The news of the Luxury Passover Getaway being canceled last minute and leaving many without arrangements for the holiday spread like wildfire. Here the hotel canceled the contract claiming payment wasn’t received, while at the same time the Program Managers had clear proof that they sent the wire transfer with the funds. What gives?
Social Engineering is a type of fraud that tricks people into giving confidential information or taking actions that are harmful to themselves or their organization, like sending a money wire to a fraudulent recipient. This will not be covered by a standard cyber policy, unless you have added ‘social engineering’ coverage.
Our client, let’s call him Joel* shared another story. Joel was in contract to purchase real estate for his company. His lawyer sent him an email with instructions for wiring the $30,000 deposit, which he promptly sent. It was days later, when the lawyer reached out for the money that he realized something was amiss. Unfortunately, Someone else walked off with the money!
The lawyer had no idea that his emails had been hacked. Nor did he know that the scammer was monitoring the email negotiations of the deal for a long time, waiting for the right opportunity. Once Joel and his lawyer finalized via email how much money Joel has to pay, the scammer sent an email with wiring instructions from an email address very similar to the lawyers.
A third story, a client got an email from a vendor requesting to set up ACH payments. They did that and paid 4 open bills immediately. A week later when paying the fifth bill, the bank notified them that the 5th payment was returned due to the account being closed. Confused, they contacted the vendor who said that they didn’t get any money at all. Checking again, they realized they were scammed.
The email with the ACH instructions came from an email that looked the same but had an “l" instead of the “i" in the domain. Nobody realized until it was too late.
All 3 incidents happened now in April! It’s heartbreaking to watch money landing in the hands of people who dupe others for a living.
Some things you can do to protect your $$$$:
Call to verify the routing and account number before setting up any new ACH or wire transfer. Don’t use the phone number that’s on the email with the wiring instructions!
Train your employees Employees are often the ones who are responsible for processing payments, managing customer accounts, and handling other sensitive tasks. It is crucial that they should be able to identify and know to report any signs of fraud.
Get Covered Coverage for social engineering scams can give you a peace of mind knowing that if you are scammed you will be able to face the world and your funds will be covered.
Keep in mind, many cyber insurance policies do not cover social engineering scams by default. We urge you to check your policy for an endorsement covering losses caused by scams.
Be proactive! If you do not have cyber insurance, now is the time to get it!
Click here to request a cyber quote that includes coverage for Social Engineering scams!
Have questions about insurance for your business? We are here to help! Contact us today and we will be happy to assist.
-Adler’s Insurance