BUSINESS EMAIL COMPROMISE IS THE MOST COMMON TYPE OF PAYMENTS FRAUD
With the move to remote and hybrid working arrangements, more business is being conducted electronically. While processes, systems, communication and overall operations may have changed, an unfortunate consistency for your payables department is payments fraud. Understanding its prevalence and mitigating its threat is now more important than ever. The Association for Financial Professionals (AFP) 2021 Payments Fraud and Control Survey Report shows Business Email Compromise (BEC) is the most common way businesses become victims of fraud.
BEC occurs when someone falsifies a legitimate email address to authorize the transfer of funds to accounts managed by criminals. The scammers target businesses of all sizes and 62% of companies that experienced attempted or actual payments fraud through BEC.
UNDERSTANDING HOW BEC WORKS
When it comes to Business Email Compromise, criminals are doing their research. They not only find information on a company, but they also target the details of payments being made — often including payment type, amount and frequency. Once information is collected, a falsified email address is used to send an email communication with what seems like a legitimate request from a trusted vendor or member of a company’s executive team. The individual at the company authorizes and releases the payment, potentially resulting in a financial loss.
PAYMENT METHOD TARGETS OF BEC
As reported by survey respondents, understanding common payment targets is essential:
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While wire transfers are the most susceptible to BEC, the ACH Credits method is not far behind it. The shift to targeting ACH transactions via BEC is likely because ACH is an easier touchpoint for those committing fraud, because checks are being used less frequently. This indicates scammers have adapted and are becoming more innovative. In doing so, companies are more exposed to a significant number of risks, and things like malware and spyware further infiltrate an organization’s internal systems.
MOST SUSCEPTIBLE DEPARTMENTS
While it makes sense that the Accounts Payable department would be targeted most frequently, it may also be surprising to know that other departments are commonly targeted:
HOW TO PROTECT YOUR BUSINESS
To help protect against BEC, companies are implementing more secure procedures, and are better utilizing available tools and resources. Respondents shared the following top five methods being implemented to limit their exposure:
A successful BEC attack can significantly impact a company’s finances, but other threats such as loss of confidential information belonging to the company, their vendors and/or their customers can be just as damaging. The backlash from that alone can ruin a company’s reputation.
To help protect against payments fraud, regardless of type, businesses identified key solutions:
Employing fraud mitigation best practices, products and services such as Check and ACH Positive Pay, Commercial and/or Virtual Cards, account blocks, and more, can validate payments and stop fraudulent transactions. Doing so will only help your business keep moving forward, especially during a time of so much uncertainty.
For more tips on how to protect your business from fraud, download the Fraud Best Practices Checklist here.
Association for Financial Professionals: 2021 Payments Fraud and Control Survey Report
As with all serious financial topics or decisions, be sure to consult with a trusted financial advisor beforehand. The content here is for educational purposes only and is not meant to serve as any sort of advice or endorsement.
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