at your earliest convenience.