CLAIMS WAR STORIES: Wire Transfer ScamsAlison Cave
OAMIC’s Claims War Stories series shares tales from the trenches about real life scenarios we encounter as we defend Oklahoma attorneys in legal malpractice suits.
Lately, we’ve had a series of insureds who have called us because they have fallen victim to a wire transfer scam. Read below to learn about the most common scenario we see, what you should look for to prevent becoming a victim, and coverage information.
Attorneys are an easy target for wire transfer scams because they often wire money to or on behalf of their clients. These scams are sophisticated and all the ones we’ve seen at OAMIC originate from a foreign country.
The example that comes to mind most recently was a scammer that posed as an architect. The attorney received an email from the scammer that said, “Hi, I’m Mr. [Architect]. I just finished a project at [Oklahoma building] and now I’m doing some work for Mr. and Mrs. Jones in Nichols Hills. For some reason, they haven’t paid my bill. I would like for you to collect my bill for me. I will give you a retainer before you get started.”
From there, the scammer will send you a fraudulent cashier’s check for the retainer that is bigger than the amount of money you’re supposed to collect. However, before the check has been identified as fraudulent or you can even contact Mr. and Mrs. Jones about paying their bill, the scammer will ask for the money to be wired back to him ASAP because they made a “deal” with Mr. and Mrs. Jones. When you wire it back to them, since their check was fraudulent, you have effectively sent them your own money.
RISK MANAGEMENT TIPS
In order to prevent situations like this from happening, follow these tips:
- Verify the architect’s identity before you even respond. The scammer will use the name of a real architect who has done work in Oklahoma to make the email seem more credible. However, you should ideally have a procedure in place that includes dual forms of authentication for situations like these. In this example, the contact information in the email was fake/fraudulent. A Google search for the firm’s website would reveal the correct/authentic contact information.
- If you do accept the business before suspecting fraud, pay attention to the amount of the cashier’s check. If it’s more than the amount their client owes, it’s likely something suspicious is going on.
IS IT COVERED?
Unfortunately, wire transfer scams are not usually covered under a cyber liability policy. Cyber liability most often only covers cyber events, which are discoverable events like computer hacking or a data breach. Wire transfer scams are considered social engineering, not cyber events, because the victim willingly gives the information after being deceived or manipulated by another individual.
If you have any additional questions about wire transfer scams, please contact us.