Banking Unrest Leads to Increase in Malicious Activity

On Friday, March 10, 2023, the California Department of Financial Protection and Innovation shut down Silicon Valley Bank (SVB) and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.  Regulators announced late Sunday that Signature Bank was being taken over to protect its depositors and the stability of the U.S. financial system.  The chaos continued this week as Moody’s put 6 other US banks on watch for potential downgrade.

Even if you were not doing business directly with one of the affected financial institutions, you can expect that many of your customers and/or vendors have been.  It is likely you’ll see urgent requests come in to change banking and/or Automated Clearing House Network (ACH) routing information.  While some of these requests will be legitimate, many won’t as malicious actors take advantage of this situation.  We expect to see a sharp rise in fraudulent requests.

Don’t let the urgency and frequency of these requests be an excuse to circumvent your processes.  If you inadvertently transfer money to a scammer rather than your legitimate business partner, your likelihood of recovering those funds is very low.

When you receive requests to change bank information via any company with whom you have a transacting relationship, do not respond.  Instead, reach out to your known, trusted contacts at that company to verify any requests.  Be vigilant and cautious when anyone reaches out to you with a change to your normal business practices with them.

If you suspect any fraudulent activity, such as unauthorized transactions or suspicious emails or calls, report it immediately to your bank and the relevant authorities such as the Internet Crime Complaint Center (IC3). This will help prevent further fraud and may also help authorities catch the perpetrators.

When events like this occur, malicious actors prey on fear, uncertainty, and doubt. However, by staying vigilant to your business practices and exercising patience, you can protect yourself from scams and fraud. Remember that prevention is always better than cure, and taking practical steps to avoid fraud and scams will help ensure you don’t fall victim to malicious activity.

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Published By: David Howard, President, NetWorks Group

Publish Date: March 14, 2023

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