Call Us Today For A Free Quote | 866.940.1101
Professionals Insuring Professionals

Social Media FraudIn speaking with malpractice insurers, what the insurers call ‘social media fraud’ in many cases is ‘The Friday Afternoon Fraud’.  Insurers refer to it as a 'social media fraud' because cybercriminals lurk on social media looking for information that can be used in a hack.     

With all the massive data breaches, these cases are on the rise.  Law Firm’s and client’s e-mail systems are being hacked at an ever increasing rate.  Once the cybercriminal has hacked the e-mail system, they can monitor in the background e-mails being sent and received.  Cybercriminals wait for the right moment to strike. 

Say you are doing a closing on a real estate venture.  The funds should be transferred right after closing.  Because the cybercriminal has hacked the e-mail system the criminal can modify the e-mails in the e-mail system of an individual. They alter the client's e-mails to the attorney or vice versa, altering bank details so funds go to the criminal. The attorney and clients are now a victim of ‘Social Media Fraud’ or the previously blogged ‘Friday Afternoon Fraud’.

According to some insurers, over 75% of the cybercrimes reported were from the ‘The Friday Afternoon Fraud’.  Such e-mail scams often take place on a Friday, as this is the time that many deals are finalized and the transfer of funds often take place.  This buys criminals additional time to avoid detection.  A quarter of law firms have been targeted by cybercriminals, with nearly one in ten resulting in money being stolen.   

Not all Attorney Malpractice or Title Agent E&O polices cover this exposure.  Some do and some don’t.  Insurers are contemplating having to increase rates and/or tighten coverage because of the frequency and severity of these claims.

How to detect the Friday Afternoon Fraud or similar e-mail modification scams:

Law Firms and Title Agencies that hold large sums of client money are at the most risk.  Even for those who do not hold large amounts of client money, it is worth considering this risk. Many phishing efforts also seek to redirect funds. The following steps that help against Friday Afternoon Fraud will also work against other scams.

Basic Steps:

1.       confirm client and third party payment details, for example sending $1.00 to the account details provided and confirming it has been received by a prearranged phone number and contact person

2.       provide information to clients confirming they will never be asked by you to send money to a different account than that originally given

3.       be suspicious of requests to change payment details, in particular those sent by e-mail with high urgency, and confirm them with the client on a known telephone number

4.       confirm that money sent details provided by a third party lawyer is genuinely going to the party intended

5.       follow the ABA recommendation on encrypting e-mails

These are not the only steps that can be taken but it is a good start.  It is worth noting that most cybercrimes start with attacking individuals and not systems.  Ongoing training of staff is essential. 

If your firm conveys funds, make sure that your malpractice insurance policy covers this exposure.  If not a properly endorsed cyber or crime policy is needed.

Share |

No Comments

Post a Comment
Required (Not Displayed)

All comments are moderated and stripped of HTML.
Submission Validation
Change the CAPTCHA codeSpeak the CAPTCHA code
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2013
  • 2011

View Mobile Version
Quick Contact
We love referrals! And thank you even more for your continued business.
Customer Service
Self policy service any time of the day, directly from our website.
Join Our Newsletter
Stay in touch with the latest events, news and offers we have.
From Our Blog From Our Customers
Read More Read More
Facebook Twitter LinkedIn Google Maps
Stay In Touch With Us Helpful Site Links Contact Us
Sign up now to receive new and updates 5075 Cascade Rd. SE, Ste. E
Grand Rapids, MI 49546

Local: 616.940.1101
Toll Free: 866.940.1101
We have the expertise to find you the right coverage at the right price 
Powered by Insurance Website Builder