Posts Tagged ‘escrow security’

Business Email Compromise/Email Account Compromise

Business Email Compromise/Email Account Compromise (BEC/EAC). (part2)

(It’s a lot to say – SupercaliFRAUDulisticexpialidocious)

Email can be sinister. It can encourage changes (not authorized, not legitimate), it can “warn” recipients of dire circumstances if instructions are not followed, it can be shaped and branded to look like an institution all parties are familiar with, and it can assist in fraud that involves any number of untoward outcomes – like clients’ and institutions’ funds being pilfered.

The U.S. Government has a phrase for such criminal action: Business Email Compromise/Email Account Compromise (BEC/EAC). That wordy title speaks to two crimes.

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BEC scams are carried out by compromising legitimate business email accounts. The EAC component of the scam refers to the targeting of consumers and the lenders, real estate professionals, attorneys and others who serve them.

More information on BEC/EAC fraud prevention and recovery can be found on our Education page.

It can be daunting to try to wrap one’s brain around every single possibility and scenario that could trip someone up – and trick someone into giving away information that affords a thief the opportunity to steal funds.

Below is a list that, while not necessarily “completely memorizable” – even if studied, can serve as a red flag for knowing when something is awry.

It can serve as warning to be wary of the many and various paths that crooks can take to defraud legitimate people conducting real estate transactions.

  • Exercise extreme caution when weighing any request to change wire instructions. Encourage all parties to do the same.
  • Be wary of any email, phone call or other communication that involves threats, high pressure language (e.g. markings, assertions, or language designating the transaction request as “Urgent,” “Secret,” or “Confidential,”) or warns of “dire consequences” if immediate action isn’t taken.
  • Be wary of emails with missing or unusual subject lines.
  • Be wary of any request to change wiring instructions, especially any last-minute requests.
  • Be wary of emails that include poor spelling or grammar, are overly formal or that are written in a style uncharacteristic of the purported sender. Also, beware of emails that misuse industry terminology, for instance, references to the “HUD” instead of the “Closing Disclosure”.
  • Be wary of any unexpected emails or requests, including internal requests purportedly from executives or others.
  • Be wary of emails sent at odd hours.
  • Be wary of any communication seeking to confirm information the purported sender should already have.
  • Beware of sudden changes in business practices. For example, if a current business contact suddenly asks to be contacted via a personal email address, it’s best to verify the legitimacy of the request via other channels.
  • Review monthly escrow statements from the Receiving Bank (the one holding the agent’s escrow account) as soon as available to verify that all expected funds have actually been received.
  • Have a written agreement in place with the Receiving Bank (the agent’s bank which holds the escrow account and receives the agent’s payment order) that the Receiving Bank will match all names, addresses, account numbers, routing number and beneficiary bank name on the payment order with where and to whom the funds are actually sent. Or put instructions on the payment order for the Receiving Bank to verify authorization by matching all of this information.
  • Emailed transaction instructions directing wire transfers to a foreign bank account that has been documented in customer complaints as the destination of fraudulent transactions.
  • Emailed transaction instructions directing payment to a beneficiary with which the customer has no payment history or documented business relationship, and the payment is in an amount similar to or in excess of payments sent to beneficiaries whom the customer has historically paid.
  • Emailed transaction instructions delivered in a way that would give the financial institution limited time or opportunity to confirm the authenticity of the requested transaction.
  • Emailed transaction instructions originating from a customer’s employee who is a newly authorized person on the account or is an authorized person who has not previously sent wire transfer instructions.
  • A customer’s employee or representative emailing financial institution transaction instructions on behalf of the customer that are based exclusively on email communications originating from executives, attorneys, or their designees when the customer’s employee or representative indicates he/she has been unable to verify the transactions with such executives, attorneys, or designees.
  • A customer emailing transaction requests for additional payments immediately following a successful payment to an account not previously used by the customer to pay its suppliers/vendors. Such behavior may be consistent with a criminal attempting to issue additional unauthorized payments upon learning that a fraudulent payment was successful.

