Indiana Car Dealer Loses $736,000
Cyber criminals continue to find new and unique ways of infiltrating company systems and processes. At our most recent CLE Seminar, Protecting Your Business and the Information it Collects, Khizar Sheikh, Esq., Member & Chair, cyber, Privacy & Data law, Mandelbaum Salsberg and Robert Kleeger, Founder and Managing member, Digital4nx Group, LTD, discussed the vulnerability of our business, and stressed the importance of being vigilant and proactive at all times. They described how cybercrime is becoming an industry unto itself and even businesses that, at first glance, may not seem like obvious targets can be quite fruitful to the criminals involved. The following case takes place in the automobile industry but demonstrates the vulnerability of any large scale transaction, and the culpability of the parties involved.
In September 2015, two Ford dealers, one in Ohio and one in Indiana agreed to a transaction. Beau Townsend Ford would sell twenty (20) Ford Explorers to Don Hinds Ford for $730,000.
Unfortunately, during the course of the transaction, Beau Townsend Ford’s email system was compromised. A third party, had set up forwarding rules to divert emails from the buyer, Don Hinds Ford, to insert themselves between the two parties. The criminals (yes, apparently from Nigeria) were able to send emails from Beau Townsend to Don Hunds, and used that ability to send a fraudulent request for payment by wire transfer instead of check. Don Hinds Ford didn’t find anything unusual about that request, so they agreed and paid according to the third party’s instructions. Don Hinds Ford then took possession of the 20 Fords, and thought the matter was settled. Both parties discovered the problem when Beau Townsend Ford called Don Hinds Ford asking where their money was, and the fraud was uncovered. The authorities were then contacted and an investigation began.
A breach of contract lawsuit shortly followed, with Beau Townsend Ford demanding the Fords be returned to them, because they had not received payment, and Don Hinds Ford refusing, because they had sent payment. The argument on both sides are that Beau Townsend Ford should’ve been more careful with their email server and taken quicker action once they realized it was compromised, and that Don Hinds Ford should have taken steps to confirm that they were actually dealing with Beau Townsend Ford before sending the money. In the meantime, the cyber criminal successfully stole over $730,000, and the two parties are left to fight over who is responsible for that amount.
Unfortunately, cyber crime is becoming quite common in real estate transactions due to the large amounts of money and sensitive information involved. This case shows that it can happen in any large scale transaction, no matter the industry. It is critically important to make sure that you take proper steps to protect your information and always know who you are dealing with.