Community Bankers Association of Illinois

CBAI Warns Illinois Banks About HELOC Scam

CBAI is warning Illinois banks about an increase in attacks by fraudsters on customers with home equity lines of credit ( HELOC). The sophisticated schemers already have struck at least two Illinois banks, which have reported losses.

According to the FBI, criminals are known to use fee-based web databases to search for potential victim account holders with large balances in HELOC accounts. The information includes name, address, date of birth, and social security number, Once the criminals find a victim they use other databases to obtain information commonly used in security questions, such as the victimís motherís maiden name. The criminals then obtain credit reports on the victims in order to identify personal information and account balances.

Armed with the victimís personal information, the criminals call the bank. Posing as the customer, the fraudsters wire transfer available money from the HELOC account into a separate account at another bank and controlled by the criminals. Funds are then wired from that account to accounts overseas. The criminals use caller-ID spoofing services, such as transferring the victimís home telephone number to a prepaid cell phone, in order to impersonate the customer.

Even banks with strong security in place have been victims, including instances where staffers made call-backs to the customerís home telephone number. Fortunately, in one case, the loan administrator knew the customer, did not recognize the voice, and cancelled the transaction.

CBAI offers the following recommendations:

- If there is any doubt as to authenticity of the funds transfer request, banks are reminded they do not have to perform a wire transfer.

- Beware of large requests for wire transfers that draw against a HELOC, particularly HELOCs that have large available balances and little previous activity.

- Limit the amount of wire transfer that can be completed by a customer service employee. Bank managers should approve all wire-transfer requests.

- Perform additional verification to include the customerís work and/or cellular telephone number.

- If the bank has the information, send an e-mail to the customer at home and/or work.

-Banks should warn bank customers to check their HELOC statements monthly and notify them if they notice suspicious activity, and always shred all documents that contain any personal information.

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