Ask HN: Lost $10k as my email was hacked. Any ways to recover it?

109 points by milanmot 7 years ago | 86 comments

I have suffered a loss of $10k due to an extremely unbelievable case of my client's as well as my own email domain was hacked.

–----

So, I run a very small pharma export company in India. I have a client in Ontario, Canada with whom I have been doing regular business.

2 weeks ago I got an order worth $10000 from them. So as usual I dispatched the material to them and then raised the invoice with my bank details from my email address called "abcde@mydomain .com".

Now on the next day my client received an email from "abicde@mydomain.com" stating that there is a change in invoice and revised invoice is again sent which had bank account details of a UK bank account.

Now an email like "abicde@mydomain.com" doesn't exist at all.

My client asked me for a confirmation email again but this email never reached me. So the client made the payment and the money is already deducted from his account.

Also, what makes this even more strange is that I received a fake email from my client's company with 3-4 times about not asking for payment as it will be delayed.

I got this email from an email address like "klye@clientdomain.com" instead of "kyle@clientdomain.com".

Now $10000 in an extremely huge amount for survival of my company. I want to know what are my options and is there any way of recovering it.

CPLX 7 years ago |

I'm surprised I'm the first person to point this out, but you have not lost any money, your client has.

You sent the goods to the client, and they have yet to remit the payment to you. So they still owe you the money and you should insist they pay it.

Granted, they're not going to like that, but the reality is they sent payment due to you to some other person. That's something they did not something you did.

They may be in a position to take steps to recover the payment they sent to someone else, given the banks involved and so on, and they should try to do it. But that's not something you're really in a position to be involved in, you didn't have anything to do with it and aren't a party to the fraudulent transaction.

In the meantime they should return the goods or send you the payment they owe.

cybrjoe 7 years ago | |

If this single transaction is key to the survival of his business this may be one of few, if not the only client they have. In that case it may make longer term sense to "negotiate" a settlement. That could either be a payment plan or percentage of the 10k obligation.

benmowa 7 years ago | |

this is an issue in real estate transactions as well, where a client or law firm executed fraudulent wire instructions received via spoofed email.

see last paragraph: https://themortgagereports.com/39665/cash-to-close-what-is-i...

Latteland 7 years ago | |

I strongly disagree with you. The person who sent that money will want to get their money back and you are in the middle. At the very least I would want to stop doing business with someone who communicates bank information in such a careless manner. It's possible these are such tiny companies that they do things like that. In any case, I'd blame the other person whom I thought I was sending money to.

Alex3917 7 years ago | |

> my client received an email from "abicde@mydomain.com" stating that there is a change in invoice and revised invoice is again sent which had bank account details of a UK bank account.

Emails sent from your domain usually constitute valid contracts. If you're letting other people send emails from your domain because you don't have SPF configured then there's a good chance a court would either rule that you've allowed them to enter into a legally binding contract on your behalf, or else that you were negligent and owe the $10,000 back in damages.

That's why you need to take away the email addresses of people who no longer work for your company, so that they can't enter into contracts on your behalf.

That said no one should ever wire money based on anything they receive via email. So if the sender email had SPF but the recipient just didn't see it flagged because it was in SOFTFAIL mode or whatever, then it's probably the client's fault at that point.

CPLX 7 years ago | | |

That’s highly doubtful.

I think it would maybe be arguable if someone actually hacked the OP’s account and the emails really did come from their outbox, but spoofed email is a different thing entirely.

It seems more equivalent as a legal precedent to someone sending a forged letter from a nonexistent employee on similar looking letterhead. Or maybe someone showing up at the door and collecting payment wearing a stolen or counterfeit uniform.

If you think of it in legal terms, in a lawsuit say, the client would have to acknowledge the existence of a contract and an obligation to pay the supplier, and then somehow make an argument that a spoofed email from a third party that the supplier had no awareness of, that never entered the posession or control of the supplier at all, somehow invalidates that contract, or proves that the client has satisfied their obligation.

That’s quite a stretch.

Arguing negligence on the part of the supplier still wouldn’t do anything to satisfy the payment obligation, at best it would seem to be a counter-claim, saying they they suffered a loss because of the suppliers negligence, but then that’s a separate tort and the burden of proof would be on them.

Klathmon 7 years ago | | |

I'm not a lawyer, but is that really true?

