Joseph Sviatko, 410-468-2458

Businesses and Consumers Advised to Verify Authenticity of E-Mail Before Sending Payments to Financial Institutions

Growing number of e-mail fraud schemes under investigation by federal and state authorities

BALTIMORE — The Maryland Insurance Administration staff, working with federal and state agencies, has recently concluded several in-depth investigations, related to e-mail schemes that adversely affected consumers and financial institutions. Commissioner Al Redmer, Jr. warned Maryland businesses and consumers today to use caution when sending payments via wire transfer and to use multiple means of communication to verify the authenticity of the e-mail sender.
The main types of e-mail compromise fraud include: business e-mail compromise (“BEC”), which targets businesses, and e-mail account compromise (“EAC”), which targets a consumer’s personal account. As part of these schemes, criminals compromise the e-mail accounts of victims and others to send fraudulent wire transfer instructions to financial institutions in order to steal the funds. According to the Federal Bureau of Investigation’s Crime Complaint Center, there have been 22,000 reported cases of e-mail compromise totaling $3.1 billion since 2013.
“We are seeing an increase in this type of cybercrime and want to alert the public to this trend,” said Commissioner Al Redmer, Jr. “With a few simple steps, the criminals can be stopped before the money has been sent over the wire. Recognizing the red flags is critical to preventing these crimes.”
BEC can include schemes in which the criminal impersonates a financial institution’s commercial customer, an executive, or a supplier. Federal authorities have had greater success in recovering funds when consumers and financial institutions report unauthorized transfers within 24 hours to law enforcement.
The Maryland Insurance Administration’s cases involved real estate transactions where the realtor, mortgage loan officer and title producer were coordinating the closing for a consumer when the fraudster altered this information by compromising or hacking into the e-mails between the parties in order to divert the deposit received from the buyer, and re-direct the seller proceeds and loan payoff funds to a fraudulent account.
Recognizing Red Flags:
The United States Department of the Treasury’s Financial Crimes Enforcement Network cited several red flags to guard against these e-mail fraud schemes to include the following scenarios: 
  • Transaction instructions originate from an e-mail account closely resembling a known customer’s e-mail account; however, the e-mail address has been slightly altered by adding, changing, or deleting one or more characters.
  • Real estate agents, settlement agents and attorneys should be wary when wire instructions change after the initial instruction is given. Call the buyer, seller, payoff lender or payee directly at a known, legitimate number to verify the authenticity of an email purporting to change wire instructions.
  • E-mailed transaction instructions direct payment to a known beneficiary; however, the beneficiary’s account information is different from what was previously used.
  • E-mailed transaction instructions include markings, assertions, or language designating the transaction request as “urgent”, “secret” or “confidential.”
  • E-mailed transaction instructions direct payment to a beneficiary with which the customer has no payment history or documented business relationship, and the payment is in an amount similar to or in excess of payments sent to beneficiaries whom the customer has historically paid.


How to Report Fraud:
Reporting the fraud immediately is important. If you are victimized, contact your bank or lending institution’s Fraud Department to report the incident. 

Consumer Help:

About the Maryland Insurance Administration

The Maryland Insurance Administration is an independent State agency charged with regulating Maryland’s $28.5 billion insurance industry. For more information about the Insurance Administration, please visit or follow us on Facebook at or Twitter at @MD_Insurance.

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