Review and revisit this list of tips when handling suspicious wire requests, before the exchange of funds takes place.

  • Verify all wire instructions with an alternate method of communication.
  • Check emails to ensure the sender’s address has not been altered. Fraudsters typically use email addresses that closely resemble a seller’s (or any party’s) actual email address.
  • Do not open unknown or unverified hyperlinks or downloads. Tip: Hovering your mouse over the sender’s email address may reveal a different email address. Caution: Do not hover over unknown links within the body of a suspect email. Security experts formerly recommended hovering as a way to determine the validity of such links. However, newer strains of malware may infect a computer when the user merely hovers over the link.
  • Delete unsolicited emails from unknown sources.
  • In the case of an invoice, verify any changes in vendor payment location and confirm requests for transfer of funds.

Download Our Fraud Detection Guide for Agents

Mortgage Fraud Red Flag

Flagging Fraud (Part I): Know These Indicators of Transaction Fraud

Every year the U.S. government comes out with a growing list of warnings on cyber fraud, real estate fraud, email fraud – the list goes on.

on cyber fraud, real estate fraud, email fraud – the list goes on.

Some warnings are common sense: delete suspicious-looking emails, don’t give away banking information or social security numbers, never wire anyone money without triple checking – and then checking again.

We’re committed to ensuring that all independent agents have every new (and standard) information source available, even as the rules and the threats multiply and expand almost every month.

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In this first installment of a multi-part series on Flagging Fraud, we take a look at some of the red flags involving parties to a real estate transaction.

Red Flags

Learn or at least become familiar with red flags that could well indicate something is awry in any real estate transaction.

Some title fraud may be detected by agents before the transaction closes.

Rather than memorize, regularly reviewing this list will help you and all those involved in your transactions be aware of potential fraudulent components:

  1. Releases of prior mortgages recorded before or independently of the closing of a new loan with no source of payoff funds.
  2. Many recent transactions and/or re-recordings.
  3. Recent change in title, especially one without concurrent financing.
  4. Releases recorded out of sequence.
  5. Sale of property subsequent to or concurrent with a divorce.
  6. Quitclaim deeds with no consideration.
  7. “Intra-family” deeds.
  8. Parties to the transaction are affiliated.
  9. Document not prepared by an attorney or title company.
  10. Document looks non-standard.
  11. Power of attorney with Grantee signing as Attorney-in-Fact.
  12. Prior signatures indicate failing health or physical deterioration followed by a healthy, strong signature.
  13. Bargain purchases—policy amount much higher than purchase price.
  14. New mortgage amount much higher than purchase price.
  15. Property seller is an LLC/entity/corporation.
  16. Appraisal looks questionable (e.g. indicates recent sale/listing activity at significantly lower price; comparable sales are previously flipped properties).

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businessman punching and breaking the word RISK

Increased Risk Means We Need to Increase Training

Threats are constantly evolving and your training and testing must also evolve to counter these threats and keep your defense robust.

A cyberattack is a malicious and deliberate attempt by and individual or an organization to breach the information system of another individual or company, seeking benefit from the disruption, ransom, or theft of data.

This electronic threat is increasing in frequency and complexity and has become very expensive to remediate or to recover from.

Here’s the surprise – almost 90 percent of cyberattacks are caused or allowed by human error from the internal staff of the entity attacked.

This includes failure to follow security rules and protocols, sharing passwords, using weak or default settings, and falling victim to social engineering.

Even the large events such as the hacking at Equifax and Target, were caused by failure to follow the rules regarding administrative password settings, human error.

So whether your business is large or small, you need ongoing, strong training and testing to counter the threats.

Recent survey results of a survey of title insurance professionals by the American Land Title Association show a surprisingly small amount of agents are conducting ongoing staff training, and most do it once when they hire an employee.

This is a recipe for eventually becoming a victim of electronic fraud.

