Client Alert – Wire Transfer Fraud Hits Local Governments

7/12/17

By Marcus Norris, Underwood Law Firm

Marcus Norris

Did you know that your city, county, hospital district, or other agency is not immune from scam artists and thieves? In fact, you may be targeted precisely because you are a bureaucracy.

Scammers count on chronic understaffing and often weak internal controls at governmental agencies, along with the “normal” appearance of counterfeit wire transfer instructions, and your rush to please the customer at the end of a business day.Scammers recently tried to take $75,000 from the city of Odessa last week.

You can read about it here.

Here are some tips to help protect your entity from wire transfer fraud:

Documentation. Require the same supporting documents for a wire transfer as for a manual check (i.e., draw request, affidavits, receipts, invoices, etc.).

Confirm the request. Don’t drop your guard because a request for wire transfer comes as an official looking email. After verifying the documentation (see step 1), initiate contact with the vendor (a call or original email—not a reply to the scam email) to confirm the request.

Examine the instructions. Do the wire instructions direct funds to an overseas bank or to a bank not previously used by the customer? Those are red flags. Confirm directly with the vendor.

Confirm the payment. Do not rely solely on the confirmation from your bank because that only tells you that your money was sent, not that it got into the rightful hands. After sufficient time has passed, call the vendor and request that it check with its bank to confirm receipt of your funds into the correct account.

Beware of late requests. Scams are often timed near the end-of-day (especially before a weekend or holiday) when you may feel rushed. Do not process a wire transfer so late in the day that, upon completion, your bank, the recipient bank, or vendor’s offices will be closed. Be mindful of time zone differences among the involved parties.

For more tips for preventing wire fraud from the ACH network:

http://www.bankinfosecurity.com/24-tips-to-avoid-ach-fraud-a-2504

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