In 2019, a subsidiary of Toyota lost $37M to a wire transfer scam. The financial executive who sent the unauthorized transfer sure would have liked to know how to reverse wire transfers — but it was too late. Can you recall wire transfers? The short answer is no in most cases. The more nuanced answer is in this article.
The good news? Trustpair blocks fraudulent wire transfers by continuously controlling payments before they’re executed, eradicating your risk of financial fraud. Contact an expert to learn more!
Can you get wire transfers back?
Overall, your chances of getting your bank to reverse wire transfers are pretty low. They are electronic fund transfers, and the way they work makes it hard to cancel them.
If the funds have already been accepted by the receiving bank (if the money is already in their bank accounts), then it’s impossible to retrieve the money sent by the sender.
That’s actually what makes wire transfer fraud so dangerous. By the time you realize you’ve been a victim of bank transfer fraud, it’s usually too late. Scammers have received the money, transferred it to another account, and disappeared.
Falling victim to phishing, pharming, or CEO fraud unfortunately doesn’t qualify for reversing a wire transfer. However, there are some circumstances under which you might get lucky.
In what situations can a wire transfer be reversed?
When it comes to reversing wire transfer, there are two scenarios:
If your bank made an error
If your financial institution made an error when processing the wire transfer you sent, then you have a chance of getting your funds back. Wire transfer reversal can happen under these circumstances:
- Your bank sent your wire transfer twice, in which case you’ll get the duplicate back.
- They sent more money than you intended to send. For instance, they sent $100.000 instead of $10.000. Since it’s their fault, you’ll get the difference back.
- They sent it to the wrong recipient. If the bank account information wasn’t correctly processed by the financial institutions involved, it’s their responsibility to correct their mistake.
If you made a mistake
On the other hand, if you’re the one who made a mistake, it’s very unlikely you’ll be able to retrieve your money.
In the UK, a man lost about $200K from his father’s inheritance because of one wrong digit in the recipient’s bank account number.
The bank first refused to give him the funds back — only offering him $30 in compensation while the erroneous payee was doing withdrawals. It’s only when he sued them and the case picked up some publicity months later that the bank turned around and he was able to retrieve the funds.
While that story has a good ending, it shows how tedious it can be to reverse wire transfers when you’ve made a mistake. In the case of corporations, you probably wouldn’t want to go public about it, further reducing your leverage.
Here are some cases in which you can ask your bank to reverse wire transfer:
- Errors: just like the case above, you can always ask your or the other financial institutions to reverse the transfer. Chances are slim, but often it’s your only recourse.
- Fraudulent transaction: if you can prove it was a fraudulent transfer (and you catch it in time), your bank might be able to help you recover the funds lost through fraud if the clearing process hasn’t been finalized already. Bank intervention is what saved Matel from losing millions when they fell victim to CEO fraud.
- The recipient cooperates: if you’re lucky, the person you wrongly sent the money to might be willing to send them back. However, doing the “right thing” isn’t a trait fraudsters are known for. In case of corporate fraud, don’t count on it.
It’s worth noting that the same rules apply to Automated Clearing House (ACH) transfers.
What to do to reverse a wire transfer?
If you need to reverse wire transfers, here’s the step-by-step process to follow:
- Contact your bank ASAP: explain the situation clearly and ask them to immediately take action to block the transfer. Know that if it’s already been received by the recipient, your chances are very low. But you can still ask them what your recourse is.
- Gather evidence: from phishing email to the transit number (or your transaction’s reference number), make sure you provide all relevant details. This can include electronic communications like emails, screenshots of text messages, etc.
- Sit tight. The process of wire transfer reversal can take some time. Correspondent banks have to establish communications and grasp the full extent of situation amidst a sea of bureaucratic and legal regulations.
Can a wire transfer ever be canceled or disputed?
Traditional wire transfers through banks — which are electronic funds transfers — can very rarely be retrieved. If the funds have already arrived in the recipient’s account, then you can’t cancel or dispute it.
Ultimately, retrieving money sent via wire transfer is a race against time. With the current push towards instant payment methods and mobile banking, sending money has never been so easy. Funds are deposited within 10 seconds or less, making this race very hard to win. For bank-to-bank transfers, the funds transfer can be even quicker.
If you use a money transfer service like Transferwise, Western Union, or Moneygram to send remittance, you legally have 30 minutes to call back your transfer of funds if the recipient hasn’t done a withdrawal.
Note that the outgoing transfer fees for an international bank account can be much higher. That’s especially the case if you want it received the same day. It’s worth comparing with the wire transfer fees at your local bank, especially to send money in a foreign currency as they’ll charge you on top of the exchange rate.
In the case of B2B payment fraud, fraudsters will likely clear out their account the same day they receive the transfer, making it impossible to get your funds back. If they’ve given false information to their bank and proceeded to close their account, then they become untrackable.
How to avoid erroneous or fraudulent wire transfers?
Preventing mistakes in electronic bank transfers
Since reversing wire transfers (and ACH transfers) is almost impossible, you need to make 100% sure that the ones you send are correct.
Here are some good practices that you and your financial team must follow to lower your risks of financial losses:
- Double-check all information. When sending any type of electronic funds, verify every piece of information twice. It is tedious, but it’s worth the effort to safeguard your company. Ideally, you want to ask two different people to check the same information — applying the 4-eye principle makes it less likely for an erroneous transaction to go through.
- Contact the recipient. If you’re not fully convinced that the details provided are correct, up-to-date, or even legit: get in touch with the account holder using the contact information in your database. That’ll ensure you’re not falling victim to vendor fraud, where criminals impersonate your suppliers and send you fraudulent bank account information under false pretenses.
- Trust your instincts. If you’re thinking something is odd, it probably is. Whether it’s a fraudulent attempt or just a mistake, it’s better not to risk transferring funds to the wrong IBAN number. Ask your manager or a colleague for their opinion — or even better yet, involve your IT security team.
Of course, in the case of elaborate fraud schemes, these protections aren’t enough to ensure your bank transfers are done securely.
Preventing fraud with Trustpair
Using fraud detection and protection software like Trustpair is the best measure against fraud. Trustpair automatically and continuously checks your suppliers’ bank details (including their SWIFT code) through automated account validation before wiring money — even if it’s a recurring payment.
This protects you against international wire transfer scams as well as those initiated domestically. This could be invoice fraud, whaling attacks, spear phishing, and other types of fraud.
Our access to databases internationally means we can quickly find otherwise hard-to-verify information. Cybercriminals take advantage of businesses with overseas merchants to commit social engineering fraud via bank transfers internationally.
Our solution uses AI and machine learning to recognize and stop fraudulent attempts before local or international wire transfers are sent. We use three-way matching to check:
- The bank account numbers are correct.
- The name and address on the account are correct.
- Both elements match.
With Trustpair, you can rest easy knowing that no wrong or fraudulent online money transfer can go through, regardless of your payment method. Learn more about implementing the right fraud prevention solution for your business in our dedicated guidebook!
- Wire transfers can only be reversed under specific circumstances, and while the money hasn’t been received by the beneficiary.
- Ensuring you wire funds to the correct account is paramount. Trustpair is an anti-fraud software that ensures you always send money to the right person.