What is Business Email Compromise? Complete Guide to BEC Prevention

Business Email Compromise (BEC) attacks cost companies billions each year. You might think your business is too small to be a target, but criminals don’t care about size when looking for victims. In 2023, the FBI reported that BEC scams caused over $2.7 billion in losses worldwide.

Let’s look at what BEC is, how it works, and how you can protect your business.

Understanding Business Email Compromise

Business Email Compromise is a type of scam that targets companies through fake emails. Unlike obvious spam with bad grammar, BEC attacks are carefully crafted. The attackers research your company, learn who works there, and study your business relationships before they attack.

These attacks don’t use viruses or malware. They use tricks to fool employees into sending money or sharing private information. This makes them very dangerous because they exploit human trust rather than computer flaws.

The criminals take their time. They often watch your communications for weeks to understand how your company works. They learn the words your team uses, when you make payments, and who can approve money transfers. Then they strike when you least expect it.

How BEC Works

A typical BEC attack follows these steps:

1. Research: Criminals learn about your company structure, executives, vendors, and payment systems.
2. Email setup: They either hack a real email account or create a fake one that looks like yours (like “yourc0mpany.com” instead of “yourcompany.com”).
3. Deception: They write convincing messages that seem to come from people you trust.
4. The request: They ask for wire transfers, invoice payments, or private information.
5. Disappearance: Once they get the money or data, they vanish.

John from a manufacturing company in Portland learned this the hard way. He got what looked like an urgent email from his CEO asking him to wire $43,000 to a new supplier. The email looked real, used company language, and mentioned their current project. John sent the money, only to find out later that his CEO never sent the request. By then, the money was gone.

The criminals had spent weeks studying the CEO’s writing style and company emails. They knew the CEO was traveling and wouldn’t be available to check with. The attack worked because it seemed normal and created enough urgency to stop John from double-checking.

Types of BEC Attacks

Criminals have created several kinds of BEC attacks. Each type targets different weak points in how businesses operate.

CEO Fraud

In this attack, criminals pretend to be a company executive. They send emails to employees who handle money and request urgent wire transfers. Since these messages appear to come from bosses, employees often follow the instructions without questioning.

CEO fraud emails often include words like “confidential,” “urgent,” or “sensitive matter.” They might mention a secret business deal or critical deadline as a reason why normal steps can’t be followed. The messages include details that make them believable, such as upcoming company events or recent business news.

False Invoice Scheme

Attackers pose as vendors or suppliers your company regularly works with. They send fake invoices for services that look legitimate but change the payment details to their own accounts. Your accounting team might process these payments without noticing anything wrong.

These attacks work because most businesses deal with many invoices every month. One changed bank account number among dozens of real transactions is easy to miss. The fake invoices often look identical to real ones, with only the payment details changed.

Attorney Impersonation

Criminals claim to be lawyers handling sensitive or urgent matters. They create a sense of urgency and secrecy to prevent the target from checking with others.

These attacks exploit the respect typically given to legal professionals. The fake lawyer might claim to be handling a confidential sale, responding to a legal issue, or managing an urgent legal matter that needs immediate payment. The supposed private nature of legal work gives a convenient excuse for why the target shouldn’t talk about it with coworkers.

Gift Card Scam

This common attack involves criminals asking employees to buy gift cards for clients or staff. The victim is told to send the gift card codes to the attacker, who can then cash them out quickly.

The small amount of each gift card makes these requests seem less suspicious than large money transfers. The attacker might claim the cards are for employee rewards, client gifts, or charity donations. Gift cards can quickly be converted to cash before the fraud is discovered.

Vendor Email Compromise (VEC)

This advanced attack involves hijacking communications between your company and a real vendor. Attackers insert themselves into ongoing email conversations about actual purchases and redirect payments to their accounts.

VEC attacks are especially dangerous because they target established business relationships. The criminal monitors real communications about actual transactions, then steps in at the right moment to redirect payment. Since everything else about the transaction is legitimate, these attacks can be very hard to spot until it’s too late.

BEC vs EAC: What’s the Difference?

You might hear the terms BEC and EAC used together. While related, they refer to different parts of the same threat.

