THE WORKS Blog, Credit Union Compliance News & Views

      Check Yo Self Before You Wreck Yo Self

      By Jeremy Smith · Jun 05, 2018

      Nothing like a little Ice Cube on a hot summer day, which in Iowa can take a while to get here. Like clockwork around here once we start to see the weather warm up, so goes the housing market. Everyone is trying to get those homes bought and sold before the kids are back in school, and before we go back to the ice age. For credit union’s that means a pick-up in loan activity, which increases the risk factor when it comes to lending. That is one of the things that the NCUA highlights in their second quarter report, and it serves as a good reminder that fraud can happen in the places we least expect it to.

      In the article the NCUA references a warning published by the FBI that states in 2016, the number of reported wire transfer scams by title companies and closing agents increased by 480%. No folks, that is not a typo. This increase in activity was also not isolated to a certain region of the country either. Now you may be thinking to yourself, "how in the world does something like this happen?" Well I think the NCUA does a great job of highlighting that below.

      “What makes this type of scam so enticing to criminals and easy to pull off is the nature of the real estate closing process, which is often hurried, and the fact that email is a commonly used method for providing legitimate instructions for sending funds at closing.

      Here is how the fraud works:

      • A fraudster hacks into a title company or lender’s email server or computer system to search for upcoming real estate closings; and
      • The fraudster then emails the buyer or financial institution with bogus wire-transfer instructions related to a particular real estate loan closing. The buyer or financial institution then follows the bogus instructions to generate the wire transfer request. Once the funds are sent, the criminal moves on.”

      If you get the chance, I highly recommend you go to the link above and take a look at the full article that is out in the report. It provides some detailed background on this issue, as well as preventative measures you can take within your credit union.