High Net Worth Clients Become Fraud Targets

High net worth families at risk for fraud

December 14, 2018

By Alicja Grzadkowska
Insurance Business America

Identity fraud in the US is on the rise, with 16.7 million consumers affected in 2017, according to the Javelin Strategy & Research report, “2018 Identity Fraud: Fraud Enters a New Era of Complexity.” In the same year, 30% of US consumers were notified about an exposure to a data breach, which was a 12% increase from 2016, and losses as a result of identity fraud cost consumers $16.8 billion. For those people whose accounts were taken over by cyber criminals, the average cost of out-of-pocket expenses was $290, in addition to the 15 hours it took, on average, to resolve the situation.

For high net worth individuals who are impacted by fraud, those costs can be even higher. According to PURE Insurance(opens in a new tab), which is a member-owned insurer for high net worth families, typical scenarios that their members have faced include unauthorized wire transfers that, for one individual, resulted in the loss of $240,000 after the money was fraudulently transferred from their bank account. In the midst of purchasing a new property, yet another PURE member was targeted by a cyber criminal who had sent an email from what looked like the sellers attorney with fraudulent wire instructions, which the member had followed. In the end, close to $1 million was sent to an account in Hong Kong that had already been closed.

The PURE team first realized that members were becoming victims of this type of criminal activity back in 2015, and has since seen instances of fraud occur at an increasing rate.

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