BBB examines business email compromise scams

An in-depth study by Better Business Bureau finds that 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 in businesses, government and nonprofits.

The study – “Is That Email Really From ‘The Boss?’ The Explosion of Business Email Compromise Scams” – looks at the prevalence of business email compromise scams and the criminal systems that perpetrate 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.

Business email compromise fraud takes many forms, but in essence, the scammer poses as a reliable source who sends an email from a spoofed or hacked account to an accountant or chief financial officer, asking them to wire money, buy gift cards or send personal information, often for a plausible reason. Money goes into an account controlled by the con artist.

The FBI recognizes at least six types of activity as business email compromise or email account compromise fraud, which differ based on who appears to be the email sender – a CEO asking the chief financial officer 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, even 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 received 58,571 complaints on business email compromise fraud, with reported losses in the U.S. totaling $3.1 billion. BBB’s report finds the average business email compromise loss involving wire transfers is $35,000, while the average loss involving gift cards is $1,000 to $2,000.

According to BBB’s report, the majority of defendants who have been arrested or charged for business email compromise fraud in the U.S. over the last three years are of Nigerian origin. The report says 90% of business email compromise 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 business email compromise scam, the report notes that 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.

Active efforts are being made to fight business email compromise fraud. On Aug. 22, 80 defendants, believed to be responsible for at least $6 million in losses, were indicted in Los Angeles for business email compromise fraud in a major effort led by the FBI. On Sept. 10, a worldwide law enforcement effort yielded 74 arrests for business email compromise-related fraud in the U.S., 167 in Nigeria and 40 in several other countries, with nearly $3.7 million in assets seized from the fraudsters. The U.S. Justice Department has brought at least 22 cases in the last three years, many as part of a collective enforcement effort called “Operation Wire Wire,” named for business email compromise fraud’s common name among Nigerian fraudsters.

Recommendations:

• BBB urges businesses and other organizations to take technical precautions such as multifactor 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 business email compromise fraud, including default settings with more security.

• Law enforcement should recognize that business email compromise fraud gangs engage in many varieties of the 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 business email compromise fraud:

• If an organization finds that it has been a victim of a business email compromise fraud, it needs to immediately call its bank to stop the payment and report it to the FBI in the U.S. 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. The center also asks people to report unsuccessful business email compromise attempts. Information from attempts may help establish patterns or identify mule bank accounts.

• Report fraud to BBB Scam Tracker

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