Posts Tagged: Bank of America


27
Apr 17

Blind Trust in Email Could Cost You Your Home

The process of buying or selling a home can be extremely stressful and complex, but imagine the stress that would boil up if — at settlement — your money was wired to scammers in another country instead of to the settlement firm or escrow company. Here’s the story about a phishing email that cost a couple their home and left them scrambling for months to recover hundreds of thousands in cash that went missing.

It was late November 2016, and Jon and Dorothy Little were all set to close on a $200,000 home in Hendersonville, North Carolina. Just prior to the closing date on Dec. 2 their realtor sent an email to the Little’s and to the law firm handling the closing, asking the settlement firm for instructions on wiring the money to an escrow account.

The fraudulent wire instructions apparently sent by the hackers via the settlement law firm.

The fraudulent wire instructions apparently sent by the hackers via the settlement law firm.

An attorney with the closing firm responded with wiring instructions as requested, attaching a document that had the law firm’s logo and some bank account information that was represented as the seller’s account number. The Little’s realtor sent the wire on Thursday morning, the day before settlement.

“We went to closing at 1 p.m. on Friday, and after we signed all the papers, we asked the lawyers if we were going to get back the extra money we had sent them, because they hadn’t be able to give us an exact amount in the wiring instructions. At that point they told us they had never gotten the money.”

After some disagreement, both legitimate parties to the transaction agreed that someone’s email had been hacked by the fraudsters, and was used to divert the wired funds to an account the criminals controlled. The hackers had forged a copy of the law firm’s letterhead, and beneath it placed their own Bank of America account information (see screen shot above).

The owner of the Bank of America account appears to have been a willing or unwitting accomplice — also know as a “money mule” — recruited through work-at-home job schemes to receive and forward funds stolen from hacked business accounts. In this case, the money mule wired all but 10 percent of the money (a typical money mule commission) to an account at TD Bank.

Fortunately for the Littles, the FBI succeeded in having the resulting $180,000 wire transfer frozen once it hit the TD Bank account. However, efforts to recover the stolen funds were stymied immediately when the Littles’ credit union refused to give Bank of America a so-called “hold harmless” agreement that the bigger bank wanted as a legal guarantee before agreeing to help.

Charisse Castagnoli, an adjunct professor of law at the John Marshall Law School, said banks have a fiduciary duty to their customers to honor their requests in good faith, and as such they tend to be very nervous legally about colluding with another bank to reverse payment instructions by one of their own customers. The “hold harmless” agreement is usually sought by the bank which received a fraudulent wire transfer, Castagnoli said, and it requires the responding bank to assume any and all liability for costs that the requesting bank may later incur should the owner of account which received the fraudulent wire decide to dispute the payment reversal.

“When it comes to wire fraud cases the banks have to move very quickly because once the wires make it outside the U.S. to foreign banks, the money is usually as good as gone,” Castagnoli said. “The receiver or transferee usually insists on a hold harmless agreement because they’re moving the money on behalf of their own account holder, kind of going against their own client which is a big ‘no-no’ when you’re a fiduciary.”

But in this case, the credit union in which the Littles had invested virtually all of their money for more than 40 years decided it could not in good faith provide that hold harmless agreement, because doing so would stipulate that the credit union affirms the victim (the Littles) hadn’t willingly and knowing initiated the wire, when in fact they had.

“I talked to the wire dept multiple times,” Mr. Little said of the folks at his financial institution, Atlanta, Ga.-based Delta Community Credit Union (DCCU). “They finally put me through to the vice president of loss prevention at the credit union. I’m not sure they even believed all that was going on. They finally came back and told me they couldn’t do it. Their rules would not allow them to send a hold harmless letter because I had asked them to do something and they had done it. They had a big meeting last week with apparently the CEO of the credit union and several other people. Then they called me on Monday again and told me they would not could not do it.” Continue reading →


3
Mar 15

Hospital Sues Bank of America Over Million-Dollar Cyberheist

A public hospital in Washington state is suing Bank of America to recoup some of the losses from a $1.03 million cyberheist that the healthcare organization suffered in 2013.

cascadeIn April 2013, organized cyber thieves broke into the payroll accounts of Chelan County Hospital No. 1 , one of several hospitals managed by the Cascade Medical Center in Leavenworth, Wash. The crooks added to the hospital’s payroll account almost 100 “money mules,” unwitting accomplices who’d been hired to receive and forward money to the perpetrators.

