P&I correspondents are being urged to strengthen their payment verification procedures after a fraudster intercepted email communications during a sensitive crew claim and diverted a US$200,000 settlement, according to International Transport Intermediaries Club.

In a case cited in ITIC’s most recent Claims Review, a P&I correspondent was managing a sensitive crew-claim settlement when a third party intercepted email communications and began impersonating several individuals involved in the process, including members of the deceased’s family.

Mark Brattman, Claims Director at ITIC, said: “This case is a stark reminder of how sophisticated payment-interception fraud has become. Email interception is a well-known method of fraud and it often targets high value payments, particularly where the correspondence is sensitive or time pressured. In this case, the fraudster took advantage of a complex and emotional situation and relied on the apparent credibility of the forged documentation.

“The quality of fraudulent emails is constantly improving and it is becoming almost impossible to tell if it is fraudulent just from reading it. Checks need to be made to verify if the emails are real. Any changes to bank details should be seen as a huge red flag. Similarly, if bank details appear to be in a different country to where the real payee is located, or if the account name differs from the real payee’s name, this should set alarm bells ringing,” Brattman added.

Using fake email addresses and fabricated documents, the fraudster supplied false bank details and fraudulent settlement authorities.

Believing the communications to be genuine, the correspondent transferred the US$200,000 settlement to the fraudulent account provided.

The fraud only came to light when the actual family contacted the correspondent to ask why they had not received the payment. By that point, the funds had already been withdrawn by the fraudster and could not be recovered.

The correspondent notified the P&I Club immediately. Legal counsel was appointed to verify the claimant’s identity and finalise the settlement correctly. The member paid the full settlement again from their own funds and also had to cover the additional legal costs to ensure the family received what they were owed.

The correspondent was covered by ITIC, which assessed the incident as a failure to identify fraudulent communications and verify new bank details before authorising payment. ITIC also reimbursed the correspondent for the additional legal costs.

“We highly encourage correspondents to take extra care to verify identities and payment instructions through secure, multi-channel communication. Bank details should always be checked by calling a publicly available telephone number, such as one listed on an official website, rather than any number supplied in an email. We strongly encourage members to put robust fraud prevention measures in place and to maintain strong internal control systems, especially when managing settlements or any other critical payments,” Brattman concluded.