I could see the instance of an ex-employee that still can login can enter into contracts on your company's behalf, but a hacker doing so gets the same protections (for lack of a better word)?

That seems very wrong to me. I'm sure it makes things harder to determine the actual issue, but I just don't believe that a judge would look at this and conclude that fraud is ok as long as it comes from your email address...

(ignoring issues like gross negligence where a company is doing significantly less to secure their systems than should be expected)

philipodonnell 7 years ago | | |

> Emails sent from your domain usually constitute valid contracts

Gonna need a source on that one, chief.

nashashmi 7 years ago | | |

SPFs are not a legal enforcement and a court cannot penalize an entity for not having an SPF.

It is sort of like saying "because you are not sending encrypted emails, you are purposefully and negligently jeopardizing your privacy and information security."

xoa 7 years ago | | |

Amusingly in a thread on email scams and such you didn't read quite closely enough (plus OP didn't do a great job of differentiating either, maybe on purpose) :). Even ignoring the "sent from your domain = contract" assertion:

>Now on the next day my client received an email from "abicde@mydomain.com" stating that there is a change in invoice and revised invoice is again sent which had bank account details of a UK bank account. > >Now an email like "abicde@mydomain.com" doesn't exist at all.

Notice the "i", different from abcde@mydomain.com. He's saying it wasn't sent from the normal email account. The question I'd have is that OP uses "hacked" but there aren't actually any technical details here at all. Was one or the other mail servers genuinely compromised, or someone phished? Or were these emails simply spoofed? Or what? It sounds like it could have just been a forged From which is utterly trivial, every mildly serious spammer let alone spearphisher has done that forever. If the client "asked for a confirmation email" but the "email never reached" because it was a spoofed From and got blackhole'd but the client then took no response as confirmation that would probably be on the client.

Of course whatever the legal case there are other practical considerations, if this is a very valuable client then a certain amount of bending may be in order. It sounds like a pretty hokey order mechanism all around vs even just a simple HTTPS LE plain text web form and static invoice. And there is still the question of how exactly the phishing (if that's what it was) information was gathered for the spoofed invoice in the first place, insider job? Some other leak or hack?

But at least asking the client to try to get the money back seems fair enough. Money in that amount to a developed world bank should absolute be traceable. Alerting the banks and law enforcement should have been the absolutely immediate first move the instant anything amiss was realized. If it was the client's fault and the money really is gone somehow (or even will just take along while to recover) then at least splitting the different shouldn't be unreasonable.

shyn3 7 years ago |

Your email did not get hacked most likely. Your client got tricked. They spoofed an email with your domain, but the reply-to email was their own (the attacker). So the client thinks they responded to you, but they responded to the fake address. Also, generally when they do this, they spoof the body and the conversation of the email.

Most likely, your client's emails were compromised in this case. Ask them to forward you the original email received as an attachment, and the reply-email as an attachment.

Your client likely has to reach out to their banking institution. Most companies have safeguards against this on their end when sending money, specifically, when accounts change they get on the phone with someone using their Vendor list, not the communication from the email. Also, having multiple parties authorize a transfer.

gus_massa 7 years ago | |

I agree. A few (10? 20?) years ago it was very easy to spoof email and send an email "from" mickey@disney.com if you wish. The original email specification has almost no security features. Now, most of the email servers will sign the outgoing email, and if you receive an email with the signature gmail and others big webmail providers will show a big warning.

So, to understand the problem it is very important to get a copy of all the complete emails with all the hidden headers that have the automatic signatures of the servers the email passed through. (See https://www.google.com/search?q=email+headers )

With the emails headers it is posible to see if your server was hacked or if the sender field was spoofed.

samstave 7 years ago | |

Or an employee of his used this information to email the client and steal the money

shyn3 7 years ago | | |

This is not limited to an employee at OPs organization. It can be an employee from the corporation he is doing business with. Alternatively, someone could have printed an old email and one of the facilities providers (i.e. cleaning crew) found it and used it.

czbond 7 years ago |

This is very common issue; I've personally helped a company after they lost much more than this, and had to help prove to insurance/govt agencies/etc. Turn on DKIM, DMARC, and SPF records for your mail domain. Also, never send invoices over email that contain any payment terms (eg: accounts, addresses to mail check to, etc) they should always be in some sort of protected portal. Tell every customer never to accept payment term details from you over email, phone, etc. If you or your client has insurance, start documenting every part of your case with screenshots into a file, and document everything you know NOW, including timestamps, etc.