On Thursday, April 19, and then again on April 20, the thieves put through a total of three unauthorized payroll payments (known as automated clearing house or ACH payments), siphoning approximately $1 million from the hospital.

Bank of America was ultimately able to claw back roughly $400,000 of the fraudulent payroll payments. But in a complaint (PDF) filed against the bank, the hospital alleges that an employee on the Chelan County  Treasurer’s staff noticed something amiss the following Monday — April 22, 2013 — and alerted the bank to the suspicious activity.

“Craig Scott, a Bank of America employee, contacted the Chelan County Treasurer’s office later that morning and asked if a pending transfer request of $603,575.00 was authorized,” the complaint reads. “No funds had been transferred at the time of the phone call.  Theresa Pinneo, an employee in the Chelan County Treasurer’s Office, responded immediately that the $603,575.00 transfer request was not authorized. Nonetheless, Bank of America processed the $603,575.00 transfer request and transferred the funds as directed by the hackers.” Continue reading →


25
Feb 14

Card Backlog Extends Pain from Target Breach

Last week’s story about steeply falling prices on credit and debit card data stolen from Target mentioned several reasons why many banks may not have already reissued all of their cards impacted by the breach. But it left out one other key reason: A huge backlog of orders at companies that manufacture credit and debit cards on behalf of financial institutions.

carddominoesTurns out, while the crooks responsible for monetizing the Target breach seem to have had little trouble counterfeiting stolen cards, the process by which banks obtain legitimate replacement cards for their customers is not always quite so speedy.

I recently spoke with a gentleman who heads up security at a small federal credit union, and this individual said his institution ended up printing their own cards in-house after being told by their financial services provider that their order for some 2,000 new customer cards compromised in the Target breach would have to get behind a backlog of more than 2 million existing orders from other banks.

The credit union in question issues Visa-branded cards to its customers, but the actual physical cards are produced by Fiserv, a Brookfield, Wisc. financial services firm that also handles the online banking portals for a huge number of small to mid-sized financial institutions nationwide. In addition to servicing this credit union, Fiserv also prints cards for some of the biggest banks in the world, including Bank of America and Chase.

Shortly after the holidays, the credit union began alerting affected customers, notifying them that the institution would soon be reissuing cards. But when it actually went to place the order for the new cards, the institution was told it would have to get in line.

“They informed us that there was a backlog of 2 million cards, and said basically, ‘We’ll get to you when we get to you’,” the credit union source told KrebsOnSecurity.

Murray Walton, chief risk officer at Fiserv, acknowledged that the company has experienced extraordinarily high demand for new cards in the wake of the Target breach, but that Fiserv is quickly whittling down its existing backlog of orders.

“A large breach injects additional demand into a system that is already operating at near-peak capacity at year-end,” Walton said. “As a result, producers face the challenge of juggling existing contractual commitments with this incremental demand, and turn to mandatory overtime and staff augmentation to get the most out of their equipment and infrastructure.   We believe we are managing this situation as well as possible, and are beginning to see our cycle times (order to delivery) diminish compared to a few weeks ago.  Meanwhile, we note that fraud prevention is a multi-faceted challenge, and card reissue is only one arrow in the quiver.  Alert consumers and behind-the-scenes fraud management programs are also essential.”

Faced with mounting customer service requests from account holders who’d been told to expect new cards, the credit union decided to take matters into its own hands.

“We have the capability to print out the cards ourselves at a local branch, so some of our software developers wrote some scripts to export the customer data and we had two people who ended up burning the midnight oil for several days making these cards by hand.”


30
Apr 13

Wash. Hospital Hit By $1.03 Million Cyberheist

Organized hackers in Ukraine and Russia stole more than $1 million from a public hospital in Washington state earlier this month. The costly cyberheist was carried out with the help of nearly 100 different accomplices in the United States who were hired through work-at-home job scams run by a crime gang that has been fleecing businesses for the past five years.

cascadeLast Friday, The Wenatchatee World broke the news of the heist, which struck Chelan County Public Hospital No. 1, one of several hospitals managed by the Cascade Medical Center in Leavenworth, Wash. The publication said the attack occurred on Apr. 19, and moved an estimated $1.03 million out of the hospital’s payroll account into 96 different bank accounts, mostly at banks in the Midwest and East Coast.

On Wednesday of last week, I began alerting the hospital that it had apparently been breached. Neither the hospital nor the staff at Cascade Medical returned repeated calls. I reached out to the two entities because I’d spoken with two unwitting accomplices who were used in the scam, and who reported helping to launder more than $14,000 siphoned from the hospital’s accounts.

