New Twist on an Existing Fraud Scheme
By now we are all familiar with existing cyber fraud schemes involving fraudsters intercepting and manipulating wire instructions in order to divert funds to a fraudulent account. Now there is a new twist to the scheme which occurs after a settlement agent has wired funds to a fraudster's account after receiving fraudulent wire instructions.
Taking things one step further, the fraudster contacts the settlement agent after the fraudulent wire has been sent, often using a spoofed caller identification number, posing as the receiving bank for the wired funds. The fraudster indicates that the funds were sent to an account that has been flagged as being suspicious and assures the settlement agent that the funds will be returned within a few days. This assurance tricks the agent into not contacting the actual receiving bank in order to freeze the funds and provides the fraudster sufficient time to move said funds before being detected.
It is imperative that settlement agents institute and follow protocols that require verification of all disbursement instructions.
- Always perform outgoing call-back procedures utilizing a known, safe telephone number to confirm any instruction received via email.
- Incoming telephone calls are not a substitute, due to the known risk of call spoofing.
- Confirm wire instructions via direct contact with the funds recipient where possible. There have been instances where funds were lost because an agent relied on a call-back made to the recipient's attorney when the email between the recipient and his/her attorney had been compromised.
- In addition, many settlement agents have started requiring in-person, wet signature disbursement instructions presented to them by parties with valid identification.
If you ever have any indication that escrow funds have been misdirected, never rely on an incoming call to provide confirmation or instruction. Instead, you should immediately initiate contact with both the wiring and receiving bank directly.
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