BEC Fraud Reaches $43 Billion Per Year

BEC FraudFraud In law, fraud is intentional deception to secure unfair or unlawful gain (money or other assets), or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compensation) or criminal law (e.g., a fraud perpetrator may be prosecuted and imprisoned by governmental authorities), or it may cause no loss of money, property, or legal right but still be an element of another civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits, for example by obtaining a passport, travel document, or driver's license, or mortgage fraud, where the perpetrator may attempt to qualify for a mortgage by way of false statements. A fraud can also be a hoax, which is a distinct concept that involves deliberate deception without the intention of gain or of materially damaging or depriving a victim. Reaches $43 Billion Per Year

Business Email Compromise ScamsScams A Scam is a confidence trick - a crime -  is an attempt to defraud a person or group after first gaining their trust through deception. Scams or confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, irresponsibility, or greed and exploiting that. Researchers have defined confidence tricks as "a distinctive species of fraudulent conduct ... intending to further voluntary exchanges that are not mutually beneficial", as they "benefit con operators ('con men' - criminals) at the expense of their victims (the 'marks')". A scam is a crime even if no money was lost. Explode!

A SCARSSCARS SCARS - Society of Citizens Against Relationship Scams Inc. A government registered crime victims' assistance & crime prevention nonprofit organization based in Miami, Florida, U.S.A. SCARS supports the victims of scams worldwide and through its partners in more than 60 countries around the world. Incorporated in 2015, its team has 30 years of continuous experience educating and supporting scam victims. Visit www.AgainstScams.org to learn more about SCARS. Insight

Business Email Compromise: The $43 Billion ScamScam A Scam is a confidence trick - a crime -  is an attempt to defraud a person or group after first gaining their trust through deception. Scams or confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, irresponsibility, or greed and exploiting that. Researchers have defined confidence tricks as "a distinctive species of fraudulent conduct ... intending to further voluntary exchanges that are not mutually beneficial", as they "benefit con operators ('con men' - criminals) at the expense of their victims (the 'marks')". A scam is a crime even if no money was lost.

This Public Service Announcement is an update and companion piece to Business Email Compromise PSA I-091019-PSA posted on www.ic3.gov. This PSA includes new Internet Crime Complaint Center complaint information and updated statistics from October 2013 to December 2021.

DEFINITION

Business Email Compromise/Email Account Compromise (BEC/EAC) is a sophisticated scam that targets both businesses and individuals who perform legitimate transfer-of-funds requests.

The scam is frequently carried out when an individual compromises legitimate business or personal email accounts through social engineeringSocial Engineering Social engineering is the psychological manipulation of people into performing actions or divulging confidential information. It is used as a type of confidence trick for the purpose of information gathering, fraud, or system access, it differs from a traditional "con" in that it is often one of many steps in a more complex fraud scheme. It has also been defined as "any act that influences a person to take any action that may or may not be in their best interests." or computer intrusion to conduct unauthorized transfers of funds.

The scam is not always associated with a transfer-of-funds request. One variation involves compromising legitimate business email accounts and requesting employees’ Personally Identifiable Information, Wage and Tax Statement (W-2) forms, or even crypto currency wallets.

STATISTICAL DATA

The BEC/EAC scam continues to grow and evolve, targeting small local businesses to larger corporations, and personal transactions. Between July 2019 and December 2021, there was a 65% increase in identified global exposed losses, meaning the dollar loss that includes both actual and attempted loss in United States dollars. This increase can be partly attributed to the restrictions placed on normal business practices during the COVID-19 pandemic, which caused more workplaces and individuals to conduct routine business virtually.

The BEC scam has been reported in all 50 states and 177 countries, with over 140 countries receiving fraudulent transfers. Based on the financial data reported to the IC3 for 2021, banks located in Thailand and Hong Kong were the primary international destinations of fraudulent funds. China, which ranked in the top two destinations in previous years, ranked third in 2021 followed by Mexico and Singapore.

The following BEC/EAC statistics were reported to the FBIFBI FBI - Federal Bureau of Investigation The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, the FBI is also a member of the U.S. Intelligence Community and reports to both the Attorney General and the Director of National Intelligence. A leading U.S. counter-terrorism, counterintelligence, and criminal investigative organization, the FBI has jurisdiction over violations of more than 200 categories of federal crimes, including financial fraud. IC3, law enforcement and derived from filings with financial institutions between June 2016 and December 2021:

