Fraudsters duped this company into handing over $40 million

Robert Hackett

Cybercrime isn&#8217;t just about fancy hacks and killer exploits. An increasingly common and lucrative scam to which businesses are falling victim involves just a bit of phishing and social engineering. It&#8217;s called &#8220;CEO fraud,&#8221; or &#8220;business email compromise.&#8221;<div class="paywall-selector"></div><div class="paywall">
The con works like this: A swindler fakes emails from senior managers at the target company and requests (fraudulent) wire transfers. If they&#8217;re lucky, the recipient will approve an otherwise unauthorized transaction. And&mdash;kashhing&mdash;that&#8217;s cash in the thieves&#8217; banks.
Ubiquiti Networks is <a href="http://krebsonsecurity.com/2015/08/tech-firm-ubiquiti-suffers-46m-cyberheist/">one of the latest companies to admit</a> it&#8217;s had the multimillion dollar wool pulled over its eyes. The San Jose, Calif.-based networking equipment company disclosed it lost $46.7 million through such a scam in <a href="https://www.sec.gov/Archives/edgar/data/1511737/000157104915006288/t1501817_8k.htm">its fourth quarter financial filing.</a>
&#8220;On June 5, 2015, the Company determined that it had been the victim of a criminal fraud,&#8221; the company writes in its 8-k form. &#8220;The incident involved employee impersonation and fraudulent requests from an outside entity targeting the Company&rsquo;s finance department. This fraud resulted in transfers of funds aggregating $46.7 million held by a Company subsidiary incorporated in Hong Kong to other overseas accounts held by third parties.&#8221;
Ubiquiti says it has so far managed to recover $8.1 million of the lost funds, and it expects to regain control of another $6.8 million. The rest? Uncertain.
&#8220;The Company may not be successful in obtaining any insurance coverage for this loss,&#8221; the firm notes before providing some reassurance that the incident was a fluke. &#8220;The Company currently believes this is an isolated event and does not believe its technology systems have been compromised or that Company data has been exposed.&#8221;
Events like these are far from isolated. At the beginning of the year, the Federal Bureau of Investigation <a href="http://www.ic3.gov/media/2015/150122.aspx">warned</a> that such attacks are on the rise. Victims in the U.S. and abroad numbered 2,126 between Oct. 2013 and Dec. 2014, losing a combined $215 million, according to the Bureau&#8217;s analysis of data from its <a href="http://www.ic3.gov/default.aspx">Internet Crime Complaint Center</a>.
As a preventative measure, the FBI recommends that businesses implement two-factor authentication for email as well as phone verification for substantial wire transfers. And employees should always be on guard for suspicious emails&mdash;even if that means occasionally bucking your boss&#8217; request.</div>

The networking company disclosed its expensive blunder in a quarterly SEC filing.

Ubiquiti Networks falls victim to $40 million wire transfer scam

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Fraudsters Duped This Company Into Handing Over $40 Million

Ubiquiti Networks falls victim to $40 million wire transfer scam | Fortune

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