Business Email Compromise at the Heart of Fraud Against Businesses, AFP Report Finds

Author

Michael W Kahn

Michael W Kahn

Nacha

Business Email Compromise was where “the majority of payments fraud attempts/attacks” originated last year, a new report found.

More than 60% of treasury and financial professionals surveyed for the “2020 Payments Fraud and Control Survey Report” said BEC was the source. 

The report, released April 7 by the Association for Financial Professionals, also found that while three-quarters of companies were impacted by BEC, that’s down from the record 80% in 2018, and the lowest level since 2016. Still, AFP cautioned against letting your guard down.

“Even though this is less than the last two years, it is still an elevated percentage,” the report noted. 

And while eight-in-10 companies say they’re educating staff about BEC, the report said fraudsters “have become more sophisticated in their techniques,” including making emails look authentic. 

“Respondents indicate that their organizations are often victims of emails from fraudsters pretending to be senior executives directing employees to transfer funds into fraudsters’ accounts,” the report said. In fact, 17% of those surveyed said this sort of attempt happens between 26 and 100 times a year.

But the report also found that only 38% of firms suffered a financial loss from BEC, the lowest figure since AFP began keeping track in 2015. 

Overall, 63% of companies reported zero dollars lost as a result of fraud. Another 17% lost less than $25,000.
“However,” the report added, “loss of confidential and personnel information, while not a direct impact on the bottom-line, requires extensive efforts to resolve.”

The report found attempted fraud remains high, with 81% of financial professionals saying their organizations were hit with either an attempted or successful attack in 2019. 

As for payment methods that were most impacted by fraud activity last year, checks remained atop the list, reported by 74% of organizations. That was followed by wire transfers, reported by 40%, corporate/commercial credit cards by 34%, ACH debits by 33% and ACH credits by 22%. 

“Nacha’s review of the 2020 AFP Payments Fraud and Control Survey Report shows that checks not only have the highest level of reported fraud, but also an increasing rate of fraud during a period when check use has dropped substantially,” said Michael Herd, Nacha Senior Vice President, ACH Network Administration. “The report also shows that fraud rates remained nearly flat for ACH during a period when the use of ACH is increasing robustly.” 

“Nacha works with its members and AFP to provide education on current fraud threats and how to mitigate them to maintain a high-quality ACH Network, which benefits consumers, governments, businesses and financial institutions,” Herd added.

Visit Nacha’s Current Fraud Threats page for timely information on BEC and other scams.