Alert: Payroll Scams, Fictious Invoices & Cyber Insurance

There is no shortage of tasks to complete on a daily basis, but please take a minute to remind yourself of two common frauds that our clients have encountered in the past several months: payroll scams and fictitious invoices.

Payroll Scams often involve manipulation of the payroll system by either an employee or an external actor. One recent scam we have seen involves an "employee" emailing to ask for a change in their account number. The email is not genuine, and the account is fictitious. In the case of an email-only transaction, HR/Payroll staff should consider confirming via text, phone, or in person.

Additional frauds can include ghost employees, where paychecks are issued to non-existent workers, or unauthorized increases to compensation. These scams exploit the complexity of payroll systems and the trust placed in employees who manage them.

Fictitious invoices, on the other hand, involve the creation of false invoices that are sent through mail or email. The company, believing the invoice to be legitimate, pays for goods or services that were never delivered. Recently, we have seen invoices related to federal SAM renewals, website renewals, and consulting services. This type of fraud is often sophisticated, with the scammers doing their homework to make the invoices appear as authentic as possible. They may use the names of real companies and even duplicate their logos and branding. It's crucial for our clients and internal teams to verify mailing, banking, and tax information to detect and prevent these types of scams.

Detecting and preventing this type of scam is not always possible. Most businesses have standard insurances in place, but some of our clients have not elected Cyber Insurance. This relatively new and inexpensive insurance may come into play with the new fraudulent activities facing you and your teams.

With all the public funds our clients manage and student data, it's worth reconsideration. Make sure you talk with your broker about what is and is not included. Here are a few benefits of cyber liability insurance:

- Financial Protection: It provides financial support for various costs associated with a cyberattack, such as legal fees, recovery plans, crisis communications, and credit monitoring services.

- Coverage for Damage: It covers the damage that your business suffers because of a cybersecurity breach. This includes items like investigative services, data recovery, and identity recovery.

- Legal and Settlement Costs Coverage: Cyber liability insurance also covers damage impacting your customers or business partners because of the cyberattack. These damages include things like legal fees, customer notifications, and settlement costs.

If you have questions about some of the recent fraud attempts we have seen, please reach out. If you don't have cyber liability insurance, we strongly recommend contacting your broker and learning more.

-EdFin Team