Pub. 8 2019 Issue 2

The CommunityBanker 18 F E A T U R E Fraudulent Instructions Information from Travelers Insurance By Travelers Insurance, a VACB endorsed provider O ne increasing claim trend we’ve seen at Travel- ers among financial institutions is a form of social engineering referred to as fraudulent instructions. In a bank’s case, fraudulent instruction occurs when an employee is tricked into transferring money from a cus- tomer’s account to somewhere else because a fraudster steals the customer’s identity and convinces the bank through emails or phone calls to move the funds. With the benefit of seeing multiple claim scenarios, we would like to share some of the best practices that can be used to prevent fraudsters from making your bank a victim. • Train your staff. The Number 1 way to prevent fraudulent instructions is to have a well-trained staff that follows procedures, verifies a customer’s instructions by calling the customer at a pre-determined number, and ques- tions things when they don’t look right. Your staff should not only understand the procedures but also why they are important. Train your staff not to deviate from procedures by taking shortcuts. • Deliver good customer service, but make the customer prove who they are. Don’t hand the customer answers. In a recorded call we listened to, a bank employee was trying very hard to give the member excellent customer service but did so at the expense of the real customer. To questions such as “Are you still at 123 Main Street?” and “Is your phone number still 555-5555?” the crook simply had to acknowledge that the information was correct. Staff should require the customer to authenticate their person- ally identifiable information rather than acknowledge what is on file. • Know your customer. If a bank employee thinks a wire request is unusual for a certain customer, they should be empowered to dig further. We had one claim where an 80-year-old customer requested a $750,000 draw from his home equity line of credit to be wired to Australia. When asked what the transfer was for, the purported customer said he was buying a rock quarry. Unusual requests should spark increased due diligence.