Business Email Compromise (BEC) means the scam where criminals pretend to be executives or trusted parties via email to trick victims into making payments or sharing data.

Email Account Compromise (EAC) happens when attackers gain actual access to real email accounts through phishing or other tricks. They can then send authentic emails from those accounts, watch communications, and gather information for future attacks.

Think of EAC as a tool criminals might use as part of a larger BEC campaign. Not all BEC attacks involve hacked accounts—many use fake look-alike domains and clever deception.

While BEC attacks often rely on impersonation through similar-looking domains, EAC attacks use legitimate, hacked accounts. This makes EAC particularly dangerous because all security checks will show the email coming from a trusted source. The criminal can also delete any replies or warnings that might alert the victim.

Methods Used in BEC

Phishing

Attackers send emails designed to steal login information. These messages often direct users to fake login pages that capture usernames and passwords. Once they have these credentials, they can access real accounts and send authentic-looking messages.

Modern phishing attempts rarely look like obvious scams. Today’s phishing emails might perfectly copy your company’s login page, complete with logos and security badges. They might claim that you need to verify your account, check a document, or update your password due to suspicious activity. Each creates a sense of legitimacy and urgency that bypasses careful thinking.

Spoofing

This technique involves creating emails with fake sender addresses. The criminal makes the email appear to come from a trusted source without actually hacking any accounts. Modern email systems have protections against spoofing, but many companies don’t set them up properly.

Email spoofing works because basic email protocols don’t have built-in security checks. Without added security measures, anyone can send an email claiming to be from any address. Spoofed emails might have small differences like “ceo@company-inc.com” instead of “ceo@company.com,” changes many people won’t notice in a busy inbox.

Insider Threats

Some BEC attacks involve employees who either help criminals on purpose or are manipulated into helping them. An insider might provide information about company processes or help bypass security measures.

Unhappy employees might sell access or information to criminals for money. More commonly, criminals might build relationships with employees through social media, slowly gathering information without the employee realizing they’re being used. This kind of manipulation can happen over months before the actual attack occurs.

Email Account Compromise (EAC)

As mentioned earlier, gaining control of legitimate email accounts gives attackers a powerful platform for BEC scams. They can read emails to learn about payment processes, discover relationships with vendors, and send messages that pass all security checks.

Once an account is hacked, attackers often create rules to hide their activities. They might set up forwarding rules to receive copies of all incoming messages or filtering rules to hide warning messages about suspicious logins. They might also access the account during off-hours to reduce the chance of being caught.

What Makes BEC So Dangerous

Financial Loss

The direct impact of BEC is often significant money loss. Unlike credit card fraud, wire transfers are hard to reverse once completed. The average BEC attack costs victims $80,000, but many losses reach millions of dollars.

What makes BEC particularly devastating is the size of potential losses. While credit card fraud is typically limited and can be reversed, wire transfers to overseas accounts are essentially permanent. Once the money leaves your account, recovery becomes extremely difficult. Businesses have lost entire budgets, acquisition funds, and even payroll to these attacks.

Data Breaches

Not all BEC attacks aim for immediate financial gain. Some criminals seek sensitive information like employee tax forms, customer data, or company secrets. This information can be sold or used for further attacks.

The stolen data might include W-2 forms with Social Security numbers, customer credit card information, trade secrets, or unreleased product details. This information has significant value on black markets or to competitors. The damage from these breaches often exceeds the immediate financial losses and can continue for years.

Reputation Damage

Companies that fall victim to BEC scams may suffer damage to their reputation with clients, partners, and investors. The perception that your business can’t protect itself or its partners can lead to lost business opportunities.

When customers learn that a company fell victim to fraud, they often question other aspects of the business. If you couldn’t protect your own financial systems, how can they trust you with their sensitive information? Partners might add extra verification steps that slow down business, and investors might question management competence. These indirect costs can far exceed the initial fraud amount.

BEC Prevention and Protection Strategies

Defending against BEC requires a multiple-layer approach combining technology, training, and process changes.

Employee Training and Awareness

Your staff is your first line of defense. Regular security awareness training should cover:

• How to spot suspicious emails
• The importance of verifying unusual requests
• Red flags for BEC attacks
• How to report suspicious messages

Consider running fake phishing tests to reinforce training and identify areas for improvement.