Jesus Contreras, a 31-year-old from San Bernadino, Calif., had been out of work for more than two months when he received an email from a company calling itself Best Inc. and supposedly located in Melbourne, Australia. Best Inc. presented itself as a software development firm, and told Contreras it’d found his resume on Careerbuilders.com. Contreras said the firm told him that he’d qualified for a work-at-home job that involved forwarding payments to software developers who worked for the company’s overseas partners.

Could he start right away? All he needed was a home computer. He could keep eight percent of any transfers he made on behalf of the company. Contreras said he was desperate to find work since he got laid off in February from his previous job, which was doing inventory for an airplane parts company.

Best Inc.

Best Inc. Website

His boss at Best Inc., a woman with a European accent who went by the name Erin Foster, called Contreras and conducted a phone interview in which she asked about his prior experience and work-life balance expectations. In short order, he was hired. His first assignment: To produce a report on the commercial real estate market in Southern California. Contreras said Ms. Foster told him that their employer was thinking of opening up an office in the area.

On Monday, Apr. 22 — shortly after he turned in his research assignment — Contreras received his first (and last) task from his employer: Take the $9,180 just deposited into his account and send nearly equal parts via Western Union and Moneygram to four individuals, two who were located in Russia and the other pair in Ukraine. After the wire fees — which were to come out of his commission — Contreras said he had about $100 left over.

“I’m asking myself how I fell for this because the money seemed too good to be true,” Contreras said. “But we’ve got bills piling up, and my dad has hospital bills. I didn’t have much money in my account, so I figured what did I have to lose? I had no idea I would be a part of something like this.”

A small, but significant part, as it happens. Contreras never got to use any of his meager earnings: His financial institution, Bank of America, froze his account and seized what little funds he had in it.

Meanwhile, the Chelan County treasurer’s office is struggling to claw back the fraudulent transfers. According to press reports, roughly $133,000 of the lost funds have been recovered so far, and it may take at least 30 days to learn how much was actually lost.

Continue reading →


28
Jan 13

Big Bank Mules Target Small Bank Businesses

A $170,000 cyberheist last month against an Illinois nursing home provider starkly illustrates how large financial institutions are being leveraged to target security weaknesses at small to regional banks and credit unions.

I have written about more than 80 organizations that were victims of cyberheists, and a few recurring themes have emerged from nearly all of these breaches. First, a majority of the victim organizations banked at smaller institutions. Second, virtually all of the money mules — willing or unwitting individuals recruited to help launder the stolen funds — used accounts at the top five largest U.S. banks.

The attack on Niles Nursing Inc. provides a textbook example. On Monday, Dec. 17, 2012, computer crooks logged into the company’s online banking accounts using the controller’s credentials and tunneling their connection through his hacked PC. At the beginning of the heist, the miscreants added 11 money mules to Niles’ payroll, sending them automated clearing house (ACH) payments totaling more than $58,000, asking each mule to withdraw their transfers in cash and wire the money to individuals in Ukraine and Russia.

nilesmulespartNiles’ financial institution — Ft. Lauderdale, Fla. based Optimum Bank — evidently saw nothing suspicious about 11 new employees scattered across five states being added to its customer’s payroll overnight. From the bank’s perspective, the user submitting the payroll batch logged in to the account with the proper credentials and with the same PC that was typically used to administer the account. The thieves would put through another two fraudulent payment batches over next two days (the bank blocked the last batch on the 19th).

In total, the attackers appear to have recruited at least two dozen money mules to help haul the stolen loot. All but two of the mules used or opened accounts at four out of five of the nation’s top U.S. banks, including Bank of America, Chase, Citibank, and Wells Fargo. No doubt these institutions together account for a huge percentage of the retail banking accounts in America today, but interviews with mules recruited by this crime gang indicate that they were instructed to open accounts at these institutions if they did not already have them.

ANALYSIS

I’ve spoken at numerous financial industry conferences over the past three years to talk about these cyberheists, and one question I am almost always asked is, “Is it safer for businesses to bank at larger institutions?” This is a tricky question to answer because banking online remains a legally and financially risky affair for any business, regardless of which bank it uses. Businesses do not enjoy the same fraud protections as consumers; if a Trojan lets the bad guys siphon an organization’s online accounts, that victim organization is legally responsible for the loss. The financial institution may decide to reimburse the victim for some or all of the costs of the fraud, but that is entirely up to the bank.

