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Wire fraud is a serious criminal offense that uses electronic or interstate communications methods to defraud someone out of money or property. It's a broad category encompassing various forms of deceit and scams conducted over phone lines, the internet, or other forms of electronic communication.
Wire fraud hinges on the intent to defraud and the use of electronic communications. It can be a standalone charge or linked with other criminal activities like identity theft or phishing schemes. Given its nature, wire fraud is often complex and can span across state and even international borders.
How does wire fraud work?
The process typically involves the perpetrator sending false statements or deceptive information electronically to trick victims into sending money or revealing sensitive information. These schemes can vary significantly in their complexity and the methods used. Common examples include:
- Email Phishing: Sending emails that appear to be from legitimate sources, asking for personal or financial information.
- Advance Fee Fraud: Convincing someone to pay a fee upfront for a service or reward that never materializes.
- Business Email Compromise: Hacking or spoofing a business email account to instruct employees to transfer funds or sensitive information.
- Online Auction and Retail Scams: Posting fake listings for products or services online, collecting payment without delivering the promised goods.
Wire fraud is a federal crime in the United States, carrying severe penalties, including hefty fines and significant prison time, especially if the fraud leads to substantial financial loss or affects many victims. Individual perpetrators face fines of up to $250,000 and up to 20 years in prison, while organizations may pay fines of up to $500,000. In exceptional cases, where wire fraud is related to a state of emergency declared by the president or targets a financial institution, penalties include a prison sentence of up to 30 years and monetary penalties of up to $1 million.
Similarly, the statute of limitations for wire fraud crimes is five years unless the target is a financial institution. Then, the statute of limitation is 10 years.
What does wire fraud look like in action?
In practice, wire fraud often involves a convincing story or an urgent request that seems real. For example, an email from what appears to be a trusted source, such as a bank or a well-known company, might ask someone to transfer funds to an account quickly. In reality, these are deceptive tactics to extract money or information.
A person responsible for vendor management at a company might receive an email appearing to be from a new vendor stating that their banking details have changed. The email seems legitimate and even uses the correct sender email address, but the sender is actually a fraudster. The vendor desk updates the vendor’s banking information to ensure that the next invoice is paid to the correct account. However, when the company wires the money to the updated account, it is instead sending money to a bad actor, leaving the actual vendor without payment.
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Everything you need to know about the payment rails that power the world’s economy, from ACH and wires to RTP, FedNow, and more.
ACH credits and debits are two kinds of ACH transactions. Whereas a credit involves depositing, or “pushing,” funds into a bank account, for a debit, funds are withdrawn, or “pulled,” from an account.
The two kinds of financial institutions in the ACH network are ODFIs (Originating Depository Financial Institution) and RDFIs (Receiving Depository Financial Institutions).
US companies moving money internationally will likely weigh the pros and cons of SWIFT vs. Global ACH when it comes to attributes like speed and cost.
The Clearing House (TCH) is a banking association and payments company owned by 20 of the world’s largest commercial banks.
For business-to-business (B2B) companies, embedded payments integrate payment processing directly into software platforms
ACH (Automated Clearing House) is a payment processing network that facilitates electronic transfers between banks in the United States. It enables automated electronic debiting and crediting of checking and savings accounts. ACH payments work by batching transactions together, which are then processed at scheduled daily intervals.
A return is a credit or debit entry initiated by the Receiving Depository Financial Institution (RDFI) that returns a previously originated payment to the Originating Depository Financial Institution (ODFI).
ACH return codes identify the reason an ACH payment was returned by the recipient's bank. They make it easier to spot and resolve payment failures.
An ACH reversal refers to an erroneous ACH payment that a payment originator requests to take back, or reverse.
Payment rails are the underlying systems and networks that facilitate the movement of funds between parties in financial transactions.
Pix is Brazil’s instant payment platform that launched on November 16, 2020. Created and managed by the Central Bank of Brazil, Pix enables fast payments and transfers at any time, year-round.
