5 Ways BEC Fraud Works

Business Email Compromise (BEC) fraud has become one of the most significant and enduring cyber threats to businesses of all sizes. This sophisticated form of scam involves tricking employees into transferring funds or revealing sensitive information, leveraging the trust and authority associated with company email accounts. The mechanisms behind BEC attacks can vary widely, from straightforward to highly complex and tailored approaches. Here are five ways BEC fraud works, highlighting its diversity and the imperative for vigilance within organizations.

1. CEO Fraud

This is one of the most common types of BEC scams. It involves impersonating a high-ranking executive, typically the CEO or CFO, via email. The scammer, after conducting thorough research on the company’s hierarchy and communication styles, sends a seemingly urgent and confidential email to a junior employee, often in the finance department. The email requests a wire transfer to a new vendor or an urgent payment to a client, emphasizing secrecy due to the “sensitive” nature of the transaction. By leveraging the authority of the executive’s position and creating a sense of urgency and secrecy, the scammer hopes to bypass internal controls and expedite the transfer without scrutiny.

2. Vendor Email Compromise

In this variant, the scammer targets the vendors or suppliers of a business rather than the business itself. By compromising a vendor’s email account, the scammer can send fake invoices or payment requests to the business, often mirroring the vendor’s usual invoicing format and content to avoid suspicion. This approach is particularly effective when businesses have automated payment systems or when the vendor’s communications are not thoroughly vetted. The goal is to have the business pay the scammer instead of the legitimate vendor, with the transaction appearing as a normal business operation.

3. Account Takeover

This method involves the scammer gaining direct access to an employee’s email account, often through phishing attacks, password guessing, or exploiting vulnerabilities in email clients. Once inside, the scammer can monitor communications, gather information about financial transactions, and even set up email forwarding rules to stay informed without arousing suspicion. From this position, the scammer can initiate transactions or request changes to existing payments, all while appearing to be the legitimate account holder. This level of access allows for highly targeted and personalized attacks, increasing the likelihood of success.

4. W-2 Phishing

In the lead-up to tax season, scammers often launch targeted attacks on HR and payroll departments, posing as executives or other high-level officials. The emails request W-2 forms for all employees, claiming the information is needed for an audit or other critical business purposes. This scam not only puts the company at risk of financial loss through identity theft but also compromises sensitive personal data of employees, which can be used for further financial fraud. The immediacy and importance associated with tax seasons add to the urgency of the request, increasing the likelihood that the targeted employee will comply without thoroughly verifying the request.

5. Hybrid Attacks

Some BEC scammers combine different tactics to enhance the credibility and urgency of their requests. For instance, they might start with a phishing attack to compromise an employee’s credentials, then use the gained access to send internal emails requesting financial information or transfers. Alternatively, they could use social engineering tactics, such as calling the finance department while posing as an executive, to confirm the legitimacy of a suspicious transfer request sent via email. These hybrid attacks are particularly dangerous because they can bypass many of the traditional security measures in place, such as two-factor authentication, by engaging multiple points of verification and exploiting human psychology.

Protecting Against BEC Fraud

Given the diversity and sophistication of BEC scams, protection requires a multi-layered approach: - Verify Requests: Especially those that are urgent or unusual, through a secondary means of communication. - Implement Security Measures: Such as two-factor authentication for email and financial transactions. - Educate Employees: About the dangers of BEC scams and how to identify them. - Regularly Update Software: To protect against known vulnerabilities. - Monitor Accounts: For suspicious activity, both internally and with external vendors.

By being proactive and vigilant, businesses can significantly reduce their vulnerability to BEC fraud, protecting both their financial assets and the sensitive information of their employees and clients.