Posts Tagged: BEC


18
Jan 16

Firm Sues Cyber Insurer Over $480K Loss

A Texas manufacturing firm is suing its cyber insurance provider for refusing to cover a $480,000 loss following an email scam that impersonated the firm’s chief executive.

athookAt issue is a cyber insurance policy issued to Houston-based Ameriforge Group Inc. (doing business as “AFGlobal Corp.“) by Federal Insurance Co., a division of insurance giant Chubb Group. AFGlobal maintains that the policy it held provided coverage for both computer fraud and funds transfer fraud, but that the insurer nevertheless denied a claim filed in May 2014 after scammers impersonating AFGlobal’s CEO convinced the company’s accountant to wire $480,000 to a bank in China.

According to documents filed with the U.S. District Court in Harris County, Texas, the policy covered up to $3 million, with a $100,000 deductible. The documents indicate that from May 21, 2014 to May 27, 2014, AFGlobal’s director of accounting received a series of emails from someone claiming to be Gean Stalcup, the CEO of AFGlobal.

“Glen, I have assigned you to manage file T521,” the phony message to the accounting director Glen Wurm allegedly read. “This is a strictly confidential financial operation, to which takes priority over other tasks. Have you already been contacted by Steven Shapiro (attorney from KPMG)? This is very sensitive, so please only communicate with me through this email, in order for us not to infringe SEC regulations. Please do no speak with anyone by email or phone regarding this. Regards, Gean Stalcup.”

Roughly 30 minutes later, Mr. Wurm said he was contacted via phone and email by Mr. Shapiro stating that due diligence fees associated with the China acquisition in the amount of $480,000 were needed. AFGlobal claims a Mr. Shapiro followed up via email with wiring instructions.

After wiring the funds as requested — sending the funds to an account at the Agricultural Bank of China — Mr. Wurm said he received no further correspondence from the imposter until May 27, 2014, when the imposter acknowledged receipt of the $480,000 and asked Wurm to wire an additional $18 million. Wurm said he became suspicious after that request, and alerted the officers of the company to his suspicions.

According to the plaintiff, “the imposter seemed to know the normal procedures of the company and also that Gean Stalcup had a long-standing, very personal and familiar relationship with Mr. Wurm — sufficient enough that Mr. Wurm would not question a request from the CEO.”

The company said it attempted to recover the $480,000 wire from its bank, but that the money was already gone by the 27th, with the imposters zeroing out and closing the recipient account shortly after the transfer was completed on May 21.

In a letter sent by Chubb to the plaintiff, the insurance firm said it was denying the claim because the scam, known alternatively as “business email compromise” (BEC) and CEO fraud, did not involve the forgery of a financial instrument as required by the policy. Continue reading →


27
Aug 15

FBI: $1.2B Lost to Business Email Scams

The FBI today warned about a significant spike in victims and dollar losses stemming from an increasingly common scam in which crooks spoof communications from executives at the victim firm in a bid to initiate unauthorized international wire transfers. According to the FBI, thieves stole nearly $750 million in such scams from more than 7,000 victim companies in the U.S. between October 2013 and August 2015.

athook

In January 2015, the FBI released stats showing that between Oct. 1, 2013 and Dec. 1, 2014, some 1,198 companies lost a total of $179 million in so-called business e-mail compromise (BEC) scams, also known as “CEO fraud.” The latest figures show a marked 270 percent increase in identified victims and exposed losses. Taking into account international victims, the losses from BEC scams total more than $1.2 billion, the FBI said.

“The scam has been reported in all 50 states and in 79 countries,” the FBI’s alert notes. “Fraudulent transfers have been reported going to 72 countries; however, the majority of the transfers are going to Asian banks located within China and Hong Kong.”

CEO fraud usually begins with the thieves either phishing an executive and gaining access to that individual’s inbox, or emailing employees from a look-alike domain name that is one or two letters off from the target company’s true domain name. For example, if the target company’s domain was “example.com” the thieves might register “examp1e.com” (substituting the letter “L” for the numeral 1) or “example.co,” and send messages from that domain.

Unlike traditional phishing scams, spoofed emails used in CEO fraud schemes are unlikely to set off spam traps, because these are targeted phishing scams that are not mass e-mailed. Also, the crooks behind them take the time to understand the target organization’s relationships, activities, interests and travel and/or purchasing plans.

They do this by scraping employee email addresses and other information from the target’s Web site to help make the missives more convincing. In the case where executives or employees have their inboxes compromised by the thieves, the crooks will scour the victim’s email correspondence for certain words that might reveal whether the company routinely deals with wire transfers — searching for messages with key words like “invoice,” “deposit” and “president.”

On the surface, business email compromise scams may seem unsophisticated relative to moneymaking schemes that involve complex malicious software, such as Dyre and ZeuS. But in many ways, the BEC attack is more versatile and adept at sidestepping basic security strategies used by banks and their customers to minimize risks associated with account takeovers. In traditional phishing scams, the attackers interact with the victim’s bank directly, but in the BEC scam the crooks trick the victim into doing that for them. Continue reading →