David Balaban is a computer security researcher with over 17 years of experience in malware analysis and antivirus software evaluation. David runs MacSecurity.net and Privacy-PC.com projects that present expert opinions on contemporary information security matters, including social engineering, malware, penetration testing, threat intelligence, online privacy, and white hat hacking. David has a strong malware troubleshooting background, with a recent focus on ransomware countermeasures.
EXECUTIVE SUMMARY:
As if online frauds weren’t hugely prolific before the COVID-19 emergency, they shifted into hyper-drive amid the economic crisis caused by the pandemic. The tough circumstances arising due to the coronavirus gave rise to novel schemes that piggyback on people’s fears and pain points. The internet-borne stratagems that are creating the most ripples in the cyber crime world these days are money mule and imposter scams.
This article will give you the lowdown on these escalating hoaxes so that you can step up your preparedness and do the right thing when someone contacts you with an offer that looks too good to be true.
What are money mule scams and how to identify them?
A money mule is an individual who facilitates a cyber crime operation by transferring illegally acquired funds between different accounts on behalf of someone else. This is a classic form of money laundering that helps malefactors confuse the money trail and thereby get away with their shenanigans. It also supports a huge underground economy.
According to the FBI’s Internet Crime Complaint Center (IC3), money mule schemes accounted for the greater part of the $3.5 billion in financial losses stemming from online frauds perpetrated from 2015 to 2019. Predictably enough, interest in money mule scams rose as unemployment soared amidst the pandemic. That said, researchers single out the following three types of money mules:
Unwitting money mules. These are individuals who participate in a criminal scheme like that while being clueless that they are doing something illegal. Their motivation runs the gamut from an online romantic relationship to what appears to be a lucrative business opportunity.
Witting money mules. This category spans people who turn a blind eye to apparent red flags when transferring funds back and forth at the whim of an alleged employer. These folks are driven solely by financial gain.
Complicit money mules. These people fully acknowledge their role as individuals who are in cahoots with a criminal gang. They are motivated by loyalty to cyber crooks or an opportunity to rake in profits the easy way.
The silver lining is that there are plenty of red flags that should make you suspicious. Here is a summary of these giveaways:
- A stranger contacts you over email or via a social network offering easy gain for hardly any effort.
- The purported recruiter uses web-based email like Gmail or Yahoo rather than a company-specific email account.
- You are instructed to open a separate bank account for incoming transfers from a third party.
- The self-proclaimed employer tells you to process the received funds via a wire transfer, mail, direct deposit (ACH transfer), or money transfer services such as Western Union or MoneyGram.
- You are permitted to keep a specified portion of the funds in return for your assistance.
- The cooperation offer has a vague description of your duties.
- Your mysterious “partner” asks you to carry out financial transactions they should be able to easily complete on their own.
- The companion insists that you keep the cooperation strictly confidential.
In July 2020, the U.S. Financial Crimes Enforcement Network (FinCEN) issued an advisory that sheds light on money mule scams from a different angle. The document is intended to help financial institutions unearth such frauds. Here is an overview of the key activities listed in it that organizations should remain aware of:
- The client’s bank account starts receiving transactions that are at odds with their transaction history. These may include overseas transfers and suspicious purchases of large amounts of virtual currency or fiat money. Also, if the person’s account used to have a low balance and this has suddenly changed, it could be a hallmark of their involvement in a money mule scheme.
- The client opens a new bank account in the name of a business entity, and somebody (the account holder or an authorized third party) sends funds out of this account shortly afterward. If the suspect keeps a part of this amount, that is one more thing that should give the financial institution a heads-up.
- The person opens accounts at several banks, starts receiving funds from different organizations or businesses, and then disperses the money across a series of accounts owned by the alleged recruiter.
- The client receives multiple unemployment insurance payments during an unusually short timeframe.
- The funds are promptly wired to accounts registered in countries that have questionable regulations in terms of money laundering countermeasures.
Not only does acting as a money mule undermine a person’s financial security and put sensitive information at risk, but it can also be considered a felony even if a person is are unaware of his/her role in a criminal organization.
Telltale signs of imposter scams
The term “imposter scams” is self-explanatory. It denotes social engineering trickery in which criminals portray themselves as trusted organizations –such as government agencies, charities, nonprofits, or educational institutions– to manipulate victims into sending funds, disclosing sensitive information, or exposing their devices to malware/ adware infection.
Fraudsters often align their plots with the COVID-19 theme by impersonating representatives of reputable healthcare organizations, such as the Centers for Disease Control and Prevention (CDC) or the World Health Organization (WHO). Many present-day imposter scams try to wheedle out users’ personally identifiable information (PII) under the guise of expediting pandemic-related stimulus payments or benefits.
To prevent pseudo-officials from defrauding you, peruse the following tips that cover common red flags associated with imposter scams:
- Someone claiming to represent a government agency reaches out to you over the phone, via email, or social media requesting personal information or bank account details so that they can supposedly facilitate the process of your receiving unemployment insurance, Economic Impact Payments (EIP), or other benefits.
- You receive an electronic copy of a check purportedly issued by the U.S. Department of the Treasury in which the amount is less than the EIP you are expecting. To get the whole payment, you are instructed to contact the pseudo-agency over the phone or via online channels and verify personal info.
- A message supposedly from a COVID-19 response entity (such as a special government program) asks you to open an attached file, click a link, or hand over financial details or credentials for accessing your online accounts.
- The sender’s email address contains inaccuracies, or its domain string does not match the one used by the organization the message purportedly comes from. For instance, U.S. government entities use the *.gov or *.mil domain, and charitable organizations will often have *.org at the end of their email addresses. Domains like *.biz or *.net are unlikely to be used by reputable sources.
- The subject line of the message has been previously associated with coronavirus-related social engineering hoaxes. A few examples of known-dodgy phrases are “Coronavirus Updates”, “Coronavirus outbreak in your city (Emergency)”, and “2019-nCov: New confirmed cases in your city”.
- An incoming email or an advertisement you come across on a social network requests donation on behalf of a trusted charity, but the embedded link triggers page redirects and leads to an unrelated website. If the solicitor’s email address has misspellings, or if there is no evidence that they represent the trusted organization, you would be better off ignoring the ad.
- A charity asking for donations to tackle the healthcare crisis has no financial reports and you cannot verify its nonprofit status using publicly available online resources.
Summary
Whereas imposter scams can jeopardize your financial well-being, sensitive data, or electronic devices, money mule hoaxes can have serious legal implications down the road. In other words, you may be prosecuted for your involvement in money laundering schemes, even if you have no idea about your status as an accomplice to a criminal operation.
Hopefully, the tips above will help you steer clear of problems like that. Also, being a little paranoid about any offers received from strangers will not hurt in today’s world of online hoaxes.