May 7, 2019
Theft by cyber thieves has taken on a whole new wrinkle in the last year by using “spoofed” email addresses, thus duping honest companies and individuals trying to pay their bills.
A local church in Cleveland, Ohio is a new victim; cyber thieves stole $1.75 million by tricking them into believing that the construction firm with whom it is working with to repair and restore the church, changed its bank account. They deceived the church into wiring the money to a fraudulent bank account. The cyber thieves then moved the money immediately out of the fraudulent bank account “before anyone knew what had happened.”
Here’s how the thief does it:
The key is prevention: There are several ways to prevent the above damage for both businesses and individuals. This is known as “multi-factor authentication.”
It is important to note that most insureds use a combination of factor level one and two. Three and four are considered more sophisticated.
How insurance can protect you
First, a client needs to purchase a “cyber liability” policy or “crime” policy, which typically contain a number of insuring agreements. One of the insuring agreements available is “social engineering fraud”, which would provide coverage for the scenario described earlier in this article.
“Social engineering fraud” means a misrepresentation of fact or an intentional, malicious, willful or fraudulent act undertaken by a third party that misleads an employee and directly results in any or all of the following:
Social engineering fraud does not include electronic theft, telecommunications fraud or computer fraud.
Note that other types of “theft” are not covered under this very specific coverage grant.
Many clients already have computer fraud and/or funds transfer fraud coverage on a crime policy and believe they are protected. THEY ARE NOT! Computer fraud and/or funds transfer fraud do not include coverage for “voluntary parting” with money and securities. Only by adding the “social engineering fraud” insuring agreement would the above scenario find coverage.
To further discuss how you and your company can be protected from these cyber thieves, please contact your Fedeli Group consultant.
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