Phone Scams Gone Wild

It used to be that when the phone rang, it was someone with an African accent telling you that he was from Windows technical support calling you because your computer was infected. You hung up.

Scammers have gotten much smarter. Unfortunately. Here are two recent examples.

This guy got taken for $10,000. Mitch (him, not me, thank goodness) got a call a couple of Fridays ago from someone claiming to be from his bank saying there was fraud detected on his bank card. The callerid had the same number as was printed on the back of his card. He logged into his account and did, in fact, see several fraudulent charges going back several weeks (NOTE 1 – see tips below). They were relatively small – under $100 each. But there were also two withdrawals from cash machines in Florida for $800 each (NOTE 2).

He figured that if this was a scam, the caller would have asked him for information, which she did not (NOTE 3). She said they would reverse the charges and send him a new card (NOTE 4). He thanked her and hung up.

This was part of the hook in the scam.

The next day he got another call about suspected fraud on his bank account. He thought this is weird, so he called his bank on another phone and asked if they were talking to him. They said yes. This is known as a man in the middle attack (or woman in the middle. These scams often use women because, after all, women aren’t crooks, right?). The hacker calls the bank pretending to be you, then they call you pretending to be the bank and magic, they have everything they need to do the fraud.

Mitch said that the bank, in the past, might send him a one time code via not-very-secure text message, so when the attacker asked him to give him the text message code (which the bank had asked the attacker for, he gave it to her. Again they said they would fix it.

Over the weekend he looked at his account and saw no more activity and figured it was handled. Not so.

On Monday Mitch saw a $9,800 outgoing wire posted to his account (NOTE 5). He was now out over $10,000.

To add some intrigue, the destination of the wire was an online-only bank in Mitch’s name. The bank figured it was a Mitch to Mitch transfer, so they figured it was okay. Banks are required by law to “know your customer” or KYC. For online banks, “know” is a relative term and until the feds start fining those banks millions of dollars, this fraud will continue.

Obviously, at some time his debit card and maybe PIN (NOTE 6) was compromised and the rest was an elaborate social engineering scheme.

The bank did give him back his money (under federal law CONSUMERS but **NOT** BUSINESSES are giving the benefit of the doubt and will usually, but not always and sometimes are a fair bit of screaming, will get their money back). Businesses are assumed to know what they are doing and don’t get a free pass.

So what about all the notes. Okay, here goes.

NOTE 1 – All decent banks can send you a text message (better than an email because you are more likely to look at it quickly) every time your card or bank account is used. If your bank can’t do this simple anti-fraud measure, find a new bank. BTW, this includes credit cards too. Usually there are a lot of options in terms of what/when/how much, but in my opinion, opt for being over notified. That way, the first fraudulent transaction that cleared, Mitch would have said “hey wait, I didn’t use my card” and he would have called the bank, they would have killed the card and maybe this would not have happened. If, after Mitch did all of this, a second fraudulent transaction happened, Mitch would have known that not only was his card compromised, but so was his account.

NOTE 2 – $800 withdrawal from a cash machine. Banks will let you specify how much cash you want to be allowed to withdraw per day from the ATM. I do not EVER withdraw $800 in one day from an ATM. That limit is too high. Set your limit at $50 above the max you want to risk losing. You can always go into the branch and withdraw more in some weird circumstance. Also, your spouse’s card has a separate and likely equal (could be different) limit, so if you set the limit low, you can get your spouse to get more cash. Again, if you had followed NOTE 1 above, you would have known about the $800 cash withdrawal as soon as it happened.

Side note. I got a text alert a while back and immediately called my wife. Wasn’t her. I called the bank, in this case it was Wells and they did a great job. WHILE I WAS ON THE PHONE WITH FRAUD and he was working diligently to kill the card, he saw three more transactions attempting to be authorized. He was able to “decline” those charges, kill the card and issue a new one via overnight mail. Problem solved.

Your choice is convenience in not having to deal with those text messages or a pain in the ^%$# trying to get your money back. YOUR CHOICE.

NOTE 3: Banks also often choose convenience over security. Since the hacker spoofed Mitch’s callerid, the bank’s security mechanism got scammed. They would rather eat a few billion dollars in losses which you pay for in fees than annoy you. They figured the call was coming from Mitch, so why bother using the security protocol. I’m not fond of that strategy.

NOTE 4: The bank said they would send him a new card. Since there was fraud on the card – as well as fraud on the phone – they should have said they were going to kill the card. Apparently they didn’t say that. That should have been a flag to Mitch. When there was a supposed additional fraudulent charge the next day, that really should have been a red flag to Mitch again. If they say the card was disabled, you can easily test it by trying to make an online transaction. If it is a hacker saying the card is disabled, you will be able to complete the transaction. Big red flag. It should be declined. If it is not, call your bank yourself.

NOTE 5: That $9,800 outgoing wire. You should be able to tell your bank that you do not want to allow outgoing wires ONLINE or you want to set the limit to $500 or whatever. Sometimes you will have to make a stink, but banks can do almost anything. Also, that wire should have generated an alert (see Note 1).

NOTE 6: Some people insist on using their PIN when they buy gas or go to the grocery store. I am not sure why. Maybe they like dealing with the nice people in the fraud department. The only place you should ever use your PIN is at the ATM. Period. End of conversation. There is NO reason to use your PIN anywhere else. If you don’t use your PIN then your PIN can’t be compromised and your bank account emptied out.

In this case, Mitch got his money back. That doesn’t always happen and it doesn’t always happen quickly. The quicker you notify your bank about fraud, the more likely it is that you will get your money back. In the case of businesses, this is super critical because with wire fraud, money usually only stays in the first bank account for a few minutes. Literally.

Credit: Brian Krebs

I said at the beginning that I had two examples, but this post is already too long. Here is the link to the other example.

All I can say is be proactive or deal with the results.

If you have questions, please reach out to me. I am happy to help you protect yourself. AND, share this post with your family.

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