Email scams & swindles

Newspaper headlines about online, phone and email scams are commonplace in today’s cyber-threat world. Of course, prevention of a cyber attack is better than a cure. However, what happens when a cyber attack strikes and a company is duped into transferring money into a fraudster’s account?

We recently acted for a company which made an erroneous transfer on 14 December 2017 of over US$3M, after a scammer pretended to be a business partner. Staff of the company realized they had been duped when they checked with the real business partner about the transaction.

Our firm was instructed on 18 December 2017 and quickly filed a report with the Hong Kong police the same day. The police swiftly notified the Anti-Deception Coordination Centre and froze the account with the assistance of the local bank, so that the funds remained intact in the Hong Kong bank account.

Civil proceedings against the recipient account holder were issued on 22 December 2017 on the company’s behalf and default Judgment obtained against it on 26 January 2018, as fraudsters usually never defend. Garnishee Proceedings were subsequently issued against the local bank for the return of the funds. Once a Garnishee Order Absolute was obtained from the Court, the same was served on the local bank and the funds were safely returned to the company’s bank account on 27 March 2018.

In the case above, our client was fortunate to retrieve the funds.

Timing is key. Fraudsters will be quick to transfer the funds out and into another account once the original transfer has been made. Hence, the report to the police to freeze the funds and trace the recipient account holder ought to be done within a 72-hour timeframe. If this opportunity is missed, the chances of recovering the funds may be lost.

If the funds in question are not small, other measures, such as an application to the Court for a freezing order, are advisable, especially at the very early stages, when the police are unable to confirm whether the funds have been frozen.

For companies both large and small: be prudent and check with the counterparty before making a fund transfer and, in the unfortunate event of an erroneous transfer, report the matter to your bank, the police and reach out to your lawyers.