A Standard Entry Class or SEC code is a three letter code that describes how a payment was authorized by the consumer or business receiving an ACH transaction.
A SWIFT code, also known as a SWIFT ID or Bank Identifier Code (BIC), is a unique 8-11 character code assigned to a bank for SWIFT wire transfers.
SWIFT payments or international wires are global payments made through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.
ACH (Automated Clearing House) is a payment processing network that’s used to send money electronically between banks and financial institutions in the United States.
The Clearing House Interbank Payments System, or CHIPS is the largest private sector USD clearing system for wire transfers.
Electronic check presentment (ECP) is the process of electronically submitting a check to a bank for payment.
An electronic funds transfer (EFT), also known as a direct deposit, is the digital transfer of money between bank accounts. As digital transfers, they reduce the need for manual input and paper documents.
FedACH is the automated clearing house (ACH) service of the Federal Reserve Banks.
Part of the FedACH system, FedGlobal ACH offers low-cost and efficient cross-border ACH payments.
FedNow is a new payment rail that enables faster bank payments for financial institutions of any size, in any community, 365 days of the year.
Fedwire Funds Services, commonly known as Fedwire, is a real-time gross settlement transfer system that allows participating financial institutions to send and receive same-day fund transfers.
Fiat money is a form of currency issued by a government and declared legal tender, though not backed by a commodity.
Global ACH can help companies move money from US-domiciled accounts across borders using local rails. Learn how and when to use this payment rail.
The National Electronic Funds Transfer (NEFT) is a centralized payment system that facilitates transfers between certain bank accounts across India.
The National Automated Clearing House Association (Nacha) is responsible for overseeing the Automated Clearing House (ACH) Network, which is used to send money electronically between banks throughout the United States.
RTP (Real-Time Payments) is a payment processing network used to send money electronically between banks in the United States. It transfers funds between two bank accounts instantaneously and is available year round.
A Request for Payment (RFP) is an ACH Network message that can be used by businesses to send electronic invoices to their customers.
Same-Day ACH is an improvement to the ACH network that allows the processing of credit, debit, and return transactions several times a day.
Wire fraud is a serious criminal offense that uses electronic or interstate communications methods to defraud someone out of money or property.
A take rate refers to the fees online marketplaces (such as Amazon or eBay) or third-party service providers (such as PayPal) collect for enabling third-party transactions.
A wire transfer is an electronic payment made through a global network, allowing for fast, irreversible, foreign or domestic electronic money transfers.
ACH APIs enable companies with high transaction volumes to write software that automates payments over the ACH network.
An ACH credit refers to the process of electronically depositing, or “pushing,” funds into a bank account using ACH.
In an ACH debit, funds are electronically withdrawn, or “pulled,” from a bank account using ACH.
A Notification of Change (NOC) is used to notify the sender of an ACH payment to correct or change information related to a customer’s bank account.
A pre note or prenotification is a zero dollar payment to validate the account and routing details of a bank account before debiting or crediting it.
An International ACH Transfer—also known as Global ACH—is an ACH payment made cross-border from a US-domiciled account.
The issuer identification number (IIN) is the first eight or nine digits on a payment card tied to the financial institution that issued the card.
Originally known as Bankers’ Automated Clearing System (BACS), BACS Payment Schemes Limited clears and settles direct debit, BACS direct credit, and current account switch service in the United Kingdom.
The Bulk Electronic Clearing System (BECS) is a streamlined electronic payment method used to process low-value, bulk transactions in Australia and New Zealand.
The Faster Payments Service (FPS) is a banking service in the United Kingdom. The FPS was instituted in order to reduce payment times between accounts held by different customers.
The Single Euro Payments Area (SEPA) is a system of payment schemas that standardizes cashless transactions in euros.
Unified Payments Interface (UPI) is a real-time payments system for mobile applications designed and launched by the National Payments Corporation of India.