The Carroll County Industrial Development Authority’s (IDA) checking account was recently breached as part of a national Craigslist scam, but county officials say the scheme was caught before any of the agency’s funds were lost.
According to Carroll County Interim County Administrator Nikki Cannon, the county became aware Dec. 16, 2015 that there potentially could be some fraudulent checks on the Carroll County IDA account.
“We received three phone calls in a matter of minutes, and the people who had received checks from the IDA were calling to make sure that they were valid checks,” Cannon said. “When you receive three calls in a matter of minutes, it really threw up a red flag to us that we may have a problem. The story that we kept hearing over and over from people who had called was that they had been contacted through Craigslist.”
Craigslist is a classified advertisements website with sections devoted to jobs, housing, personals, for sale items, items wanted, services, etc. The website is set up, however, where many of the transactions often take place without face-to-face interaction. Because of that, craigslist has often been plagued by a variety of scams.
“The premise of the scheme was they would sell a piece of merchandise for $350, but when the check came in the mail it came for $1,400 and with instructions to cash the check and to give the additional $1,100 to the person who comes and picks it up,” Cannon said. “We had calls from all over the United States. We had calls from Arizona, West Virginia, Florida, California, Pennsylvania, and New Hampshire.”
Cannon said after the Carroll County Administrator’s Office received the first three calls, it contacted the bank to put a fraud alert on the account the IDA has with Wells Fargo. Once that happened, she said the governmental agency wasn’t at risk of losing money.
“Luckily we got in contact with Wells Fargo before any of the checks were attempted to be negotiated and clear,” she said. “But then the inundation started because there was a large volume of checks out there. People were calling to make sure they were valid. Not all the checks were for the same amount. There were some large checks. We had bank tellers calling with the person there who was trying to negotiate the check.”
Cannon said the group behind the Carroll County IDA account breach was not local – the scheme crossed several state lines – but it was what she called a very evolved group. Thankfully, she said the Wells Fargo Fraud Unit and several state and national law enforcement agencies were quick to get on the case.
“Wells Fargo put an alert on the account so any time somebody came in and presented a check there was a flag on the account for them to call and validate it. That way there was a positive pay set up on the account to protect the account and make sure there was no loss. If indeed a check did go through, once that fraud alert was put on the account, the bank would automatically reverse it as fraudulent,” she said. “The good news is that the Carroll County IDA did not suffer any losses from this fraudulent activity. And if there is a silver lining, it is that the account now is probably more secure than it has ever been.”
Cannon said such schemes are now so common it took her four hours to get in touch with a live person on the phone with Wells Fargo’s Fraud Unit.
“He said he understood we were upset and frustrated, but he wanted to let us know we were the tenth person calling to report this kind of instance of fraud that day,” Cannon said. “I don’t know if we will ever know the origin of how they got the account and the routing number on the IDA account, but in this day and age with cyber security being such an issue somebody could have stolen a an electronic file somewhere. We are not the only agency this has ever happened to.”
Even though the Carroll County IDA is a separate governmental agency, Cannon said the IDA does not have a staff. Therefore once the fraud calls started coming in, the county administrator’s office stepped in to assist with the case.
Allen Worrell can be reached at (276) 779-4062 or on Twitter@AWorrellTCN