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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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May 6, 2019


Business Email Compromise Moves Mainstream

The Retail Payments Risk Forum has blogged extensively on business email compromise (BEC) over the past few years. With losses attributed to BEC already in the billions of dollars and the number of attacks increasing over 475 percent from fourth-quarter 2017 to fourth-quarter 2018, the topic warrants continued attention. As the "business email" part of the phrase suggests, businesses and executives of businesses have been the primary targets of this type of fraud. The goal of most of these incidents is to trick businesses into moving funds into the criminals' accounts using wire transfers.

When perpetrators of this fraud scheme experienced great success with businesses and executives as their primary targets, they quickly moved to include ordinary individuals. That is, the fraud has gone mainstream, evolving beyond businesses and executives with wire transfers as the key payment platform. As the scheme has begun to involve employees as victims and reached the person-to-person payment arena, fraudulent transactions are occurring more often using ACH, not just wire transfers. Since BEC is not just for businesses and their executives anymore, BEC is sometimes more aptly referred to as EAC—that is, email account compromise.

In April, CNBC reported a new scheme whereby the fraudsters are targeting the human resources function of businesses to change employees' direct deposit payroll information to an account held by the fraudster. The fraudster either spoofs an employee's email account or gets access to it and then sends a message to human resources requesting a change to the banking account associated with their direct deposit. While the amounts fraudulently transferred in this scheme are generally well below those of the traditional BEC scheme, they are simple and cheap to execute and could become more attractive for criminals.

In more troubling news on this fraud scheme, the Association for Financial Professionals (AFP) reported that the number of businesses reporting that they had been victims of actual or attempted fraud increased significantly for both ACH credit and debit transactions, while instances of fraud involving checks, cards, and wire transfers declined. And what could be the reason behind this increase in ACH fraud? According to a representative with the AFP, "a likely explanation for the higher fraud lies in the popularity of ACH…for schemes like business email fraud."

And as I mentioned earlier, fraudsters aren't limiting this scheme to businesses. In fact, I was a target of an EAC scam earlier this year when fraudsters took control of a relative's email account. But for a bit of good news (at least for me), I was immediately suspicious and a phone call to the relative confirmed that my gut feeling was accurate. This image is a screenshot of the text conversation I had with my "relative."

IM screenshot

To piggyback on a recent post by my colleague on using discipline to fight BEC: having the discipline to make a follow-up call to the person emailing a request for funds or a change to bank account information can make the difference between being a victim and being a spoiler.

How are you attacking this growing threat, and what are you doing to educate your employees and customers?

May 6, 2019 in ACH , data security , P2P , wire transfer fraud | Permalink

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