Wire transfer fraud: Confirm before you wire

Reliance on electronic communication gives hackers an opportunity to redirect funds.

Wire fraud is not a new crime. Many criminals have engaged in this activity in the past and will continue to do so in the future. But wire fraud has taken a new twist in the age of electronic communication.

We have seen hackers spoof emails and send instructions from what appears to be an executive to an administrative assistant or the accounting department with instructions to wire thousands of dollars to a particular account. If the wire is sent, the funds are unlikely to be recovered unless the FBI is notified within a very short period of time. Typically, the financial institution is not liable for the misdirected funds, because its account agreement contains language allowing it to rely on the client’s instructions. On that note, credit unions should review their account agreements with members to ensure they are able to rely upon the instructions given by a member, or that appear to be given by a member.

More recently, hackers have begun injecting themselves into transactions, such as real estate and commercial transactions between sellers and buyers. If a hacker is able to obtain the credentials of a lawyer, real estate agent or company inside—and this is not difficult for those who are adept at phishing and social engineering—then the hacker has access to details about the transaction, such as the parties involved, their email addresses and the property or assets to be sold.

 

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