In case you haven’t heard of this, it is the latest trend in the theft of money that is NOT covered by either a Crime Policy or a Cyber Policy. Here is a description of how it works.
The accounts payable clerk receives an email from the company president directing him/her to transfer money to an account in China. Since the company regularly transacts business in China and the email came from the president, the clerk proceeds with the transaction. However, it turns out that the email was never sent by the president. Another example is that the company has a contract with ABC janitorial service. The accounts payable clerk receives an email from ABC indicating that they have changed their banking relationship and to direct all future payments to a different bank (including routing numbers/account number, etc.). Time goes by and ABC contacts the company and inquires why their account is 3 months past due. Turns out that ABC never sent the email changing the banking information.
These instances are not covered under a commercial crime as the policy was designed to cover theft perpetuated without the insured’s knowledge or through unauthorized access or fraudulent funds transfer by an imposter. There is no hacking, virus, unauthorized access to the network, etc. that would trigger any cyber coverage. These are examples of gullible employees who fail to follow procedures or assume that because they received an email it has to be true. A new version of “The Sting.”
For information on how to protect your business, contact a knowledge broker at R&R Insurance.