What’s more, it is likely that fewer cyberheists involving customers of Top 5 banks ever see the light of day, principally because the larger banks are in a better financial position to assume responsibility for some or all of the loss (provided, of course, that the victim in return agrees not to sue the bank or disclose the breach publicly).

I prefer to answer the question as if I were a modern cyberthief in charge of selecting targets. The organized crooks behind these attacks blast out tens of millions of booby-trapped emails daily, and undoubtedly have thousands of stolen online banking credentials to use at any one time. There are more than 7,000 financial institutions in the United States…should I choose a target at one of the top 10 banks? These institutions hold a majority of the financial industry’s assets, and they’re accustomed to moving huge sums of money around each day.

On the other hand, their potential for fraud is almost certainly orders of magnitude greater than at smaller institutions. That would suggest that it may be easier for these larger institutions to justify antifraud expenditures. That incentive to enact antifraud protections is even greater because these institutions have huge numbers of retail customers, a channel in which they legally eat the loss from unauthorized account activity.

Continue reading →


5
Sep 12

A Handy Way to Foil ATM Skimmer Scams

I spent several hours this past week watching video footage from hidden cameras that skimmer thieves placed at ATMs to surreptitiously record customers entering their PINs. I was surprised to see that out of the dozens of customers that used the compromised cash machines, only one bothered to take the simple but effective security precaution of covering his hand when entering his 4-digit code.

In February 2011, I wrote about geek gear used in a 2009 ATM skimmer incident at a Bank of America branch in California. The theft devices employed in that foiled attack included a card skimmer that fit over the real card acceptance slot, and a hidden ball camera.

I recently obtained the video footage recorded by that hidden ball camera. The first segment shows the crook installing the skimmer cam at a drive-up ATM early on a Sunday morning. The first customer arrives just seconds after the fraudster drives away, entering his PIN without shielding the keypad and allowing the camera to record his code. Dozens of customers after him would do the same. One of the customers in the video clip below voices a suspicion that something isn’t quite right about the ATM, but he proceeds to enter his PIN and withdraw cash anyhow. A few seconds later, the hidden camera records him reciting the PIN for his ATM card, and asking his passenger to verify the code.

Some readers may thinking, “Wait a minute: Isn’t it more difficult to use both hands when you’re withdrawing cash from a drive-thru ATM while seated in your car?” Maybe. You might think, then, that it would be more common to see regular walk-up ATM users observing this simple security practice. But that’s not what I found after watching 90 minutes of footage from another ATM scam that was recently shared by a law enforcement source. In this attack, the fraudster installed an all-in-one skimmer, and none of the 19 customers caught on camera before the scheme was foiled made any effort to shield the PIN pad.

Continue reading →


2
Nov 10

Your Money or Your Business

New fees levied by financial institutions are likely to push many small businesses into banking online, whether or not they are aware of and prepared for the types of sophisticated cyber attacks that have cost organizations tens of millions of dollars in recent months.

On the way home from the store last week I caught a Public Radio/Marketplace story in which the radio show interviewed a small business owner who was nudged into banking online after discovering a $9.99 fee had been added to her business banking account for the privilege of continuing to receive paper statements each month.

The angle of the story was the unfairness of the new fees, considering the estimated 12 million people in the United States who have no or only slow access to the Internet. In the following snippet from that program, Marketplace’s David Brancaccio interviewed a woman from Northern New Hampshire:

“The bank with her personal account still sends monthly statements printed on paper, through the mail, for free. Old school. But this year, one of her business accounts started charging money for paper statements.

Johnson: That’s right.

Brancaccio: How much?

Johnson: $9.99 a month.

Brancaccio: Really?

Johnson: Yes.

Brancaccio: When did you actually notice?

Johnson: My bank statement, my paper bank statement! is how I found it!

“It’s a growing trend in banking. For instance, Bank of America has something called the E-banking account where paper statements and routine visits to a human teller cost money. It’s now in more than three dozen states. B of A says techno-savvy customers seem fine with online-only in exchange for no minimum cash balances in the account.”

Johnson didn’t say which bank her commercial account was at.  And for its part, BofA’s eBanking plan only applies to consumer accounts, not businesses. But if this type of trend becomes more mainstream among commercial banking customers, more and more small businesses will be pushed into banking online without knowing how to protect themselves from organized cyber thieves that have stolen at least $70 million from small to mid-sized organizations over the last few years.

Continue reading →