Business Email Crime: $2bn in Two Years From Scam and Fraud

“Email scam” has become a widely used form of the fraudster, who made many victims in personal or business sector.

A scam termed “CEO fraud” or “business email crime” has proven costly for businesses across the globe. According to the FBI, losses incurred from this scam have cost companies more than $2bn (£1.43bn, €1.81bn) over the past two years.

Under their modus operandi, criminals impersonate email accounts of chief executives and ask employees to transfer money to an overseas bank account, which results in the money being lost by the time the company realises it has been duped.

According to FBI, there has been a sharp rise in such scams. While $1.2bn was lost between October 2013 and August 2015, through the scam globally, the losses increased by an additional $800m over the last six months. More than 12,000 companies have fallen prey to this scam.

US authorities estimate the average amount a company has been duped of is $120,000. However, there are companies who have been defrauded by as much as $90m. The scam has been allegedly reported in as many as 108 countries. “Criminals don’t have borders and this is a global problem. It’s easy. All you need is a computer”, James Barnacle, chief of the FBI’s money laundering unit said.

It has been understood that offshore banks in Asia and Africa are primary places where most of the money ends up. This is because the US finds it harder in these regions to get assistance of local authorities.

With regards to how the FBI was working on the case, Barnacle said, “We’re working with our criminal investigation resources, our cyber resources, our international operations divisions — which is all our legal attachés overseas — and we’re working with foreign partners around the world to try to tackle this crime problem.”

While the FBI has found similarities between various frauds, it is yet to conclude if it is being run by one single dominant global ring. “We’re putting more resource to it. We’re trying to find those patterns,” Barnacle claimed.

Both large and small companies have been subjected to this racket. However, according to reports, real estate firms have become the latest to fall prey to the fraud. Criminals are trying to steal closing fees on housing sales. Apart from this, some scam emails have even requested for details of employee wages and tax statements.

The FBI has asked companies to take simple cost-effective steps to safeguard information in an efficient manner, such as calling the executive over the phone to confirm a transfer. This follows police from Italy, Spain and other European countries arresting more than 60 members of an alleged criminal group in 2015 over an email scam that duped hundreds of individuals and numerous companies, The Financial Times reported.