Posts Tagged ‘escrow fraud’

Are you covered

Cyber Insurance: Yes, you absolutely need it.

Cyber insurance is now critical to help protect your business.

Cyber attacks are becoming more frequent, clever and complex. Cyber insurance is now critical to help protect your business from major expenses, business loss, and regulatory fines and penalties.

General liability umbrella policies typically do not cover cyber events (Target’s insurance policy only covered 36 percent of its $252 million data breach costs).

This insurance comes in many different variations and costs, so it is important to know what product works best for you, considering and balancing coverage and cost.

Four key elements comprise essential coverage to protect against data breach and loss of customer data:

  • E&O
  • Liability
  • Network Security
  • Privacy

What is most important is that both cyber-crimes and liability are included in your coverage.

The policy may be a standalone, or a rider on to your existing policy. Always buy the most compressive coverage available that you can afford.

Here is why that is so important:

Broad coverage includes both first and third-party coverage. First party only covers your business, while third party will cover the claims against you from customers or clients as well as related damages and court costs.

The below comparisons show why you need both cyber-crimes and cyber liability coverage:

Event Liability Coverage Crime Coverage
Loss of funds (escrow and operational, personal) due to social engineering and electronic fraud or theft No Yes
Fraudulent electronic transfer or divergence of funds No Yes
Employee electronic theft No Yes
Forgery No Yes
Cyber extortion (ransomware) No Yes
Data breach expenses including legal costs, fines or penalties Yes No
Loss of assets and loss of business income Yes No
Recovery of systems and forensics; reputational damages Yes No
Economic damages through network security failure or failure of privacy controls Yes No

Consult with your insurance carrier for specific coverage offerings and cost and weigh the decision that is right for your business and budget. Remember, the broadest form of coverage will best protect you and your business so while it may be more expensive, your business will be better protected against the risks we face in today’s business environment.

hands clasping together

Partners in Wire-Fraud Protection: The Escrow Account Holder and the Bank

Wire fraud is a HUGE problem that only keeps getting bigger and bigger.

In fact, U.S. Representative Randy Hultgren (R-III) wrote a letter to Fed Chairman Jerome Powell on June 29th urging the Fed to be more proactive in regard to wire fraud and real estate transactions. The letter referenced the United Kingdom’s system of matching payees’ names as a possible solution to the problem of wire fraud.

However, we don’t have to wait until a federal law is passed that orders banks to match the payee name on the wire transfer payment to name on the payee’s destination bank account (“Beneficiary Bank”).

As title and escrow agents, we can be proactive and in partnership with the banks with which we do business.

So, what can we do right now?

First, we can know what our Agreement with our Escrow Account Bank says.

Does your Bank Agreement say that your bank will check the payee’s name with the name on the destination account when a wire fund transfer is initiated?

Or, does it say your bank need only rely upon the account number it was provided in the wiring instructions order? The answers to these questions might lead to an opportunity to have a discussion with your partnering Receiving Bank.

We can also send the wire instructions on the payment order, with explicit directions that acceptance be restricted to match the designated payee’s name on the Beneficiary Bank account. If it doesn’t match, then do not send the funds.

Lastly, if something does go wrong despite our best efforts and precautions, then notify both the Beneficiary Bank and the Receiving Bank as soon as possible. Typically, banks require notification of an unauthorized transfer or error within a defined time period such as, for example, thirty or sixty days.

Aside from any contractual or legal requirement for early notification, the sooner the problem is communicated, the greater the odds of the bank being able to halt or pull back the wire funds transfer.

For a great explanation of how a wire fund transfer works behind the scenes, view “Funds Transfer Law and Unauthorized Payment Liability.”

Embracing What If: When wire fraud happens

Really, that statement is about getting us to seriously consider the “what if.” For instance, “what if I suffered a data breach;” or, “what if, despite my best efforts, a criminal somehow managed to divert a wire to a fraudulent account?” Thinking about the “what if” is uncomfortable, particularly when it comes to wire fraud. We spend most of our time and effort figuring out how to avoid the “what if” scenario. The thing is, when it comes to attempted wire fraud, experience tells us that title agents who’ve spent time planning for “what if” are the ones who tend to get the money back.
data security

Don’t even hover your cursor over unknown or unverified links to stay safe from wire fraud

The title and settlement industry is blessed with great people, and that makes sense because our industry is built on being helpful.

We all want a smooth, efficient transaction for everyone involved. Unfortunately, our desire to be helpful and to keep things moving makes us a prime target for wire fraud.

So, how careful do we need to be when verifying the legitimacy of an email or even an incoming phone call?

Very careful.

Fraudsters know about us. They know how busy we can be, and they know how to prey on our traits to overcome our data and escrow security training.

They aren’t just looking to trick us. They aren’t practical jokers. They are truly insidious “social engineers.”

data security

5 tips to share with your consumer early and often during the real estate transaction

A few weeks ago, I wrote a post likening email escrow fraud to Whac-A-Mole. I’d like to revisit that image for a moment.

A few years ago, scammers figured out what our industry does. Admittedly, it took them a while, but when they did, many agents started seeing a barrage of fraudulent emails. Title agents responded by tightening down on their policies and procedures.

The “mole,” however, always manages to find a weak spot where he can pop his head out of the ground. In our case, that weak spot is clearly the consumer.

Ah, the consumer…

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