The Consumer Fraud Task Force encourages businesses to remain alert to Business Email Compromise (BEC) scams. According to statistics compiled by the Federal Bureau of Investigation, BEC scams are a growing problem, costing companies more than $1 billion in losses in 2016.
The schemes usually involve fake or “spoofed” email instructions that appear to come from high-ranking company officials. The emails instruct employees to wire cash or provide employee payroll or W-2 information. At a recent forum held by the FBI and Secret Service in St. Louis, agents said the schemes can hit businesses of any size.
“Anywhere there is a financial transaction, they are looking to insert themselves,” an FBI agent said of the scammers.
The FBI received nearly 300,000 cybercrime and fraud complaints in 2016. Those complainants reported losses of $1.5 billion, making BEC the No. 1 cause of business losses. Worldwide, losses were estimated at $5 billion, the FBI reported. The fraud was reported in all 50 states and more than 130 countries. FBI statistics show there was a 2,370 percent increase in identified loses between January 2015 and December 2016.
Thieves use publicly available information to research their targets and tailor the fake emails to make it appear they are from company executives. Not wanting to challenge the executives, employees often comply with the requests.
The FBI says the scam may begin when a legitimate user responds to a phishing email. Those emails may contain malicious software that are affixed to an attachment or link in the email. More sophisticated criminals may monitor business communications for extended periods of time in order to understand the businesses’ operating procedures and the communication style of the people they want to impersonate. In addition to email, some criminals have used faxes or phone calls to confirm or follow up on requests to send money.
The Better Business Bureau’s ScamTracker has received more than 300 reports of BEC scams since its February 2015 launch. Losses reported to BBB have been as high as $200,000.
An Atlanta, Ga., business reported losses of nearly $160,000 in May 2016. A company official reported that the business received two requests for wire transfers.
“Email appeared to come from our owner and money was sent,” the business reported.
A Colorado Springs, Colo., business reported a $48,500 loss earlier this year on BBB’s ScamTracker.
“I am a bookkeeper and I received an email from a long-time client asking me to perform a wire transfer for him as he was in a meeting and had limited phone access,” the business reported. “The emails sounded like my client and were written using his kind of wording. The email (address) was his and when I sent him a text, he had no idea what I was talking about.
“His email had been hijacked and he was not receiving any of the replies I had sent. … It is critically important that two-step verification always is done when such requests are received because this email was obviously not enough.”
The FBI suggests the following self-protection strategies:
If your business is victimized by a BEC scam, contact your financial institution immediately upon discovering the fraudulent transfer and ask your financial institution to contact the corresponding financial institution where the transfer was sent. Contact your local FBI office. The FBI, working with the U.S. Department of Treasury Financial Crimes Enforcement Network, may be able to help return or freeze the funds. File a complaint with the FBI at bec.ic3.gov.
If your business is targeted by a BEC scam where W-2 information is being sought but does not fall victim, the business is encouraged to report it to the IRS. The email should be sent to email@example.com with a subject of W2 scam. The scam should also be reported to the FBI at bec.ic3.gov.
The Task Force was founded 15 years ago, holding its first meeting in October 2002. It is a coalition of local, state and federal government agencies and nonprofit business and consumer groups in Missouri and Illinois that work together to protect consumer and donor rights and guard against fraud.
The group has tackled predatory payday loan offers, tax scams, timeshare reselling fraud, credit repair and foreclosure scams, bogus sweepstakes, Internet sweetheart scams, phony grant scams, home remodeling, air duct cleaning schemes and a variety of other issues.
To obtain information, or to report a scam, you may contact members of the Task Force:
Illinois Attorney General – (800) 243-0618; www.illinoisattorneygeneral.gov.
Missouri Attorney General – (800) 392-8222; www.ago.mo.gov.
U.S. Attorney, Eastern District of Missouri – (314) 539-2200; www.usdoj.gov/usao/moe.
U.S. Postal Inspection Service – (877) 876-2455; postalinspectors.uspis.gov.
U.S. Secret Service – (314) 539-2238; www.secretservice.gov.
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