Cape BBB: Email scams abound at Christmastime

The email looked legitimate.

One day back in September, the financial controller of a local company received what she thought was an email from the company's vacationing president.

It started with a simple, "Hi, are you in?" and displayed the CEO's name in the email's "from" line. To the controller, the email appeared to be from her boss because that was the way he began many of his messages.

However, the sender was an internet scammer, someone posing as the company president as part of email scam.

She replied "Yes," and a few minutes later received another email from the impostor.

"OK," it said. "I need you to process a wire transfer payment. Can I send the bank details? Let me know."

The controller complied with the request and wired more than $22,500 to a bank in New York later that day.

Subsequent emails requested additional transfers to different banks, totaling nearly $60,000. The controller executed the transfers, but this time the banks flagged the transactions as "suspicious" and stopped the transfers before they could be completed.

The company, which has not been publicly identified, contacted the FBI, which investigates tens of thousands of email scams against American businesses every year. At last report, the company has not recovered the $22,500 from the original wire transfer, and no arrests have been made.

A growing crime

Business email compromise, also known as BEC, is among the fastest-growing forms of crime against businesses, regardless of their size, according to Whitney Quick, regional director of the Better Business Bureau in Cape Girardeau.

Whitney Quick

"From 2017 to 2018, the number of reported BEC scams reported to the BBB jumped from over 15,000 to more than 20,000 complaints," she said.

Last year, email scams cost U.S. businesses $1.3 billion. In the first five months of 2019, there were more than 10,000 cases of BEC in America resulting in $750 million in losses. At that rate, email scams this year will have cost U.S. businesses between $1.5 billion and $2 billion by the end of this month.

According to a recent report about business email compromise scams published by the Better Business Bureau, there are at least six types of BEC fraud activity recognized by the FBI:

• Someone posing as a company CEO who directs the CFO to wire money to someone.
• Fake vendors or suppliers asking that invoice payments be made to their bank accounts.
• Fraudulent tax representatives requesting copies of employee tax information such as W-2 forms.
• Impostor real estate agents, title companies or lawyers who direct proceeds from home sales or other real estate transactions into a new account.
• Scammers posing as employees who ask to have their pay deposited into a new bank account.
• Counterfeit clergy or charities asking recipients to buy gift cards on their behalf.

Quick said virtually all of the email scams originate overseas in places such as Ghana and Eastern Europe. Far and away, though, most scammers appear to be in the African nation of Nigeria.

"It's happening all over the world, but most of it is coming from there," she said. "Nigeria has a long tradition of consumer fraud and has a great deal of political corruption, which may help shield fraud operators."

There are several things businesses can -- and should -- do to help protect themselves from email scams, Quick said.

"Basically, what we tell people is to make sure everything on their computer system is up to date, that they have a good security system on their computers and they train their employees about this," she said.

One of the reasons the scam worked on the Cape Girardeau business was the scammer knew, by reading emails, the owner would be out of town. The scammer also became familiar with how the company president wrote his messages.

"The owner frequently started his emails with 'Are you available?' or 'Are you at your desk?' so the scammer's email looked very familiar," Quick said.

She said the Better Business Bureau has seen quite a bit of invoice fraud,too. Invoice fraud, she explained, happens when a business pays an invoice for goods or services it has not received. "These invoices often look legitimate and people will pay them not thinking twice about it," she said.

Charity scams

In addition to internet and email-based business scams, Quick said this is the time of year when "charity scams" are on the rise as people make end-of-year charity donations.

"Anytime you're making donations online, you can go to give.org or bbb.org and look up various charities," Quick said. "You can also look up the 990 forms for various charities that will tell you where the money goes and how much of it is used for operational expenses versus the cause."

The bottom line, she said, is to be cautious.

"Definitely research any charity before you donate anything because there are a lot of so-called charities out there that sound real that are not," she said.

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