Better Business Bureau Study examines risk to businesses from business email compromise scams

An in-depth investigative study by Better Business Bureau finds business email compromise scams are skyrocketing in frequency and have cost businesses and other organizations more than $3 billion since 2016.

Business email compromise fraud is an email phishing scam that typically targets people who pay bills for businesses, government, and nonprofit organizations. It affects both big and small organizations, and it has resulted in more losses than any other type of fraud in the U.S., according to the Federal Bureau of Investigations.

The investigative study – “Is That Email Really From ‘The Boss?’ The Explosion of Business Email Compromise Scams (BEC)” – looks at the prevalence of these scams and the criminal systems that execute them. It digs into the scope of the problem, who is behind it, the multi-pronged fight to stop it, and the steps consumers can take to avoid it.

BEC fraud takes many forms. In most cases, the scammer poses as a reliable source who sends an email from a spoofed or hacked account to an accountant or chief financial officer (CFO), asking them to wire money, buy gift cards or send personal information, often for a plausible reason. If money is sent, it goes into an account controlled by the con artist.

The FBI recognizes at least six types of activity as BEC or email account compromise (EAC) fraud.

The sender claims to be:

• A chief executive officer (CEO) asking the CFO to wire money to someone
• A vendor or supplier requesting a change in invoice payment
• Executives requesting copies of employee tax information
• Senior employees seeking to have their pay deposited into a new bank account
• An employer or clergyman asking the recipient to buy gift cards on their behalf
• A Realtor or title company redirecting proceeds from a real estate sale into a new account
• These targeted email phishing scams are sometimes called “spear phishing”

This serious and growing fraud has tripled over the last three years, jumping 50% in the first three months of 2018 compared to the same period in 2017. In 2018, 80% of businesses received at least one of these emails. From 2016 through May 2019, the Internet Crime Complaint Center (IC3) received 58,571 complaints on BEC fraud, with reported losses in the U.S. totaling $3.1 billion.

BBB’s report finds the average BEC loss involving wire transfers is $35,000, while the average loss involving gift cards is $1,000 to $2,000. However, the cost to businesses can be much higher: Google and Facebook lost more than $100 million to BEC fraud before the perpetrator was arrested in 2017.

According to BBB’s report, the majority of defendants who have been arrested or charged for BEC fraud in the U.S. over the last three years are of Nigerian origin. The report says 90% of BEC groups operate out of Nigeria, with other Nigerian fraud groups operating from the U.S., Canada and many other countries around the world. In breaking down the anatomy of a BEC scam, the report notes fraud gangs need the names of people within an organization, their job function and their email username and password, often obtained with illicit open source tools or free trials or lead generation services; that they must send emails directly to people, impersonating a trusted superior or partner and seeking money, which they can accomplish with a fake email address or domain name or by hacking a real person’s email account; and that they need a way to obtain money sent by victims, often via money mules, as detailed in a February 2019 BBB study about romance scam victims who become money mules

The report recommends:

•BBB urges businesses and other organizations to take technical precautions such as multi-factor authentication for email logins and other changes in email settings, along with verifying changes in information about customers, employees or vendors. The report also urges culture and training changes in organizations – namely, confirming requests by phone before acting and training all employees in internet security.

•There is a strong need for more international cooperation between law enforcement agencies.

•Email system providers should consider enabling additional features to help prevent BEC fraud, including default settings with more security.

•Law enforcement should recognize BEC fraud gangs engage in many varieties of fraud at the same time and focus on the key actors in the frauds, not just supporting actors such as money mules.

What to do if your organization has lost money to a BEC fraud:

•If an organization finds that it has been a victim of a BEC fraud, it needs to immediately call the bank to stop the payment and report it to the FBI. If a report is filed within 48 hours, there is a chance the money can be recovered.

•Complain to the FBI’s Internet Crime Complaint Center. IC3 also asks people to report unsuccessful BEC attempts as well. Information from attempts may help establish patterns or identify mule bank accounts.

•Report fraud to BBB's Scam Tracker.

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