Know the Signs of Fraud to Prevent Millions in Losses
Dan Levenson April 12, 2022
DON’T GET SCAMMED – Social Engineering /Deception Fraud is a serious CRIME.
It is commonly perpetrated by IMPOSTERS that contact your clients and intentionally mislead them to divert YOUR INVOICE payments to other bank accounts.
Here are two examples:
- A criminal posing as a company manager or outside vendor sends an email request for a payment by wire transfer. These requests often appear to be legitimate at first glance, but upon closer look, may contain key telltale signs that something is amiss.
- The billing coordinator gets an “urgent” email from the CEO instructing them to wire funds to a new client and promising to provide documentation later in the week. However, the email actually came from a bad actor who is “spoofing” the CEO’s email address to make it appear legitimate.
Signs of Fraud
Social engineering scams can cost businesses millions of dollars annually. But if employees know the signs of potential fraud they can help prevent these losses. Some social engineering to be aware of include:
- Email requests from vendors to wire funds to a new or unfamiliar bank account. Frequently, these accounts are located overseas. The request may include what seems to be a plausible explanation for using the “new” account. For example, the “vendor” may say that the previous account is frozen due to a tax audit. In some cases, additional emails will be sent to direct funds to yet another account before the transfer is made.
- Internal email from a manager, purportedly traveling or on vacation, who requests an e-payment to a vendor not approved by the company. The request justification may appear vague, such as payment for “business development” purposes. Or, the requestor may say they’ll provide supporting documentation for the request upon returning to the office.
- Misspellings, incorrect syntax, or unusual or odd word usage in the transfer request. Social engineering schemes are frequently perpetrated from outside the U.S. by people whose primary language isn’t English.
- Payment rejection by initial account with a new request to wire funds to a different account. This could indicate that the perpetrators are having difficulty lining up an account for withdrawing the funds.
- Requests to wire funds on a Friday, urging payment by close of business. This timing gives the perpetrators two non-business days to remove the transferred funds from the receiving account.
- Requestor instructs the employee to keep the wire transfer a secret from colleagues. They may say it’s for a confidential purpose, like the acquisition of a new subsidiary that hasn’t yet been made public, and assert that disclosing the payment could be a violation of SEC rules.
- Requests for wire transfers to a foreign bank account by a company that doesn’t engage in overseas business.
- Vendor email states new “wire transfer only” policy for payments. There may even be a request to stop payment on a payment check already mailed, and to wire-transfer the funds instead.
Also, be aware that tech savvy criminals may be able to monitor, infiltrate and intercept a company’s email accounts and service. This allows them to track and then mirror a vendor or employee communication style to appear legitimate.
BEFORE WIRING FUNDS, BE VIGILANT
The following steps take only minutes, but could save millions.
- Reach out to the requestor by telephone to verify all facets of the request and confirm the receiving account information.
- Do some research. If it’s an outside company or vendor, find out if anyone else in the company is familiar with the requestor and the history of wire transfer requests.
- Scrutinize the email address. Often, a fraudulent email address will look almostidentical to the real thing. Be on the lookout for small changes, like a missing or altered letter.
- Remind company employees: “When in doubt, check it out!” It’s important to have a culture where employees feel comfortable asking for verification/clarification that a request is legitimate.
Consider Social Engineering Fraud Insurance
Even companies who undergo training and employ strong security practices can be infiltrated. Social engineering coverage is typically added to a crime or cyber liability insurance policy and can provide protection for your business. There are several types of coverage available so it is important to talk with your agent about your company’s needs and risks.
Always train yourself and your employees to spot the signs of fraud and be ever vigilant and ask us about CYBER and CRIME INSURANCE. We can help show you how to protect your company.