The RCMP is investigating possible fraud against the Town of Irishtown-Summerside on Newfoundland's west coast, just north of Corner Brook.
The RCMP said it suspects an email thread between the town and a legitimate vendor was hacked and the person or people behind it redirected an electronic invoice payment to their account.
Cpl. Jolene Garland, media relations officer with the RCMP, said Friday that police received a report of fraud of more than $5,000 from the town on March 29.
"It looks like a fraudster hacked into the town's email address and obtained information from an email chain," Garland said.
"The fraudster then began communicating with the town via the email, posing as a legitimate vendor, and provided instructions on the payment of the invoice in the form of an email money transfer."
Garland said whoever was behind the hack tried the exact same thing a second time, weeks later, posing as a different vendor — but using the same email address they had used the first time. That's when the town realized something was wrong, said Mayor Barry Wheeler.
In the intervening weeks, private residents were also scammed, said Wheeler. He said at least two people were conned but one has been able to recoup their losses through their bank. The scammers had sent an email offering a discount on property taxes if they were paid electronically.
"We had residents of the town coming in showing us emails that they were receiving from an individual or individuals pretending to be the town looking for payment for our tax invoices," said Wheeler, who declined to cite just how much was taken from the town, citing the ongoing investigation.
"Any amount of money that we lost from the municipality's perspective, and any amount that our residents lose, it is significant. When you look at it, we are custodians of the town's finances and we're supposed to be responsible for actually being good caretakers."
Wheeler said the town did audited its IT infrastructure and there's no evidence of personal or private information being stolen.
He said the scam was elaborate in that the person or people behind it mimicked town emails, right down to the signature. For now, the town has stopped all electronic payments and is going back to using physical cheques.
"Everything looked like it was legitimate," Wheeler said.
Garland said the scam is not believed to be local, but is within Canada.
She said police have a search warrant for the email the money was sent to. Once that's processed they will know which Canadian financial institution the funds were deposited in, Garland said, and another warrant will be issued to find out the account holder information.