There are simple yet effective steps to take to counter the increasing threats by taking a strong defense, and it starts with regular training and testing to remove or reduce the human error element.

Here is what to do to put a training and test plan into action:

  • Ensure new hires are introduced to and educated on information and data security policies and procedures as well as how to protect nonpublic personal information (NPI) and sensitive information. Emphasize to them the “why” so they fully understand the shared responsibility nature. This should be a core part of their orientation and on-boarding.
  • Set and schedule ongoing training for all employees at every level commensurate with the size of the staff and complexity of your business. This should be monthly, quarterly or semiannually.
  • At a minimum, cover controls over access (passwords; pass phrases; multi-factor authentication), network and data distribution (including never using non-secured networks for conducting business such as those in cafes/hotels/airports), phishing and spear-phishing, and never use a general email service like Yahoo or Gmail when sending NPI or sensitive information; social media and social engineering.
  • Require security measures for smart devices (smart phones, and in particular Androids, account for a large percentage of data breaches).
  • Explain the implications of data loss, which includes reputational hits and potential fines and penalties and law suits.
  • Focus on all media forms – hardcopy as well as electronic – and include proper handling and protection from receipt through handling to secured destruction.  
  • Training may be done with internal documents or you may use a third party to conduct the training (i.e. Data Shield; KnowBe4).

  • After the training, use a quiz to gauge how well your employees understood the material.
  • Develop or use a third party to conduct ongoing, regular internal testing such as phishing or spear phishing testing (i.e. KnowBe4 is one vendor who can provide you this tool). Depending on the results, you may then make appropriate changes and re-focus your training to deal with any weak or weaker topics or areas.
  • Provide a single point of contact the employee may turn to with questions or to report any suspected suspicious attempts to obtain information or data (electronic or by phone).
  • Keep records of the training and attendees and testing results. This will be needed to demonstrate good faith, to meet many state requirements – and it’s a best practice.

Last, keep up-to-date on emerging threats and vulnerabilities and provide updated training to employees to be sure they understand new risks or new controls and why they are important; employees must know how to recognize and report threats to stay vigilant.

This will keep your training and testing current and fresh and serve as a continual reminder to your staff. Remember, this is a marathon, not a sprint. Threats are constantly evolving and your training and testing must also evolve to counter these threats and keep your defense robust.

Written-cyber-security-and-response-plans-Just-do-it

Written cyber security and response plans: Just do it

Despite the rising threat, recent survey results show a surprisingly small number of agents are prepared, as most do not have a written cyber security and response plan.

A cyberattack is a malicious and deliberate attempt by and individual or an organization to breach the information system of another individual or company, seeking benefit from the disruption, ransom, or theft of data – and such attacks are increasing in numbers and complexity.

Despite the rising threat, recent survey results show a surprisingly small number of agents are prepared, as most do not have a written cyber security and response plan.

A written cyber security and response plan is essential to be prepared, organized and to execute appropriate and prompt actions when an attack occurs.

The plan does not need to be complex. To be effective, it should be simple and clear and present key information. It should also be built commensurate with the size of the organization.

Key elements of the plan must include:

  • Perform a risk analysis to mitigate all risks, covering administrative, technical, and physical controls. Simply put, this is what could be vulnerable, what could go wrong and what is or should be done to try to avoid or contain the threat(s).
  • The cybersecurity program must protect the security and confidentiality of nonpublic information, protect against threats or hazards to the security or integrity of information, and protect against unauthorized access.
  • Define a schedule for the retention of data and a mechanism for its secure destruction when data is no longer required.
  • Designate an individual, third party, or affiliate who is responsible for the information security program.
  • Be sure existing controls in place – access controls, authentication controls, and physical controls to prevent access to nonpublic information. Encryption (or an alternative, equivalent measure) should be in place to secure data stored on portable electronic devices and for data transmitted over an external network.
  • Identify and manage devices that connect to the network – a simple inventory.
  • Adopt secure development practices for in-house applications if applicable. Alternatively, obtain this assurance from your service provider that performs the development for you.
  • Use multi-factor authentication to prevent unauthorized accessing of nonpublic information.
  • Regularly test and monitor systems for actual and attempted attacks, maintain audit trails, and implement measures to prevent the unauthorized destruction or loss of nonpublic information.  
  • Keep up-to-date on emerging threats and vulnerabilities and provide ongoing training to employees to be sure they understand existing controls and why they are important; employees must know how to recognize and report threats.