Domestic and international incidents: 241,206
Domestic and international exposed dollar loss: $43,312,749,946
The following BEC/EAC statistics were reported in victim complaints to the IC3 between October 2013 and December 2021:
Total U.S. victims: 116,401
Total U.S. exposed dollar loss: $14,762,978,290
Total non-U.S. victims: 5,260
Total non-U.S. exposed dollar loss: $1,277,131,099
The following statistics were reported in victim complaints to the IC3 between June 2016 and December 2021:
Total U.S. financial recipients: 59,324
Total U.S. financial recipient exposed dollar loss: $9,153,274,323
Total non-U.S. financial recipients: 19,731
Total non-U.S. financial recipient exposed dollar loss: $7,859,268,158

BEC AND CRYPTOCURRENCY

The IC3 has received an increased number of BEC complaints involving the use of cryptocurrency. Cryptocurrency is a form of virtual asset that uses cryptographyCryptography Cryptography is an approach to protecting information or hiding its meaning by converting it into a secret code before sending it out over a public network - in other words, to Encrypt it. (the use of coded messages to secure communications) to secure financial transactions and is popular among illicitillicit Illicit means something that is not legally permitted or authorized under the law; unlicensed; unlawful. It can also mean disapproved of or not permitted for moral or ethical reasons. actors due to the high degree of anonymity associated with it and the speed at which transactions occur.

The IC3 tracked two iterations of the BEC scam where cryptocurrency was utilized by criminals. A direct transfer to a cryptocurrency exchange (CE) or a “second hop” transfer to a CE. In both situations, the victim is unaware that the funds are being sent to be converted to cryptocurrency.

DIRECT TRANSFER – Mirrors the traditional pattern of BEC incidents in the past.

IC3 Image 1

IC3 Image 1

SECOND HOP TRANSFER – Uses victims of other cyber-enabled scams such as Extortion, Tech Support, and Romance Scams. Often, these individuals provided copies of identifying documents such as driver’s licenses, passports, etc., that are used to open cryptocurrency wallets in their names.

IC3 Image 2

IC3 Image 2

400% Growth In Just ONE YEAR

In the past, the use of cryptocurrency was regularly reported in other crime types seen at the IC3 (e.g., tech support, ransomwareRansomware Ransomware is a type of malware from cryptovirology that threatens to publish the victim's personal data or perpetually block access to it unless a ransom is paid. While some simple ransomware may lock the system so that it is not difficult for a knowledgeable person to reverse, more advanced malware uses a technique called cryptoviral extortion. It encrypts the victim's files, making them inaccessible, and demands a ransom payment to decrypt them. In a properly implemented cryptoviral extortion attack, recovering the files without the decryption key is an intractable problem – and difficult to trace digital currencies such as paysafecard or Bitcoin and other cryptocurrencies that are used for the ransoms, making tracing and prosecuting the perpetrators difficult. Ransomware attacks are typically carried out using a Trojan virus disguised as a legitimate file that the user is tricked into downloading or opening when it arrives as an email attachment. However, one high-profile example, the WannaCry worm, traveled automatically between computers without user interaction., employment), however, it was not identified in BEC-specific crimes until 2018. By 2019, reports had increased, culminating in the highest numbers to-date in 2021 with just over $40M in exposed losses. Based on the increasing data received, the IC3 expects this trend to continue growing in the coming years.

BEC Fraud Chart 1

BEC Fraud Chart 1

SUGGESTIONS FOR PROTECTION

  • Use secondary channels or two-factor authentication to verify requests for changes in account information.
  • Ensure the URL in emails is associated with the business/individual it claims to be from – be careful with spoofingSpoofing Spoofing occurs when a caller maliciously transmits false caller ID information to increase the likelihood that you'll answer. Scammers often spoof local numbers, private companies, government agencies and other institutions. It can also apply to pretending to be an email address, or through other media..
  • Be alert to hyperlinks that may contain misspellings of the actual domain name.
  • Refrain from supplying log-in credentials or PII of any sort via email. Be aware that many emails requesting your personal information may appear to be legitimate.
  • Verify the email address used to send emails, especially when using a mobile or handheld device, by ensuring the sender’s address appears to match who it is coming from.
  • Ensure the settings in employees’ computers are enabled to allow full email extensions to be viewed.
  • Monitor your personal financial accounts on a regular basis for irregularities, such as missing deposits.

SPECIAL BEC SCAM REPORTING

If you discover you are the victim of a fraud incident, immediately contact your financial institution to request a recall of funds. Regardless of the amount lost, file a complaint with www.ic3.gov or, for BEC/EAC victims, BEC.ic3.gov, as soon as possible.

Additionally, we recommend that you also REPORT to the FTCFTC The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) U.S. antitrust law and the promotion of consumer protection. The FTC can also act as a clearinghouse for criminal reports sent to other agencies for investigation and prosecution. To learn more visit www.FTC.gov or to report fraud visit ReportFraud.FTC.gov at https://reportfraud.ftc.gov/#/?orgcode=SCARS

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