ProtectingEscrowTrustAccountsFromCyber-Hacking.pdfVIP

COMMISSIONER’S BULLETIN DEPARTMENT OF CORPORATIONS Supporting a Fair and Secure Financial Services Marketplace for all Californians Edmund G. Brown Jr. Jan Lynn Owen Governor California Corporations Commissioner DATE: May 21, 2013 Commissioner’s Bulletin No. 002-13 Protecting Escrow Trust Accounts From Cyber-Hacking You are being sent this urgent bulletin to alert you of the growing threat of cyber- hacking of escrow trust accounts. The Department of Corporations has been informed of two escrow companies who were the victims of cyber-hacking this year, together losing an estimated $2,000,000 in trust funds. Both cases involved unauthorized wires to foreign bank accounts. One company took extraordinary efforts to replace the funds and is still in business. The other company was not able to replace the funds and is currently in conservatorship. This is an important reminder that each escrow agent must be vigilant in protecting trust accounts. Though the alleged cyber-hacking cases are still under investigation, a common issue appears to be malware and computer viruses infecting the computers. These viruses can copy keystrokes and obtain passwords, which are sent to cyber-hackers all over the world. In at least one case, it appears that the hacker took control of the escrow agent’s computer after the agent typed in a secure token number to access the trust account. What You Can Do Escrow companies’ paramount duty is to prote