One of the most common scams in the business world is CEO Fraud. This type of fraud occurs when someone spoofs an email from a CEO or other high-level executive and asks a subordinate to wire money to a specified account. It’s very important to prevent your company from becoming a victim of CEO Fraud. That’s why it’s necessary to understand what this scam is, how it works, and how to prevent CEO fraud.
Meaning of CEO-fraud
CEO Fraud is a type of scam where fraudsters trick people into believing they are receiving an email from a CEO or other top-level executive of a company. These scammers use clever tactics to make their emails look legitimate and trustworthy. They may pretend to be the CEO and ask employees to transfer money or share sensitive information. CEO Fraud can lead to big financial losses for businesses and can damage their reputation if the scam is successful. It’s important to be aware of this type of fraud and know how to protect yourself and your organisation from falling victim to CEO Fraud.
What makes CEO-fraud interesting for attackers?
CEO Fraud is driven by various motivations that entice fraudsters to carry out these deceptive schemes. One major motivation is financial gain, as scammers aim to trick employees into transferring money or making fraudulent payments. Additionally, gaining access to sensitive information, like login credentials or proprietary data, can be another objective for fraudsters. CEO Fraud can also be used to compromise business relationships by impersonating top-level executives and deceiving partners or clients. Fraudsters target CEOs and high-level executives because their positions of authority and influence make them appealing targets for carrying out successful scams.
Common techniques
CEO Fraud involves the use of several deceptive techniques to trick individuals and organisations. One common technique is the use of spoofed emails, where fraudsters manipulate the email address to make it appear as if it’s coming from a CEO or high-level executive. They may also impersonate the CEO by creating a similar email address or using display names that resemble the real executive.
Social Engineering
Another tactic is social engineering, where fraudsters use psychological manipulation to exploit trust and urgency. They create a sense of urgency in their emails, pressuring employees to quickly transfer funds, make fraudulent invoice payments, or provide sensitive employee or customer data.
These tactics aim to deceive recipients into believing the fraudulent emails are legitimate and urgent, increasing the chances of success for the scam. It is important to remain vigilant and verify any unusual requests directly with the supposed sender to avoid falling victim to CEO Fraud.
Recognising and Preventing CEO Fraud
CEO fraud can target organisations of any size. Organizations that regularly enter into complex transactions, such as those involved with multi-national contracts or large IT projects, are particularly vulnerable to this type of fraud. Unfortunately, there is no one-size-fits-all solution which makes it difficult to determine the best way to protect your organisation from CEO Fraud. However, there are some basic steps your organisation can take to protect itself.
1. Monitor your accounts
First, your company should create a process for monitoring account activity. Any large amounts of money going in or out of the organization should be properly accounted for and cross-checked with existing documentation. When a transaction is suspected of being suspicious, it should be immediately halted, and the appropriate authorities contacted. We also recommend having two employees verify large payments, rather than just one.
2. Update your email security
No matter how strong your company’s security systems are, it is still possible for someone to hack into the CEO’s account and spoof emails without anyone knowing. This adds another layer of difficulty when identifying and stopping CEO Fraud. While it is true that if you have updated email security, additional safety nets are in place, it is still vulnerable. Make at least sure you have the right DKIM and DMARC settings in place.
3. Secure your network
Keep your network and data secure against malware and viruses. For example, scammers use virus-infected computers to send spoofed emails from the CEO’s account. Plus, if there is malware in one computer, there is a strong possibility that it has spread to other computers in the organization through shared drives and/or networks.
4. Train your employees
The best way to truly protect your organization from CEO Fraud is to train your employees about how it works. You can do this through regular online security awareness training, which teaches people how to spot the signs of a suspicious email request. With this kind of training, you can help your employees understand and recognize the various types of threats the company faces.
5. Ensure policies are followed
Your employees must know what to do when they receive some kind of request for sensitive information. You will want to have clear policies in place about who can make requests for sensitive company information, whether it’s through email, phone, or any other means. These policies should also outline the proper steps employees are to follow when they receive a request for information.
6. Internal controls
Furthermore, implementing internal controls, such as requiring multiple approvals for large financial transactions, can act as a safeguard against fraudulent activities. By combining these preventive measures with regular training and awareness campaigns, organisations can significantly reduce the risk of falling victim to this kind of attack.
Conclusion
CEO Fraud is a problem that has plagued organisations worldwide. However, with the right steps, your organisation can help reduce its chances of becoming victim of this scam. While there’s no way to 100% guarantee that this type of won’t happen, you can greatly decrease the likelihood by taking these steps. If your organisation is looking for new ways to protect itself against cyber threats, contact us about our managed services.
FAQ
Has there ever been a successful CEO-fraud attack?
Ubiquiti Networks: In 2015, the networking equipment company fell victim to a CEO Fraud scam, resulting in a loss of approximately $46.7 million. The attackers impersonated the company’s CEO and used fraudulent email requests to initiate unauthorized wire transfers. The funds were sent to accounts controlled by the fraudsters, highlighting the effectiveness of their deception.
Are small businesses at risk of CEO Fraud?
Yes, small businesses are also vulnerable to CEO Fraud. Fraudsters often target organisations of all sizes, as they can exploit weaknesses in processes, lack of cybersecurity measures, and limited resources for robust security systems. It is important for small businesses to be aware of the risks, implement appropriate security measures, and educate employees to prevent falling victim to this type of attack.