Fraud and embezzlement have been long-standing threats for homeowner associations, while cybersecurity risks are relatively new. Understand the methods criminals frequently use to help you identify problem areas and reduce your exposure to fraud.
Payment fraud has become pervasive, with 80% of organizations reporting they’ve been a target. Checks are particularly susceptible—65% of organizations say they have been victims of check fraud. Fewer organizations reported scams involving other types of payment: ACH debits (33%), wire transfers (24%), commercial credit cards (20%), and ACH credits (19%).Disclosure 1
Business email compromise (BEC) is a primary source of attack. Finance teams who manage payments and accounts payable are primary targets.Disclosure 1 Fraudsters often use social engineering to trick employees into providing sensitive information, making fraudulent payments, or opening attachments that contain malware.
Embezzlement persists as an established threat to associations’ financial health. Limited oversight of an association board or management company creates inviting conditions for theft. Entrusted parties sometimes abuse their positions, siphoning funds by falsifying invoices, diverting payments, or manipulating financial records.
Cybersecurity threats are growing as associations increasingly communicate online and adopt digital payment platforms. While convenient and efficient, electronic payments create new routes for cybercriminals to infiltrate and exploit. And the rise of remote work poses additional cybersecurity challenges.
Hackers attack homeowner associations, hoping to steal sensitive data, disrupt operations, or extort ransom payments. Their favored methods include:
- Phishing
- Malware
- Ransomware
- Data breaches
Robust cybersecurity defenses are important. But even with strong security, cybercriminals could gain access to your HOA.
