EDITOR’S NOTE: This article originally appeared on the FirstCitizens Bank blog and is reprinted by permission of FirstCitizens Bank.
HOA fraud is an unfortunate reality—and many of us will fall victim to attempted scams. The good news is that by staying vigilant, we can protect ourselves more effectively.
Common HOA scams
One common HOA scam is phishing, which involves fraudulent communications designed to trick people into divulging personal or business financial information.
Other scams include email account compromise, or EAC, which targets the personal accounts of commercial customers who conduct large transactions, and business email compromise, or BEC, which is linked to additional types of fraud—including lottery, employment and rental scams.
Scam emails can do damage in many ways. Some serve as vehicles for malware or computer viruses, which can steal passwords, user IDs and similar information, while others may send messages that appear to come from company executives.
Electronic funds transfer, a fast and simple method for moving money, is also a fertile field for fraudsters. Scammers may attempt to order wire transfers through illegitimate emails, phone calls or texts. These emails often refer to specific individuals or business functions such as payroll, human resources or accounting. Ramping up a sense of urgency is a common tactic, with fraudsters often sending such requests late in the day, just before a holiday or weekend, or when the purported sender is out of the office.
Sophisticated fraudsters may also send what appear to be legitimate wire transfer instructions to intercept those funds. The scammed business remains unaware of the fraud until the intended recipient asks where the money is.
Consider these steps to help protect your HOA from phishing, EAC and BEC scams:
- Install antivirus protection
- Create and use secure passwords
- Protect access to sensitive data
- Sign up for fraudulent activity alert notifications
- Enable two-factor authentication
- Use a secured network
- Pay close attention to website URLs to avoid suspicious sites
- Avoid unknown links or requests sent via email or text
- Play it smart
- If you receive a communication that appears suspicious, don’t perform a wire transfer before checking its authenticity.
Never act upon changes to payment instructions from an email or other electronic message without validating the requester’s authenticity with a trusted party at the company, using a different communication method.
For any wire request, remember: If it doesn’t feel right, it probably isn’t.
ABOUT THE AUTHOR
FirstCitizens Bank is your community association banking expert. Delivering individualized service, customized technology, smart savings solutions and operational efficiency for community association management companies and their homeowners associations. FirstCitizens Bank offers valuable solutions, national reach, and client-focused services. Learn more at: https://www.firstcitizens.com/commercial/solutions/community-association-banking
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This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.