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FBI warns of dramatic increase in business email compromise scams, says US$2.3 billion lost over two-year period


April 8, 2016   by Canadian Underwriter


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The Federal Bureau of Investigation (FBI) in the United States has issued a warning of a “dramatic” rise in “business email compromise” scams (BEC) that has resulted in massive financial losses in U.S. cities.

iStock_000035961190_MediumFrom October 2013 until February 2016, law enforcement received reports from 17,642 victims, amounting to more than US$2.3 billion in losses, the FBI said in a press release earlier this week.

The schemers go to great lengths to spoof company email or use social engineering to assume the identity of the CEO, a company attorney or trusted vendor, the FBI said. They research employees who manage money and use language specific to the company they are targeting, then request a wire fraud transfer using dollar amounts that “lend legitimacy.”

Most victims report using wire transfers as a common method of transferring funds for business purposes; however, some victims report using cheques as a method of payment. The fraudsters will use the method most commonly associated with their victim’s normal business practices.

BEC scam

Sample of a BEC scam. Photo courtesy of the FBI.

There are various versions of the scams and victims range from large corporations to tech companies to small businesses to non-profit organizations. Many times, the fraud targets businesses that work with foreign suppliers.

The FBI said that law enforcement globally has received complaints from victims in every U.S. state and in at least 79 countries. Since January 2015, the FBI has seen a 270% increase in identified victims and exposed loss. In Arizona, as an example, the average loss per scam is between US$25,000 and US$75,000.

In the U.S., victims can file a complaint, regardless of dollar loss, to the FBI’s Internet Crime Complaint Center.