All it took was access to a lawyer’s email, and suddenly, almost $532,000 was in the wrong hands.
This business email compromise (BEC) scam began simply: A criminal in Los Angeles named Ochenetchouwe Adegor Ederaine, Jr. gained access to a real estate lawyer’s email and sent fake messages to a buyer, according to the U.S. Department of Justice. Soon after, the purchaser sent that six-figure payment to a bank account controlled by Ederaine — one of 23 he had set up at various California financial institutions using six different false identities.
He used this same kind of attack over and over between March 2016 and November 2017 before federal authorities caught up with him. The scheme worked for as long as it did because the criminal didn’t compromise just any email accounts — he carefully selected his targets to maximize his chances for success.
A Persistent Problem
Impostors are tricking workers into sending money to rogue bank accounts at an alarming rate. From December 2016 to May 2018, the FBI observed a 136 percent increase in losses to BEC scams. This type of attack has been reported in all 50 states and in 150 countries.
The real estate sector is particularly at risk, and criminals like Ederaine are making off with huge sums. From 2015 to 2017, the number of real estate transaction incidents increased by more than 1,110 percent, and losses reported to the FBI ballooned by almost 2,000 percent.
The basic strategy is simple and, according to another FBI report, the crime has been observed in five basic flavors:
- Invoice schemes — Criminals pretend to be suppliers, create a mock invoice and trick firms into payment.
- Account compromise — Criminals impersonate an authority figure in an organization and order someone to make a payment.
- Attorney impersonations — Criminals convince victims to remit payment to a bogus account.
- CEO fraud — This is similar to an account compromise, but with the added heft of an order appearing to come from the top position in an organization.
- Data theft — Criminals target human resources workers and trick them into coughing up tax statements and other personal information.
Why Business Email Compromise Is Less Obvious Than You Think
Like many scams, BEC often appears obvious in hindsight. A person reading a story about an incident is already in an antifraud mindset, but busy workers are often targeted at just the wrong time, and anyone can suffer a momentary lapse. That’s why defense against BEC requires multiple layers.
Many of these attacks are skillfully crafted. Criminals lurking on websites and social media can uncover plenty of fodder for fine-tuned spear phishing emails: who suppliers are, what the management structure is, who is receiving new business pitches or expansion plans, etc. Executive travel plans are particularly useful for scenarios like this since the urgency of a task can be inflated from abroad: “I’m in London and we need to make a payment ASAP to this supplier or we risk losing it. Don’t delay — please wire these funds immediately.”
New Dog, Old Tricks
Whatever the cover story might be, most BEC scams are just modern twists on old tricks to convince victims to wire money overseas. Controls around wiring funds should be constantly examined and guarded, lest criminals learn to mimic those controls. Two-party transaction authorization ensures that a second pair of eyes examines each payment for signs of trouble.
Watch where is the money going; some destinations should raise red flags. The FBI noted that banks in China and Hong Kong remain the primary destinations for fraudulent funds. Banks in the U.K., Mexico and Turkey are also frequently used, but Ederaine’s scam showed that criminals are also using U.S. banks to hold stolen funds.
To prepare your enterprise for a potential attack, consider conducting phishing simulation exercises and penetration testing to generate insights into your current security posture and employees’ cyber awareness. Combined with technological defenses such as vulnerability scanning and firewall protections, you can establish a layered defense to ensure that threat actors don’t get their hands on your critical assets.
Gain an Edge Over BEC and Account Compromise With Intelligent Incident Response
Bob Sullivan is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Ti...