Wire Fraud Prevention
The dramatic and rampant spread of e-mail account scams over the past year has raised concerns over wire fraud for title companies nationwide. The result of these increasingly successful scams partly stems from two types of schemes: Business E-mail Compromise (BEC) and E-mail Account Compromise (EAC). Both of these involve stealing money through fraudulent wire transfer payments. In comparison to other schemes, BEC’s require a greater sense of intrigue and dexterity, because they require tricking someone into making what is actually an unauthorized transfer. These transfers however can partly be considered authorized, in the sense that the transfers, at least on the surface, seem to have the backings of the proper authority.
A typical BEC scam will usually coincide with normal operating hours and for normal amounts. For example, a wire request will come in at 9:00am EST for $150,000.00 and it will appear to be legitimate. The party compromising the victim’s information and e-mail accounts will gain this access by social engineering or computer intrusion techniques. The techniques used for social engineering are called “phishing”, and this involves the use of e-mail messages, website forms, or even phone calls in order to acquire private information. As for computer intrusion techniques, these are the Trojans and worms that different software securities try to protect against. The second stage of the scam is the transmitting of fraudulent transaction instructions. To do this, hackers can either use the victim’s actual e-mail account that they now control, or they can create a fake e-mail account resembling that of the victim’s. The final step is executing the unauthorized transaction. The false instructions direct the wire transfers into an unknown domestic or foreign bank account, and now the criminal has absconded with your money.
The consistent evolution and transformation of these schemes cries out for continuing education. New statistics from the FBI support this sentiment, as they have reported that in 2016 wire fraud scams increased by 480%. Statistics specifically regarding BEC schemes are even more alarming, as there has been an exponential growth of 1,300% of BEC scams since 2015. The amount of money lost as a result of these schemes is not in the millions, but rather in the billions. From February to May of 2016, BEC scams reached $3.1 Billion in lost loot. More recently, from May 2016 through May 2017, in a matter of a year, $5 billion has been lost due to business e-mail compromise scams.
An increased awareness and understanding of these scams will make you better prepared in recognizing them. Here is one suggestion; avoid using free web-based e-mail accounts, and instead establish a company domain name. It is also a good idea to register company domains that are slightly different than the actual company domain.
Another good practice would be to carefully scrutinize all e-mail requests for transfers of funds. Establish a two-step verification process; using the telephone and code words can be a lot more effective and secure than e-mail. Be alert that requests for secrecy, pressure for quick action, or sudden changes in business practices are all causes for alarm. It is also not common for title companies to change their wiring instructions and payment information, so always confirm through a phone call that you are making an accurate change. Finally, considering your best chance for recovering lost funds is if the fraud is detected within 24 hours, it is always a good business practice to verify the receipt of the funds, and confirm the account number and the name on the account.