Seventeen FIs targeted in high-dollar wiretapping scam

FEDERAL WAY, Wash. (1/15/07)--At least 17 financial institutions--including several credit unions in Washington State and elsewhere--have seen a sophisticated, high-dollar scam involving wiretapping to steal hundreds of thousands of dollars from home equity lines of credit (HELOCs).

The actions have occurred in the past 30 days, said the Washington Credit Union League, and are similar to what happened to a member at Woodstone CU, based in Federal Way, when someone transferred $665,000 from a HELOC (News Now Jan. 14).

"All of the thefts are in the high-dollar amounts, some with as much as seven figures," said David Bennett, director of public relations at the league. "The cases are very similar and involve transferring credit to the Far East, namely China, Korea and Japan."

The league issued a fraud alert to its member credit unions Friday, he told News Now.

The fraud involves telephone, fax or e-mail requests made to the credit union for large-dollar advances on HELOCs. The fraudster then requests the money be wire transferred, often to a foreign country.

"What makes this fraud even more unique is that the fraudsters have extensive personal information about the members, such as the information to answer many authentication or challenge questions, transaction history and account information," says the league's fraud alert.

The fraudsters "have found ways to circumvent the credit unions' 'call back' procedures, which are used to verify the identity of non-in person requests for wire transfers." They either request phone-line forwarding from the phone company, or--more than 30 days prior to the request to advance the funds--call the credit union to change the member's phone number.

"Thus, when the credit union calls back the phone number it has on file for the member, the call goes directly to the fraudster," said the alert.

In the Woodstone case, the credit union and member are cooperating fully with law enforcement authorities. The member "is protected and isn't out of a single penny," Bennett said.

The fraud alert has six suggestions for credit unions:

1. Inform staff of the scam, especially those processing HELOC loan advances and wire transfers;

2. Rigorously scrutinize large-dollar requests for HELOC advances made over the phone, fax or e-mail;

3. Rigorously scrutinize requests to wire transfer HELOC advances, especially if the request is to a foreign country;

4. Review change of phone number or address requests made on accounts that are requesting HELOC advances by phone, fax or e-mail;

5. Review large dollar requests for HELOC advances to see if this is the type of activity generally performed by the member and further scrutinize out-of-the-ordinary transactions; and

6. Alert call center and member service employees to be wary of persons calling to request information that is not otherwise publicly available.

"Because of obvious concerns about terrorism and the high dollar amount, the police, Secret Service and Federal Bureau of Investigation are all involved. The Secret Service has about 20 agents just on this basket of cases. It's definitely an international incident," said Bennett.

Resource Links

CUNA's ID Theft Resources

Verafin/CUNA Strategic Service