Oct. 17, 2016 – The State Bar of Wisconsin issued an alert on Oct. 7 to inform members of a potential scam involving automated clearinghouse (ACH) transactions. These were not scams after all, but members are still encouraged to remain vigilant.
Several members had notified the State Bar about ACH withdrawals from their personal bank accounts with notations that those transactions originated from the State Bar of Wisconsin. ACH is an electronic network used to process credit and debit transactions.
But the State Bar of Wisconsin does not and cannot access members’ bank accounts (personal, business, or trust) via ACH. Thus, the State Bar issued the scam alert immediately to inform members of a potential scam and to be on the lookout.
Upon further investigation, however, the State Bar discovered that those transactions were authorized by the members affected. Specifically, the transactions involved a State Bar affinity partner that provides insurance products to State Bar members.
However, the transactions were mislabeled as originating from the State Bar of Wisconsin. That was an error. The affinity partner has been notified to ensure all future transactions are properly labeled to reflect the actual originating party.
The State Bar will continue to monitor and investigate any potential fraud targeting State Bar members, and issue scam alerts as that information becomes available.
Please note that an affected member, who provided information to the State Bar, was instrumental in helping the State Bar resolve this matter. Such communications are welcome and appreciated to identify, investigate, and resolve potential problems relating to fraud against lawyers.
Please contact the State Bar of Wisconsin at (800) 728-7788 should you discover potential fraud that could be targeting lawyers or law firms.
The State Bar continues to urge members to be vigilant and take precautionary steps to protect data and financial information from cyber threats. Note that “cybersecurity” is the special focus of the October issue of Wisconsin Lawyer, now available online.
Timely Report Potential Fraud
Mary Gilmeister, president of the Wisconsin Automated Clearing House Association (WACHA), notes that federal regulations require account holders to notify their financial institutions of potential fraud on ACH transactions within 60 days for personal bank accounts, and 24 hours for business accounts.
“The chances of recovering losses from fraud are slim if not meeting these deadlines,” Gilmeister said. “In all instances, the sooner you report it the better.”
That means attorneys should have mechanisms in place to actively monitor for suspicious banking activity, and report any suspicious transactions immediately.
Gilmeister recommends that law firms (and other businesses) have a “dedicated computer” that is purely for online banking and no other purpose. “It would not be used for email or other online activity that could draw potential phishing or other scams.”
She also advises law firms to require two “tokens” for validating user transactions; that is, two different security codes (tokens) that would be required before approval.
Contact your financial institution for more information about transaction security tools.