Frauds & Scams

Fraud Advisory for Businesses: Corporate Account Takeover

Cyber criminals are targeting the financial accounts of owners and employees of small and medium sized businesses, resulting in significant business disruption and substantial monetary losses due to fraudulent transfers from these accounts. Often these funds may not be recovered. This document explains what is happening and what you can do to protect your business.

Check Fraud

Lately, check fraud schemes have drawn a lot of attention because of both the number of existing scams and the huge financial losses they generate.

An insurance company is getting the word out about such scams as consumers continue to be duped by lucrative offers to make money by depositing checks into their accounts and then wiring a portion of the funds to a third-party account, only to find out that the checks deposited were altered or counterfeit. A Midwestern community bank is dealing with the loss of almost one million dollars from a commercial customer who fell for such a scheme.

The victim has been a long-term customer of the bank. He was contacted by oversees investors to invest in equipment in South Africa. As part of an elaborate international transaction, they claimed that they needed funds to come from the U.S. in order to pay the taxes on the equipment. The victim was informed that he would receive a check and should wire most of the funds to an account in Japan, keeping the remaining balance for his assistance.

Three checks from large American companies were received and deposited, and over $950,000 was wired to Japan in three installments. The checks were returned to the bank by the maker's banks shortly thereafter as having altered payees. The checks had been stolen and altered to reflect the victim as payee. By that time, the money had been wired out of the Japanese bank.

It's important for both retail and commercial customers to remember that if a deal sounds to good to be true, it probably is. Since liability for any bad checks deposited falls on the customer, we can't overstate the need for caution.

The FBI has posted a Fraud Alert which addresses a number of scams with a list of point-blank questions that should be cause for concern anytime you can answer "yes" as you could be involved in fraud or about to be scammed.

• Is the CHECK from an item you sold on the Internet, such as a car, boat, jewelry, etc.?
• Is the amount of the E-CHECK more than the item's selling price?
• Did you receive the CHECK via an overnight delivery service?
• Is the CHECK connected to communicating with someone by e–mail?
• Is the CHECK drawn on a business or individual account that is different from the person buying your item or product?
• Have you been informed that you were the winner of a LOTTERY, such as Canadian, Australian, El Gordo, or El Mundo, that you did not enter?
• Have you been instructed to either "WIRE", "SEND" OR "SHIP" MONEY, as soon as possible, to a large U.S. city or to another country, such as Canada, England, or Nigeria?
• Are you receiving PAY or a COMMISSION for facilitating money transfers through your account?
• Did you respond to an e–mail requesting you to CONFIRM, UPDATE OR PROVIDE your account information?

Lotteries

Foreign or out-of-state lotteries or sweepstakes is an old favorite. Who wouldn't want to believe that they've won a fortune? But if you've "won" a lottery that you did not enter or are asked to pay fees to collect any prize, odds are that it's a scam. Adding insult to injury are the subsequent frauds which dupe victims into paying a fee to someone (usually someone posing as a law enforcement officer) to recover lost money

Phishing

"Phishing" (also called "spoofing") is the act of sending an e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft. The e-mail directs the user to visit a website where they are asked to update personal information, such as passwords and credit card, social security, and bank account numbers, that the legitimate organization already has. The website, however, is bogus and designed only to steal the user's information.

Protect yourself:

• Never share your User ID or password with anyone. A bank representative will never ask you for your password.  Always use a secure payment processor.
• Question suspicious e–mails. We will never send you an e–mail asking for your online ID or PIN.
• To be sure you're on the website you want, type the address in your browser address bar.