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Insurance Glossary

The world of insurance for law firms can be confusing, and difficult to navigate. We've created this glossary because these common insurance terms should be easy to understand.

Wire Fraud

Wire fraud is a financial crime that involves the use of some form of telecommunications or the Internet to steal funds. Common tools used to perpetrate this type of crime include a phone call, a fax, an email, a text message, or social media messaging. Unfortunately, this type of fraud can be quite difficult to identify.  

Here’s just one example, a law firm relied on an online fax service to request and receive loan payoff statements via fax.  

The vendor would forward all incoming faxes to a designated firm email account. Unbeknownst to the firm, this designated email account had been compromised giving whoever did it the ability to monitor all incoming faxes. Any fax that did not contain wiring instructions was immediately forwarded by the hacker to the firm’s email account as a way to help avoid being detected. Once a fax containing wiring instructions was spotted, however, the hacker quickly modified the payoff account information and then forwarded the altered fax to the firm.  

Since the incoming fax was expected, came from a known party, and there were no obvious signs of any fraudulent activity, the firm trusted the information contained in the altered fax and wired substantial funds to the wrong account.  

The funds were never recovered. Man, talk about a bad day.