02 Mar What is Business Email Compromise (BEC) Fraud?
Business Email Compromise Fraud: Protect Your Business from Corporate Fraud
Understanding Business Email Compromise Fraud
Business Email Compromise (BEC) fraud, a rapidly growing cyber threat, has become a significant concern for businesses worldwide. The FBI’s Internet Crime Complaint Center (IC3) reports that Business Email Compromise schemes have inflicted a staggering $5.3 billion loss on around 24,000 organizations worldwide over the last three years. Each victim, on average, suffers a financial hit of approximately $218,000. These schemes indiscriminately target companies of all sizes and industries, resulting in significant financial and emotional repercussions.
These attacks often start with compromising or spoofing an email account belonging to a business owner, executive, or employee.
For example, a CEO’s email account might be spoofed to send a seemingly legitimate request to the company’s finance department, urging immediate payment to a supposed vendor. The urgency and authority of the email often trick employees into bypassing standard verification procedures, resulting in significant financial losses. By manipulating these accounts, fraudsters can deceive unsuspecting employees into authorizing wire transfers, resulting in substantial financial losses and leaked financial records.
BEC’s appeal to cybercriminals lies in its simplicity and effectiveness. Unlike other cyber-attacks that require advanced technical skills, BEC relies heavily on social engineering—manipulating human psychology to achieve malicious ends. This approach reduces the need for sophisticated malware or extensive technical infrastructure, making it accessible to a broader range of criminals.
Business fraud can affect any sized business in any industry, so making sure you and your team are aware of different fraud schemes and having a cybersecurity plan against them is of the utmost importance. At Sunwest Bank, we prioritize safeguarding our business clients from such threats through our expert cybersecurity guidance so you can operate with peace of mind.
Phishing vs. BEC: Key Differences
While phishing and BEC are examples of email-based fraud, they differ significantly in their execution and targets. Phishing attacks cast a wide net, aiming to trick recipients into divulging sensitive personal and financial information, such as login credentials or banking details. In contrast, BEC attacks are highly targeted, focusing on specific individuals within an organization, such as executives, finance personnel, or business owners. Those involved in this form of business fraud conduct thorough reconnaissance to craft convincing emails that bypass traditional security measures.
Business Account Fraud
While different, phishing and BED are ways to commit business account fraud. This occurs when unauthorized individuals gain access to a company’s financial accounts, typically with the intent of making unauthorized purchases that benefit the fraudster. This can result in unauthorized transactions, data breaches, and significant financial losses. Implementing strong security measures and regularly monitoring account activity can help prevent such fraud.
How BEC Attacks Work
BEC attacks typically follow a meticulous process. First, cybercriminals gather detailed information about their target organization, including its structure, key personnel, and common business practices, specifically regarding how employees are paid. Once they have identified their target, they either compromise an existing email account or create a look-alike domain (e.g., [email protected] instead of [email protected]) to contact employees. The fraudulent email, often appearing to be from a high-ranking executive, is then sent to an employee authorized to handle financial transactions or those with access to financial documents, such as a controller or finance manager. The email may contain urgent language to expedite the wire transfer without raising suspicion.
BEC vs. Email Account Compromise (EAC)
While BEC involves impersonating a legitimate email account to request fraudulent wire transfers and acquire sensitive data from financial records, Email Account Compromise (EAC) involves gaining unauthorized access to an email account. In EAC attacks, cybercriminals can monitor email communications, manipulate email settings, and create rules to hide their activities. Both BEC and EAC can have devastating consequences for businesses, but understanding their nuances helps implement more effective defense strategies against both.
Identifying BEC Attacks
Recognizing the signs of a BEC attack is crucial in preventing corporate fraud and protecting your business bank account information. Some common indicators to look out for include:
- Unusual Requests: Emails requesting urgent wire transfers, especially those deviating from standard procedures.
- Changes in Communication Style: Emails with language, tone, or formatting inconsistencies that don’t match that of your fellow employee or boss.
- Suspicious Email Addresses: Look-alike domains or slight variations in email addresses.
- Unusual Attachments or Links: Unexpected attachments or links, especially those prompting immediate action on transferring funds.
Email Fraud Methods: Common Tactics
Cybercriminals employ various tactics to execute email and business fraud. These methods include:
- Spoofing: Creating email addresses and fraudulent accounts that closely resemble legitimate ones.
- Social Engineering: A tactic often seen in Facebook scams involves manipulating victims into divulging confidential information from financial institutions or performing specific actions through compelling wording.
- Malware: Using malicious software to gain access to email accounts and networks.
Is Email Fraud a Cyber Crime?
Yes, email fraud is a form of cyber and financial crime. It involves using deceptive practices to steal money, confidential information, or other valuable assets from a business and its employees. Cybercriminals often operate from different areas of the country and the world, making it challenging for law enforcement agencies to track and apprehend them. However, businesses can mitigate financial crime risks by implementing robust cybersecurity measures and educating employees about potential threats.
What Happens if a Scammer Has Your Email Address?
If a scammer gains access to your email address, they can use it for various malicious activities, including:
- Identity Theft: Using your email to impersonate you, gain access to sensitive information, and make unauthorized purchases.
- Phishing Attacks: Sending fraudulent emails to your contacts to steal their information.
- Spamming: Flooding your inbox with unsolicited emails, often containing malicious links or attachments.
Protecting Your Business: Sunwest Bank’s Recommendations
At Sunwest Bank, we are committed to helping our clients protect their businesses from BEC and other forms of corporate fraud and financial crime. Here are some strategies we recommend taking advantage of:
Improve Business Processes
Enhancing your business processes, especially those related to wire transfers, can significantly reduce the risk of BEC and other fraudulent activity. Implement multi-step verification processes for financial transactions and establish clear protocols for verifying requests so the entire team knows when legitimate sources are reaching out.
Verify Requests
Always verify wire transfer requests through verbal confirmation or alternate contact methods. This additional step can prevent unauthorized transactions even if the initial step was taken by an employee.
Employee Education
Educate your employees about cybersecurity threats and the importance of vigilance. Regular training sessions can help employees recognize and adequately act on suspicious activity.
Incident Response Plan
A robust incident response plan is crucial in minimizing damage if a BEC attack occurs. This plan should outline steps for immediate action, including contacting your financial institution and relevant authorities.
What to Do if You Are a Victim of Business Fraud
If your business falls victim to corporate fraud, acting quickly is essential to mitigate losses:
- Contact Your Financial Institution: Immediately notify your bank to halt unauthorized transactions and freeze accounts if needed.
- Contact the FBI: Reach out to your local FBI office. They may be able to assist in recovering or freezing the stolen funds.
- File a Complaint: Report the incident to the Internet Crime Complaint Center (IC3) at IC3.gov, regardless of the financial loss.
Sunwest Bank: Your Partner in Fraud Prevention
We understand the critical importance of protecting your business from cyber threats. Our comprehensive cybersecurity solutions and expert guidance empower businesses to stay ahead of cybercriminals and minimize corporate fraud. We offer tailored services to help you enhance your security posture, from implementing robust information protection measures to providing ongoing education and support through our cyber security insights.
Business Email Compromise fraud is a significant threat that requires vigilance and proactive measures. By understanding cybercriminals’ tactics and implementing strong security practices, businesses can protect themselves from financial losses and reputational damage. Trust us to be your partner in corporate fraud prevention and cybersecurity excellence.