A property manager was having a particularly busy Friday when he received an email that appeared to be from the community association’s president of the board. The email advised that the contractor that had recently renovated the association’s pool needed to paid the next contract installment by the end of the day or the association would incur a penalty. The email explained that the money should be wired to the contractor’s new account rather than the one that the PM had on file. The email also stated that the president was about to board a plane and would be unable to communicate further with the PM before the payment was due. The PM followed the directions in the email and sent the $35,000 payment, via wire transfer, to the new account as indicated in the email. The next week, at a board meeting, the PM mentioned the payment to the president. The president did not know what the PM was talking about, so the PM forwarded the email to the president. It was determined that the email was not from the president, but from a criminal who had hacked the president’s email account, and that the $35,000 had been diverted to the criminal. The funds had been withdrawn and the account closed by the criminal by the time the scheme was discovered.
Risk Control Tip
Provide social engineering training employees and board members to reduce the likelihood they will fall prey to social engineering schemes. Learn to recognize some of the common signs of social engineering attacks, including to be suspicious of: (1) urgent requests for money that discourage the recipient from taking the time to perform reasonable due diligence; (2) requests ostensibly made by a trusted person but which are delivered using an atypical or unverifiable means of communication, (3) requests by an unknown person claiming to work for a trusted person, made in circumstances which discourage the recipient from seeking confirmation, and/or (4) requesting that a payment or money transfer be made to an unverified account or using unusual procedures. Confirm all money transfers and requests to change vendor and customer account information by a direct call to the vendor or customer using only an authenticated phone number previously provided by the vendor before the transfer or change request was received. Ensure that important vendors, including Property Managers, receive similar training in recognizing social engineering attacks and are under instructions to confirm any unusual requests for payment. Consider using simulations and other means to ensure that employees and the board understand cyber risks as well as their obligation to protect the organization’s computer systems and assets. Implement multifactor authentication to protect computer systems from remote attacks by providing an additional layer of security.
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