As fraudsters get more and more creative, scams targeted at businesses continue to be on the rise. Chelsea Groton offers tools to help customers mitigate fraud, but we must work together to have the best chance against this crime.
Here are a few recent schemes we’ve seen, and tips on preventing similar events from occurring to you and your business accounts in the future:
While the Employee Retention Credit (ERC) is a real thing, there are currently scams occurring that use the promise of this reimbursement to take advantage of unsuspecting victims. In this scam, the scammer has been calling business and personal phone lines saying “your business” qualifies for a refund of thousands of dollars per employee kept on payroll in 2020 and/or 2021, when the recipient of the phone call does not qualify. The scammer charges a fee to process the refund and works to obtain additional personal and business account information in an effort to access your accounts.
What You Can Do: If something sounds too good to be true, it probably is. This is a scam. If you are not expecting a refund, or if the call is coming from a business you have never interacted with in the past, do NOT engage in the conversation or call the number back. If this happens to you, you can report the scam attempt at www.ReportFraud.ftc.gov. If you have shared any information during this type of call, please contact the Bank to let us know so we can review your account and ensure it hasn’t been compromised.
ONLINE LOAN APPLICATION SCAMS
We have learned of a few customers who have searched for loans online in an effort to find the best rate, and most desirable terms. They then fill out an entire loan application and provide all personal information including social security number and bank account information. Two examples of scams we have seen are below.
A customer applied online for a loan. He gave all personal information that one would expect to share with a loan application, including name, date of birth, social security number, and more. He was then asked to provide his online banking credentials so funds could be deposited that way. He was told once the funds were available, he needed to withdraw them and send them back before they would send him the funds he actually applied for. During regular monitoring of his online banking account, the Chelsea Groton team noticed an unusual deposit and reached out to the customer to ask if it was authorized. Chelsea Groton stopped the deposit, and he fortunately did not incur a loss. He placed a fraud flag to the credit bureaus and his online banking credentials were changed.
A customer with a fixed income and low balance deposited a check that was much larger than her normal activity. The check was discovered during a review process, and the hold was extended on the funds. When the customer noticed that the funds were not available, she inquired to see if the hold could be removed. Due to the previous account deposit history, the request was denied. The customer explained that she applied for a debt consolidation loan and the deposit was the proceeds of that loan. The deposit was for $30,000. Fortunately, due to the hold being placed, this customer did not incur a loss.
In both scams, if the funds became available before the check funds were collected from the financial institution in which it was drawn off and those funds were withdrawn by the customer, each customer would be liable to repay those funds back to the bank. Although Chelsea Groton has a process where certain transactions are reviewed, it cannot be guaranteed that they will be found prior to a loss being incurred. The old cliché still stands: if something sounds too good to be true, it likely is.
What You Can Do:
If applying for loans online, look up reviews and try to find the company on the Better Business Bureau website. Try to use local or reputable financial institutions or lending firms. If you cannot find much information, or if you find information and it is negative, do not use that source for a loan. Always consider going to your bank to apply for a loan so you know that the source is real and you are less likely to be scammed. Remember, once you give out your personal information to the wrong source, it is likely to be used and reused by con artists. Once your information is out there, there is no removing it from the depths of the internet.
Scenario #1: Fraudsters intercepted several valid checks mailed by one of our business customers to their regular vendors. While it’s not definitively known how checks are stolen, there has been evidence of checks being pulled out of blue P.O. boxes on street corners and at Post Offices; fraudsters use a tacky substance attached to a long flexible pole in order to retrieve them. The fraudsters forged the endorsements on the back of the checks and deposited them, likely via a mobile app, into bank accounts at different financial institutions in other geographical areas. The customer only became aware of the forged endorsements when contacted by their vendor to ask why payment had not yet been received.
In these schemes, the funds are quickly withdrawn and the account is closed shortly after the funds are made available before the fraud can be identified and the depositing bank can be notified. The fraudsters subsequently used the check information they had obtained from the legitimate checks to create new counterfeit checks which they began writing off the customer’s account.
What You Can Do: Be sure to examine both the front and the back of check images when reviewing them in the online banking system or on your bank statements. If you have any suspicions about the signature, compare with the endorsement of a prior check to the same vendor. Checks to large companies will not be endorsed with an individual’s signature.
The sooner you can catch any anomalies, the better. In the case of forged endorsements, the bank that accepted the deposit is responsible for returning the funds to the issuing bank’s customer, but it can sometimes take months for the case to be investigated, resolved and the funds returned.
In addition, this customer enrolled in the Positive Pay Service after identifying the forged endorsements, which successfully caught the fake checks the fraudsters attempted to use. This prevented the customer from having to close the existing account and open a new one, since the Positive Pay account was safeguarded from fraudulent checks clearing the account.
Scenario #2: Counterfeit checks were written against the business customer’s account. Each check was for a dollar amount that was consistent with the check sizes of the customer’s historical orders, so the amounts were not suspicious. The customer became aware of the fraud when reviewing their account online and realized it was overdrawn. The fraudsters had amassed $35,000 in counterfeit checks by issuing a total of 39 checks; 9 or 10 checks posted each day for several days until the account had been drained.
What You Can Do: Set up Alerts by clicking on “Banking Services” and then on “Alerts” in the online banking system for items such as “Large Check Cleared,” “Large Withdrawal Posted”, “Current Balance Below Limit”, and “Available Balance Daily Snapshot.” This will enable you to be informed quickly of payments you didn’t authorize. These alerts can either be emailed or texted so you can receive them on the go. Remember, businesses only have 24 hours in which to detect and report fraud to the Bank. Alerts can help bring this to your attention more quickly if you don’t otherwise scrutinize your account daily. The Positive Pay Service would have also detected these fraudulent checks and required a customer to review them before they would have been able to clear the account.
Please contact Chelsea Groton’s Cash Management team at 860-448-4295 or firstname.lastname@example.org to learn more about the Positive Pay Service and other free online banking tools, such as Alerts, that can help you monitor and secure your account.