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Haylor Risk Management Blog

A Real Story on Cyber Crime

Posted by Risk Management Team on Dec 13, 2016 11:16:09 AM

The Real Target of Credit Card Thefts

iStock_000064336313_Medium.jpg   Case Study: Your company sells widgets used in manufacturing....

The John Smith Company contacts your sales department via internet and places an order for $10,000 in widgets to be shipped to a country ending in “Stan”.  He’ll pay you in full, by credit card, but you have to arrange shipping through a company that he uses to handle the logistics.

Your sales department contacts Outlaw Freight and they quote you $5,000 for associated shipping costs.

Your salesman tells The John Smith Company that the total cost of the order is $15,000. The John Smith Company gives him a credit card number. After a few days, the credit comes through and shows on your account, everything looks fine. You are instructed to wire the shipping charges to Outlaw Freight and to send the product to their attention at a shipyard.

A few days later, you are notified that the credit has been backed off of your account. It turns out that the credit card number was stolen and the holder disputed the charge when it showed up on his statement.

Turns out that The John Smith Company and Outlaw Freight do not exist. Their addresses are actually a hair salon and municipal parking garage. You have lost your product, and worse yet, you wired away $5,000 of your money.

Why does the Con work?
Credit card holders and credit card companies often don’t know that there was a breach until an unauthorized transaction is made. Also, it takes a few days to recognize and dispute the fraudulent charge, making the credit transaction appears legitimate at first.

Businesses and their employees believe the transaction is legitimate because they are brought into the scam. They have to contact the shipping company and “negotiate the cost”, providing a belief they have worked for the sale, adding a sense of legitimacy. All good scams rely on this kind of “social engineering”. 

Don't let this happen to your business.  Be aware of this type of scam.  For information on how to protect your company with proper Cyber Liability Coverage Contact Haylor, Freyer & Coon, Inc. Today 315-451-1500.

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