EDIT: Also, I'd suggest taking orders via a secured portal, and also autheticating large orders by calling a number for a client you already have (never trust their website, or an email from them). Unfortunately, you're out of luck that money.

milanmot 7 years ago | |

Is there anyway to recover that money?

charlesdm 7 years ago | | |

They need to file a police report, and get in touch with their bank. It's likely the money has already been transferred to a different bank, but the corresponding bank might still be able to freeze the account if it is still sitting there.

Then again, it might be transferred again as well. Money is hard to trace if it moves through different jurisdictions, as every country has different banking and privacy laws. Your client might very well hit a dead end for such a (in the grand scheme of things) small amount of money.

czbond 7 years ago | | |

Highly unlikely - but also, a side fact to keep it from happening again. The attack similar to this I had to help address, someone had sent an email to a client, over an Indian shared office space network. That network was found compromised, and man-in-the-middled. Suggest doing business communications like email over VPN (F-secure VPN or simlar) only.

Phlarp 7 years ago | | |

Highly unlikely.

vemv 7 years ago | |

Not sure if a portal is any better. Can't an email point to a fake portal?

czbond 7 years ago | | |

Absolutely it could. However, with a secured portal - the client would know to go there, rather than email for many interactions already. Once DKIM,SPF,DMARC are on - the spoofed email is harder to do. In this particular case, I'd suggest giving them a file of contact information, and not ever publishing it (email, etc). Also, in my view, it is much easier to spoof emails, than to attack a proper web app.

ndespres 7 years ago |

If I'm reading your story correctly, it matches up with a tactic my clients have been seeing more lately. The scammer has already accessed your account because you fell for a phishing scam, typed your email credentials into a fake login site for a fake Office 365 or Dropbox page or something.

Now the scammers are watching your email closely waiting for the opportunity to do this. Waiting for you to send an invoice to your client, so they can jump in and send a revised invoice with their own payment details on it.

This can happen with intrusion into your email box, or your clients'. Hard to say exactly from your story. But either case, someone's mailbox was accessed by the intruder. A similar scam is possible by just using similar domain names, but in such a case you wouldn't know precise details of the invoices. You can just send a random fake invoice and hope the mark pays it or provides payment details in some way.

One thing worth noting in your story is that you aren't out $10,000. Your client is the one who paid the money to the wrong party. They are the ones who need to work with their banks and reverse the payment. It's not your fault that they paid the wrong person.

corobo 7 years ago | |

> The scammer has already accessed your account because you fell for a phishing scam

> It's not your fault that they paid the wrong person.

How is this not the OP's fault? It's absolutely their fault - the fault that lead to their email being compromised

ndespres 7 years ago | | |

I stated in the next paragraph that the situation could just as easily be reversed. We do not have any way to know in this situation whose mailbox was accessed, the OP, or their client.

dkersten 7 years ago | | |

You don’t know t was the OP’s email that was compromised. It could have been the clients or something else entirely.

amorphous 7 years ago |

Immediately contact all the banks involved and report the fraud. They should be able to reverse the transaction.

captainmuon 7 years ago | |

I can confirm this. Something similar happened to an acquaintance, although the amount was even higher. They immediately called the police, and the transaction was reversed. When the thieves tried to withdraw cash, they were able to catch them. This happened in China, although the transaction was international.

drfuchs 7 years ago |

Your client got defrauded, arguably through no fault of your own. They never paid you, so they still owe you. Good luck with this approach, though. IANAL

Edit: I see CPLX has said it much better than I in the meantime. Note that it’s not at all clear that the hack happened on your end, rather than your client’s (or perhaps at some intermediate ISP).

moviuro 7 years ago |

Banking standards here in the EU impose a 13 months period during which the sender (order sender) can ask for a full refund. Check your local rules. This has to be talked about with the respective banks involved (that of your client + the one that received payment), as I believe you can't do anything anymore.

Next time, use more than one communication channel (Facebook, phone, signal, telegram, whatsapp... anything, really)

You should also see with your domain registrar and mail provider what happened.

milanmot 7 years ago | |

My domain and email provider is GoDaddy. Unfortunately, they said that they cannot do anything about it but still asked me to send IP email headers to their abuse team.

runako 7 years ago | |

> Banking standards here in the EU impose a 13 months period during which the sender (order sender) can ask for a full refund

Is this really true? Do EU bank transactions really take 13 months to fully clear?

moviuro 7 years ago | | |

No, they don't take 13 months to clear. The idea is to protect the payer (the one losing money) from either their human error, or an unlawful debit.

