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Retirement Planning > Social Security

HNW Individuals’ Lax Security Easy Target for Fraud

By Emily Zulz

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Cybercrime, particularly against high net worth individuals, appears to be on the rise.

David Stender, senior vice president and enterprise security officer at M&T Bank, outlined three cybersecurity situations that high net worth individuals need to watch out for.

Stender has a rich history in cybersecurity. Prior to joining M&T Bank, Stender was the associate chief information officer for cybersecurity and the chief information security officer for the Internal Revenue Service. He also spent 26 years on active duty in the U.S. Navy as a cryptologic officer.

Executive impersonation is up more than 100% in the past 6 months, according to Stender.

Stender explained “executive impersonation” by describing a potential scenario.

“You like art. You want to buy a piece that happens to be coming up for sale in Japan and you live in New York City,” he said during a Wilmington Trust press briefing in New York on Tuesday. “You call Christie’s, as an example, or some other art dealer or your relationship manager at a wealth institution like Wilmington Trust, and you ask, ‘I need you to transfer a million dollars to this bank so that I can put a down payment or I can buy this piece.’”

While this seems like a fairly common thing that happens, Stender pointed out how easily it could also be fraud.

“How often do you think that happens that that’s actually a fraudster who’s now impersonated that high net worth individual?” Stender asked. “And [the fraudster] has duped the relationship manager or has duped the auction house into believing that’s actually really a wire request and they fraudulently move that money.”

That’s executive impersonation.

According to Stender, hackers take advantage of the fact that the standard business process for a wealthy individual is to simply send an email to a relationship manager at some financial institution.

“And the fraudster will make that email look exactly like the email from the known customer,” Stender added.

Stender’s second piece of advice is perhaps his most important.

“What we’re seeing now – and this is probably the one key point that I’d ask you to take away: Fraudsters are not hitting banks. They’re not hitting M&T, they’re not hitting Wilmington Trust. They’re hitting individuals because their own security is so poor compared to the security of a large financial institution,” he said.

According to Stender, it’s “so much easier” to take advantage of individuals.

“Have you done all the things that you need to do to protect your home systems?” he said. “Because everyone has internet at home, everyone has broadband connectivity at home. You have broadband connectivity at home, which hackers love. And you haven’t done the due diligence on your home system to protect it.”

The most disturbing area for wealthy individuals, according to Stender, is the increase in elder abuse.

“We’re seeing a huge spike right now in elder abuse,” he said. “Especially around wealth individuals where they have a significantly diversified portfolio. They need a lot of assistance in dealing with their money that they don’t pay attention to the details because they’ve hired a number of folks to come in and do that.”

Oftentimes those “folks” are family relatives, which can be especially troublesome.

“We’re seeing a huge uptick in especially – and this is one of the worst areas we see – in family abuse,” Stender said. “That son or daughter or nephew or cousin that has decided they want to transfer that estate a lot faster than you want to transfer the estate. And they start doing it the second they’re in control. It’s happening across the industry but we’re seeing it much more in high net worth individuals because the draw is so much greater.”

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