The response plan must include the following elements to be effective:

  • Date of the cybersecurity event.
  • A description of how the information was exposed, lost, stolen, or breached,     including the specific roles and responsibilities of third-party service providers, if any.
  • How the cybersecurity event was discovered.
  • Whether any lost, stolen, or breached information has been recovered and if so, how this was done.
  • The identity of the source of the cybersecurity event.
  • Whether you filed a police report or notified any regulatory, governmental or law enforcement agency and, if so, when such notification was provided and by whom.
  • A description of the specific types of information acquired without authorization, which means particular data elements including, for example, types of financial information, or types of information allowing identification of the consumer.
  • Time period during which the information system was compromised by the cybersecurity event.
  • The number of total consumers affected by the cybersecurity event, or a best estimate.
  • The results of any internal review identifying a lapse in either automated controls or internal procedures, or confirming that all automated controls or internal procedures were followed.
  • A description of efforts being undertaken to remediate the situation which permitted the cybersecurity event to occur.

Don’t wait until an event occurs. It’s a chaotic time full of financial and emotional high stress. Do it now and provide yourself the peace of knowing you are prepared.

email threat

Title Industry’s Cyber, Escrow Fraud Preparedness Needs Improvement

A national survey of title agents conducted by the American Land Title Association shows that our industry has farther to go when it comes to formalizing cyber and escrow security plans.

Results of the survey also hint that the threat landscape is becoming increasingly perilous for title agents, consumers and others involved in real estate transactions.

Of the survey’s more than 750 respondents, 63 percent said the number of cybercrime attempts targeting their company increased between 2017 and 2018. Roughly one-third of respondents also observed increases in fraud attempts targeting buyers, sellers and real estate agents over the same period.

Many title agencies have sought to combat the worsening cyber and escrow fraud threat by means of employee awareness.

More than half of respondents said their company reminds employees about the need to remain vigilant on about a weekly basis. More than 25 percent said those employee reminders are made on a monthly basis.

However, more than 20 percent of respondents reported that their company offers no training at all on cybercrime trends or red flags.

More troubling, however, is that despite the apparent increase in fraud attempts, just 62 percent of respondents said their company has a written cybercrime response plan.

Additionally, more than 40 percent of agents were not aware of or have not implemented ALTA’s Rapid Response Plan for Wire Transfer Fraud.

Smaller agencies — those with gross annual income below $1 million — were also somewhat less likely to have formal cyber response plans, wire retrieval plans or training programs than were larger agencies.

Survey results also show that cybercrime insurance coverage among title agents of all sizes is not as prevalent as one might expect given the apparent increase in fraud attempts. More than 27 percent of respondents said their company does not currently have a cybercrime insurance policy.

While most industry participants have made strides when it comes to protecting escrow funds and sensitive information, the survey clearly shows that gaps remain.

The survey also provides an opportunity for all of us to redouble our efforts, particularly when it comes to formalizing cyber response plans.

To help, we’ll be posting a blog series in the coming weeks that will provide simple, actionable tips for improving and formalizing response plans, as well as plans for wire retrieval and staff training.

We’ll also talk about the importance of cyber insurance and provide insight on how to get the right coverages for your business.

In the meantime, check out the growing library of cyber fraud resources on the Alliant National Education page. Alliant National agents can also watch our brand new Texas Continuing Education webinar on information and escrow security.

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