#3. Computer prediction software and sports investment schemes

#5. Computer hacking scams

Per cent of total reported loss: 3%

Per cent of total scams reported: 5%

Number of consumers reporting losses: 328

Total losses reported by consumers: $2 252 292

Scam conversion rate: 7 per cent

Most affected age group: 35 y.o. and over 78%

Gender: Female: 59 % Male: 41%

In previous years, this category included any intrusion into a computer system including the installation of malware or seeking permission to remotely gain access to computer systems. The new classification system now identifies ‘Remote access’ scams and ‘Ransomware and malware’ scams as separate categories. Even with these categories removed, losses arising from hacking scams almost doubled. Reported losses in 2014 amounted to $2 252 292, up from $1 130 947 in 2013.

With the convergence of technology, hacking scams can now target computers, mobile phones or tablets and potential victims may be approached via email, text or through social media. They often ask you to follow a link to a fake mirror site. If you login using your account details and password the hacker has access to your legitimate account and whatever information they find can be used to commit further fraud in your name.

Anatomy of a hacking scam

An email is sent from the supplier’s email account to the buyer requesting a change to payment arrangements and asks for the invoice to be paid via wire transfer or to a new bank account the scammer has set up. The unsuspecting buyer updates the new payment arrangements thinking it is a legitimate request and then pays the scammer for the goods, leaving the supplier out of pocket.

Sometimes the scammer can hack enough information to identify a specific business relationship but cannot hack the supplier’s email account. In such cases the scam can still work when the scammer creates a new email address which mimics the supplier’s address and uses their logos and message format.

The victim company often does not detect the scam until they are alerted by complaints from the supplier that payments are overdue.

The Canadian Better Business Bureau and the United States Internet Crime Complaints Centre issued warnings about this scam operating in the northern hemisphere and, like other scams, it migrated south. In the latter half of 2014 Australian businesses started reporting this scam with one reported loss of over $100 000. While the number of reports for these scams is low, reported losses are generally significant with many affected businesses losing in excess of $10 000.

Victim Story: John updated supplier details and ended up costing his company thousands John worked as an accounts manager for a local manufacturing business. Late on a Friday afternoon, he received an email which appeared to be from Mr Liu from Zhang-Fei Industries, a ball bearings supplier in Asia. Mr Liu’s email explained that due to a change in their internal finance system, he needed to update the banking details. John took the email at face value and changed the banking information in his company’s database. A few days later, John made a scheduled transaction to Zhang‑Fei Industries for $17 000. Two weeks later the ball bearings from Zheng Fei industries had not arrived so John telephoned Mr Liu. Mr Liu said he hadn’t received payment for the last order and had consequently cancelled shipment. John told Mr Liu that he had processed the payment personally to make sure it was paid according to the new arrangements. After some investigation it became clear that Mr Liu had not sent any request to update his company’s banking details and John had fallen victim to a scam. In the weeks to come, with the initial loss of $17 000, the delay in supply flowing from missed orders and broken contractual obligations, John’s company estimated their loss to be over $30 000. “Effective management systems and safeguards to prevent access to your computer should be an integral part of any business, large or small. Often very simple common sense procedures like double checking accounts over a given threshold amount could save thousands of dollars.” ACCC Deputy Chair Dr Michael Schaper * All names have been changed and aspects are drawn from real examples for illustrative purposes.

PROTECT YOURSELF TIPS 1. Make yours a ‘fraud-free’ business—effective management procedures can go a long way towards preventing scams. Have a clearly defined process for verifying and paying accounts and invoices. 2. Consider a multi-person approval process for transactions over a certain dollar threshold. 3. Double check email addresses—scammers can create a new account which is very close to the real one; if you look closely you can usually spot the fake. 4. If you think a request is suspicious, especially any request to change bank account details, telephone the business to seek verification of the email’s authenticity and cross check with internal records you already have on file. 5. Check your IT systems for viruses or malware—always keep your computer security up-to-date with anti‑virus and anti-spyware software and a good firewall.