Fraud Awareness for Small Businesses: Business Email Compromise (BEC) Scams

"A good con artist doesn’t steal your money. They make you hand it over willingly." – Frank Abagnale

Cybercriminals are becoming increasingly sophisticated, and one of the most damaging fraud schemes targeting small businesses today is Business Email Compromise (BEC). This form of fraud exploits trust, often impersonating executives, vendors, or employees to manipulate companies into sending money or sensitive information to fraudsters. BEC scams have caused billions of dollars in financial losses worldwide and continue to evolve.

What is Business Email Compromise (BEC)?

BEC is a type of cyber fraud where attackers use social engineering, hacking, or email spoofing to deceive businesses into making unauthorized financial transactions or revealing confidential data. Unlike traditional phishing scams that rely on mass emails, BEC is highly targeted, often involving deep research on the victim.

Common Types of BEC Scams

1. CEO Fraud – Attackers impersonate a company executive and request urgent fund transfers, typically targeting finance departments.

2. Vendor Invoice Fraud – Fraudsters pose as trusted vendors and send fake invoices requesting payment to fraudulent bank accounts.

3. Payroll Diversion Scams – Hackers impersonate employees and request direct deposit changes to redirect salaries to fraudulent accounts.

4. Legal or Law Enforcement Impersonation – Scammers impersonate attorneys or officials and demand immediate payments to avoid legal trouble.

How BEC Scams Work

Email spoofing has become incredibly easy with modern tools, making it difficult to distinguish between legitimate and fraudulent emails. Attackers can make an email appear as if it's coming from a trusted source, such as a CEO, vendor, or financial institution, by manipulating sender information. This is why businesses must rely on verification methods beyond just recognizing an email address.

1. Research & Targeting – Cybercriminals study company structures, key personnel, and financial workflows.

2. Spoofing or Hacking Emails – They gain access to real accounts through phishing or spoof emails that appear legitimate.

3. Deception & Urgency – Fraudsters craft emails that create a sense of urgency, pressuring employees to act quickly.

4. Funds Transfer or Data Theft – Money is transferred to fraudulent accounts, or sensitive data is stolen and exploited.

Why Small Businesses Are Vulnerable

• Limited IT Security – Small businesses often lack dedicated cybersecurity teams to detect and prevent threats.

• Fewer Internal Controls – Without strong verification processes, employees may unknowingly follow fraudulent instructions.

• Trust-Based Communications – Smaller teams rely on quick decision-making, making urgent requests harder to question.

How to Protect Your Business from BEC

Limit Access to Financial Resources

Just because you trust your employees not to steal from you doesn’t mean they should have full access to the company’s financial resources. Whether through intentional theft, being fooled by a fraudster, or simply making a costly mistake, unrestricted access increases risk. Implement role-based access controls to minimize potential damage—this applies to everyone, including leadership.

Implement Processes and Tools

• Verify Requests – Always confirm fund transfer requests and invoice changes via a secondary communication channel.

• Enable Multi-Factor Authentication (MFA) – Protect email accounts from unauthorized access.

• Monitor Financial Transactions – Implement strict review procedures for large or unexpected fund transfers.

• Use Email Security Tools – Invest in email filtering systems that detect spoofing and phishing attempts.

Build a Culture of Trust with Verification

Security isn’t just about tools—it’s about fostering a workplace culture that encourages verification and diligence.

• Lead by Example – If leadership routinely sends frantic, urgent emails, employees may be conditioned to act without questioning. Fraudsters exploit this behavior.

• Encourage Verification, Not Fear – Employees should feel empowered to question unusual requests, even from executives.

• Standardize Procedures – When everyone follows verification protocols—no exceptions—it becomes harder for scammers to use urgency, panic, or authority to bypass security measures.

Final Thought:

BEC scams rely on trust and urgency to manipulate businesses into making costly mistakes. Staying vigilant, implementing strong security measures, and fostering a culture of verification within your business are the best defenses against these ever-evolving threats.

Stay tuned for the next post in our Fraud Awareness series, where we’ll discuss Payroll Fraud and how to prevent internal financial losses.