Social engineering fraud, an online risk that many businesses have had to deal with, is the hottest topic in crime insurance, according to Insurance Business magazine. A modern twist on an old scam, the fraud occurs when criminals troll social media platforms or company websites to gather information which they use to pose as an employee of the firm with vendors. Using information culled from the vendors, they then contact the company and request changes in bank routing protocols for payments, for example.
Greg Bangs of XL Catlin, a leader in global crime insurance coverage, said social engineering fraud is one of the most prevalent financial crimes that businesses face. He said many fall victim because payment changes are made with too little scrutiny. Bangs said, “And they submit this money to the new vendor and it’s only months later–when the real vendor says, ‘How come I haven’t been paid?’–that they realize they’re out all of this money.” He said the solution is internal training, “so you make sure that employees understand that these scams are not happening on occasion, but are happening all the time.”