See https://www.europeanpaymentscouncil.eu/what-we-do/sepa-direc... .

maximp 7 years ago |

Just so you know, the Reply All podcasts takes on (and helps solve) cases just like these.

xte 7 years ago |

My two cent: any business should have ALSO a phone number, perhaps not immediately reachable, but still a phone number. Perhaps also a fax number, old but still useful in emergency.

justtopost 7 years ago | |

Hear hear.

If I can't reach flesh on a phone during business hours, I do my business with somebody else. No exceptions. A friend was trusting money and login details to a site with no mailing address or phone number and I pointed this out. He was suddenly aghast, another who did the same shrugged, I shuddered. Some people insist on learning the hard way.

nimbius 7 years ago |

here in the US, we have the financial fraud kill chain for transfers greater than 50,000 dollars. Other countries have used it as well. you may wish to contact the CSIS for methods they use to short-circuit these transactions.

https://rmacounts.com/uncategorized/financial-fraud-kill-cha...

forkerenok 7 years ago |

A couple of humble suggestions:

1. Get/Hire someone to do a proper analysis of the "breach". This may require your client's cooperation.

2. Regardless of whose fault that was, try to improve the process to protect yourself and your clients in the future (e.g. email signing, confirmation via a different channel, different way of collecting payments etc.)

jiveturkey 7 years ago | |

have you ever done this? a proper analysis will cost more than the money lost, and is itself not recoverable.

Symbiote 7 years ago |

This is fairly common fraud in the UK. See this for background:

https://www.theguardian.com/money/2018/oct/18/banks-to-check...

jiveturkey 7 years ago |

one important thing you didn't state, was this $10k order typical for them, or especially outsized. another important thing, you didn't state how any discussion to date has already gone with the client.

anyway, no matter, you are in india, the client/customer is in canada? the amount is only $10,000 and you are a "very" small company? you have no practical recourse.

i'd even give small odds that the client is in fact scamming you.

regardless, good luck but in the face of an uncooperative client, you're out of luck.

many of the arguments here are around legal correctness, who is at fault, etc. but they fail to take into account that you are too small and the amount is too small and across international borders, for you to do anything about it. now if the amount were $100,000 you'd be able to pursue it.

C1sc0cat 7 years ago |

You need to speak to the bank regulators an consider talking the press

In the UK the Daily Telegraph finance team they have been covering this in their weekend issues and have had some success in getting things changed here.

huehehue 7 years ago |

I wonder if a client has ever set up a scam like this.

They send a fake-looking email to themselves (using existing invoices as a template), then feign ignorance and refuse to pay for goods/services because "we sent the money, not our fault you didn't get it".

Even better that they'd send a few emails saying "we're working on paying you, don't bug us about it" -- payments are harder to collect as time passes for a number of reasons (in my experience).

captainmuon 7 years ago | |

As others have pointed out, it's the client's fault if they have been duped. Although for sure, they'll try to put the onus on the seller, and will claim the seller has been hacked etc..

milanmot 7 years ago |

Email headers of the fake email I received are below. Can anyone identify anything out it?

-------

Received: (qmail 30963 invoked by uid 30297); 16 Oct 2018 19:04:18 -0000

Received: from unknown (HELO sg2plibsmtp01-1.prod.sin2.secureserver.net) ([182.50.144.11])

          (envelope-sender <klye@clientdomain.com>)

          by sg2plsmtp19-01-25.prod.sin2.secureserver.net (qmail-1.03) with SMTP

          for <reema@mydomain.net>; 16 Oct 2018 19:04:18 -0000

Received: from se1-lax1.servconfig.com ([104.244.124.86])

               by bizsmtp with ESMTP

               id CUdcgdXtBUMdaCUdegyEaT; Tue, 16 Oct 2018 12:04:18 -0700

Received: from res203.servconfig.com ([192.145.239.44])

               by se1-lax1.servconfig.com with esmtps (TLSv1.2:ECDHE-RSA-AES256-GCM-SHA384:256)

               (Exim 4.89)

