It is no secret that schemes and scams designed to fraudulently separate you from your money abound. Every day it seems we learn of new and creative ways criminals have devised to defraud innocent people. Sometimes the schemes are brand new, sometimes they are recycled. Whether new or old, however, they can hurt the people who fall prey to them.
Recently, we have learned that banking institutions have seen increased activity surrounding a fraud scheme that has been around for a while. You may be aware of this particular scheme, but we believe it can’t hurt to remind you to be vigilant and use best practices to protect yourself from fraud.
Here’s how the scam plays out.
You receive a fraudulent email or letter disguised as one of your current suppliers. In the communication, the “supplier” informs you that they have recently changed their payment processes or their banking relationship and provides new wiring, ACH or other payment information to be used on all future orders. The communication seems entirely legitimate, so you direct your accounting department to input the changes and your next payment is made accordingly. Unfortunately, the criminals now have your money and it will be withdrawn from the account before you catch on and can get it back.
How you can protect yourself.
ALWAYS double-check directly with your suppliers BEFORE you change any information in your company’s payment system. Make a phone call directly to a trusted contact at your supplier to confirm whether the communication and new payment instructions are legitimate or not. A phone call to a direct contact is better than email. Email can be hacked and/or redirected. A phone call will take only minutes but will provide you with significant protection against scams. It will also signal to your suppliers that you are vigilant and care about your relationship with them.
Long story short: Do NOT make any changes to how you pay your suppliers or vendors until you first confirm with them that the change of payment instruction is legitimate.
Fraudsters often target businesses, trying to steal money or personal information. Make sure your business is taking proper steps to avoid scams. Employee education and cyber security are paramount for defending your business from fraud.
About the Author
Heather J. Macklin is an experienced corporate litigator. She has spent her legal career helping businesses and business owners find practical and economic resolutions to legal disputes. You can learn more about Heather here.