Berks County Bar Association The Berks Barrister Spring 2021 - 22

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TECHNOLOGY
FRANKLY SPEAKING

Theft by e-mail
By Jeffrey A. Franklin

S

cams, known as business e-mail
compromise, cost businesses in Berks
and beyond $2 billion per year.

Your trusted employee comes to your
office with a panicked look. What could
have happened? He describes how the real
estate closing seemed to go normally, but the
wired funds never arrived. Or perhaps your
bookkeeper asks if you got the W-2s you said
were urgently needed late last evening.

Events such as these occur every day in the
United States, and sometimes here in Berks
County. A local computer consulting company
had taken precautions, such installing and
updating security software and patches, and
had trained its employees to be vigilant and
guard against falling prey to scams. However,
when the person responsible for the financial
information for the company received an
e-mail that appeared to come directly from
the boss, that bookkeeper dutifully turned
over the requested W-2 forms, and a treasure
trove of personal information about all the
company's employees. Unfortunately, the boss
had not sent that e-mail and the W-2s were
sent to someone outside the company. When
tax season rolled around, employees received
some bad news after filing their returns.
The Internal Revenue Service notified the
employees that their tax returns had already
been filed and that large refund checks had
been issued to other individuals, who were not
employees of the company.
A bookkeeper at another Berks Countybased company received an e-mail from the
company CEO to transfer about $100,000.00.
A few keystrokes and she was ready to follow
her boss' directions and distribute the money.
But right before hitting send, the bookkeeper
paused and called the CEO just to confirm
his wishes. The CEO indicated he never sent
an e-mail requesting any transfer of company
funds. One brief phone call by the bookkeeper
saved that company $100,000. Money that
likely would never have been recovered.
22 | Berks Barrister

What is Business E-mail Compromise?
Business E-mail Compromise (BEC) (or
more generally, email account compromise
(EAC)) is a scam using e-mail to impersonate
a business executive, employee or other person
with authority to request payments or W-2
information.

How Does It Start?

A BEC scam may start when one
downloads malware by clicking on a link or
attachment in an e-mail from a scammer.

Many times the spoofed e-mail comes
from an address that is very similar to the real
address, such as ceo@abc_company.com might
appear as ceo@abc-company.com.
Most victims report using wire transfers as
a common method of transferring funds for
business purposes. The fraudsters will use the
method most commonly associated with their
victim's normal business practices. The scam
has evolved to include the compromising
of legitimate business e-mail accounts and
requesting Personally Identifiable Information
(PII) or Wage and Tax Statement (W-2)
forms for employees, and may not always be
associated with a request for transfer of funds.
Some criminals will even call to confirm the
e-mail request.

Who Is Being Targeted?

Everyone. The victims of the BEC
scam range from small businesses to large
corporations. The FBI says small and
medium-size organizations, or those with
limited IT resources, are most vulnerable to
BEC scams because of the costs of robust
cyber defense. The victims continue to deal in
a wide variety of goods and services, indicating
that no specific sector is targeted more than
another. The following industries are popular
with the criminals:
*	Legal Services

*	Real Estate (Buyers, Sellers, Realtors,
Title Companies)
*	Third Party Payroll

*	Import/Export

*	Education, Government, and Healthcare

THE NUMBERS

The BEC/EAC scam continues to grow,
evolve, and target small, medium, and large
businesses. The scam has been reported in
all 50 states and in over 131 countries. It
continues to grow.

Based on the financial data, Asian banks
located in China and Hong Kong remain
the primary destinations of fraudulent
funds; however, financial institutions in the
United Kingdom have also been identified as
prominent destinations.

In 2019, the IC3 received 23,775 BEC
complaints with adjusted losses of over $1.7
billion. From 2015 to 2019, IC3 received a
total of 1,707,618 complaints, reporting a loss
of $10.2 billion. The majority of the incidents
and losses were U.S. victims.

SCENARIOS OF BEC

There are several common scenarios by
which this scam is perpetrated.

Scenario 1: Business Working with a Foreign
Supplier

A business that typically has a
longstanding relationship with a supplier
is requested to wire funds for an invoice
payment to an alternate, fraudulent account.
Referred to as the " Bogus Invoice Scheme, "
" Supplier Swindle, " and " Invoice Modification
Scheme. "
Scenario 2: Business Executive Receiving or
Initiating a Request for a Wire Transfer

The e-mail accounts of high-level
business executives may be spoofed or
hacked. A request for a wire transfer from the
compromised account is made to a second
employee within the company who is typically
responsible for processing these requests. This
particular scenario has been referred to as
" CEO Fraud, " " Business Executive Scam, "
" Masquerading, " and " Financial Industry
Wire Frauds. "
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