NGOs and apartment associations at high risk of falling victim to fraud in Estonia
Nonprofits and apartment associations are at particular risk from cases of phone and internet fraud, as oversight of financial transactions is sometimes inadequate, the police say.
Exactly one week ago, police received a report of another major fraud case in terms of financial losses, in which scammers managed to trick a victim out of nearly €500,000. The scheme used to deceive a 49-year-old man was identical to a fraud involving the Estonian Artists' Association just a few weeks earlier, in which the organization lost nearly €700,000.
"First, a courier called and said documents needed to be delivered. Then came the bank, the police, a secret operation. Remote access software was installed on the victim's computer, after which he was locked out of his accounts, the screen was blacked out and transfers began to be made," described Police and Border Guard Board (PPA) Fraud Resolution Center head Jaagup Toompuu.
The man lost money from both his personal and business accounts. According to police, this is typical. In May alone, more than €2 million was lost to scammers, with more than 1,000 cases involving fraudulent and phishing websites.
"There are far more attempts than successful scams, fortunately. But sometimes a person is actually expecting a parcel or has just made a bank transfer, becomes concerned and may also be pressured during the call. They then enter their PIN codes immediately and the money is gone," said Märt Hiietamm, head of the analysis and prevention department at the Information System Authority (RIA).
Nonprofit organizations are among the most vulnerable targets for fraud, with apartment associations warranting particular attention.
"One problem is that proper systems are not in place. Often, only one person is required to approve transfers. Another problem is that bank accounts are not monitored constantly, which means that if scammers gain access, it may take one, two or even three weeks before anyone notices," Toompuu said.
The sums accumulated in apartment association accounts can amount to hundreds of thousands of euros — for example, when an association has spent years saving to replace a roof or heating system.
"We have, let's say, three wallets. One is a reserve fund equal to about one month's average expenses, so if there are outstanding debts, we can draw from it. The second is a renovation fund and the third covers maintenance fees. In our case, one board member has all the passwords. In addition, we have an accounting firm that manages our building. We use a two-step approval process. It's not that one person does everything. The accountant prepares the transfer and then a board member approves it," said apartment association chairman Sergei Kuznetsov.
One can never be too careful, Kuznetsov added, citing an experience involving Elektrilevi, Estonia's electricity distribution network operator.
"One time, they really did want to carry out work, but we sent them away. They called again and we sent them away once more. Only the third time did we confirm everything and allow the work to be done," Kuznetsov said.
But how was the apartment association certain the person was genuinely an Elektrilevi employee?
"They sent us an official letter and when the worker arrived, he showed us his identification. Everything checked out," Kuznetsov said.
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Editor: Marcus Turovski, Marko Tooming