               (envelope-from <klye@clientdomain.com>)

               id 1gCUdY-0005Jd-Kn; Tue, 16 Oct 2018 15:04:16 -0400

Received: from [::1] (port=46403 helo=res203.servconfig.com)

               by res203.servconfig.com with esmtpa (Exim 4.91)

               (envelope-from <klye@clientdomain.com>)

               id 1gCUdY-00GWW5-7H; Tue, 16 Oct 2018 12:04:12 -0700

MIME-Version: 1.0

Content-Type: multipart/alternative;

boundary="=_cb44418026f16861773c2073108229cd"

Date: Tue, 16 Oct 2018 12:04:12 -0700

From: Kyle <klye@clientdomain.com>

To: Reema<reema@mydoamin.net>

Cc: 'mail' <mail.globax@dr.com>

Subject: RE: pharma zonisamide

Reply-To: Kyle <Kyle.clientname@dr.com>

Mail-Reply-To: Kyle <Kyle.clientname@dr.com>

Message-ID: <4d778f3b89a049b84840dbdb372798b8@clientname.com>

X-Sender: Klye@clientname.com

User-Agent: Roundcube Webmail/1.3.3

X-Get-Message-Sender-Via: res203.servconfig.com: authenticated_id: shahrukh@makamil.com

X-Authenticated-Sender: res203.servconfig.com: shahrukh@makamil.com

X-Originating-IP: 192.145.239.44

X-SpamExperts-Domain: res203.servconfig.com

X-SpamExperts-Username: 192.145.239.44

Authentication-Results: servconfig.com; auth=pass smtp.auth=192.145.239.44@res203.servconfig.com

X-SpamExperts-Outgoing-Class: unsure

X-SpamExperts-Outgoing-Evidence: Combined (0.35)

X-Recommended-Action: accept

X-Filter-ID: EX5BVjFpneJeBchSMxfU5rwL/g85tQulnBE8gPHu3/F602E9L7XzfQH6nu9C/Fh9KJzpNe6xgvOx

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EvmQrtvSbV4fnBHAY64qloNFm00WuJU2Ru5B4WNJiz4C8c3Na3gFdtxXZg==

X-Report-Abuse-To: spam@se1-lax1.servconfig.com

X-CMAE-Envelope: MS4wfGTkLN5Q3Etz9Wkc3k/s+48X4HLNxcMTgPNW9dd3KWT52iaJK7tSMbsyZjm0/hi9J87LipDUTpWV2p/qyIS3IuuXa62TTzrOmM1SRoaJXZY91Lfa/lzj

i8Jb2TdRHL58hBIRNSmmPIf9tFZ8lSpapy/8CF5h3TDIczyZlwy+0j+T7U+zeMfEALDdLQAg1NCO7Q==

X-Nonspam: None

matt_the_bass 7 years ago |

Maybe this is a dumb question, but have you talked to your customer about this? Such issues are covered by insurance plans that are common for US companies. It may be as simple as your customer makes a police report and then provide it to their insurance. Then 60 days later they get a check and pay you.

rnotaro 7 years ago |

Your case is really similar to this attack (`How a fraudster got $12 million out of a Canadian university: They just asked for it`): https://news.ycombinator.com/item?id=18186433

hawkilt 7 years ago |

you or your client using Google’s Gsuite as email service provider?

cause the same thing happened to one of client in Chennai, India.

but they client didnt tranfer the funds since he found that the bank account the fake guy sent was new to them. so the client called orginal company back and reported it.

gagabity 7 years ago |

Unless I am missing something I dont see a hack here, just some spoofed emails.

milanmot 7 years ago | |

It's not just a random spoof email. Someone was aware of the entire conversation and send a spoof email at the exact situation resulting in my loss.

gagabity 7 years ago | | |

Doesnt mean you were hacked could be an inside job by someone at either organization or could be a hack on the other company's email. If your email provider has any sort of activity log like gmail does you might want to review those, or if you run your own there should be access logs on the server.

C1sc0cat 7 years ago | |

Very common and growing type of fraud sad to say

masonic 7 years ago |

For a similar recent case, see

https://news.ycombinator.com/item?id=18318226

darkhorn 7 years ago |

Make sure you have set up SPF, DKIM and DMARC. Also use email certificate.

divitics 7 years ago |

An interesting case, I have never heard of this type of fraud

21stio 7 years ago |

Maybe your business partner is trying to scam you.

rasz 7 years ago |

You didnt lose 10K, your client did.