Effective training must go beyond annual sessions. Regular updates about new attack methods, quick refreshers, and recognition for employees who identify and report suspicious messages all help create a security-conscious culture. Share real examples of attempted attacks on your company to make the threat real rather than theoretical.

Social Engineering Defenses

Create clear procedures for handling financial requests and stick to them. For example:

• Require verbal confirmation for wire transfers over a certain amount
• Establish multiple approvers for significant financial transactions
• Create a verification system using pre-arranged questions or codes

The key to defeating social engineering is removing the human decision point during moments of stress or urgency. When clear procedures exist and exceptions aren’t allowed, employees have rules to fall back on when they feel pressure to “just get it done quickly.” This might mean establishing verification for any payment changes, such as calling a known phone number (not one provided in an email) to confirm requests.

Multi-Factor Authentication (MFA)

MFA adds an extra layer of security by requiring two or more verification methods to access accounts. Even if criminals steal passwords, they can’t access accounts without the secondary verification method, which might be:

• Something you have (like a phone)
• Something you are (fingerprint or face recognition)
• Something you know (a separate password or PIN)

This single control dramatically reduces the risk of email account compromise. When properly implemented for all users, MFA can block over 99% of automated attacks and significantly hamper even targeted efforts. The slight inconvenience of an extra verification step provides enormous security benefits.

Email Authentication Protocols

Implement these technical safeguards to prevent email spoofing:

• SPF (Sender Policy Framework): Verifies that sending mail servers are authorized to send email for your domain
• DKIM (DomainKeys Identified Mail): Adds a digital signature to verify emails haven’t been tampered with
• DMARC (Domain-based Message Authentication, Reporting & Conformance): Tells receiving servers how to handle messages that fail authentication checks

When properly configured, these protocols make it much harder for criminals to impersonate your company or your partners.

These protocols work together to create a trustworthy email system. SPF specifies which servers can send email for your domain. DKIM adds a digital signature to verify the message hasn’t been altered. DMARC ties these together with policies that tell recipients what to do with messages that fail checks (monitor, quarantine, or reject).

Cloud Email Security Solutions

Modern email security platforms can:

• Analyze messages for BEC indicators
• Detect suspicious sending patterns
• Flag emails with similar-but-not-identical domain names
• Identify messages requesting financial actions

These solutions act as a safety net by catching threats that bypass other defenses.

Cloud-based email security adds another layer of protection by analyzing messages before they reach your inbox. These systems use large databases of known threats and suspicious patterns to identify potential attacks. They can detect anomalies like first-time senders, unusual requests, or emails trying to create urgency.

AI/ML-based Detection

Advanced security tools use artificial intelligence and machine learning to identify potential BEC attacks by:

• Learning normal communication patterns
• Detecting unusual email behavior
• Recognizing social engineering attempts
• Continually improving based on new attack methods

AI-powered tools can recognize subtle signs that rule-based systems miss. They learn communication patterns within your organization and can flag messages that seem unusual, even if they don’t break specific rules. For example, if your CEO never requests wire transfers via email, an AI system would flag such a request as suspicious even if it comes from a legitimate-looking address.

Zero Trust Security Model

The Zero Trust approach assumes that threats exist both inside and outside the network. It requires verification for anyone trying to access resources, regardless of their position or location. For email security, this means:

• Verifying the identity of all senders
• Confirming the legitimacy of all requests
• Treating internal and external messages with appropriate scrutiny

Zero Trust principles recognize that once an account is compromised, traditional security boundaries become meaningless. Instead of automatically trusting internal accounts, every request is treated with appropriate verification. The principle “never trust, always verify” provides protection against both external attackers and compromised insiders.

Incident Response Planning

Despite best efforts, some attacks may succeed. Having an incident response plan helps minimize damage:

• Document steps to take when BEC is suspected
• Create contact lists for banks, law enforcement, and IT security
• Establish procedures for client and partner notification
• Conduct reviews after incidents to improve defenses

When BEC is detected, time is critical. Having pre-established relationships with your financial institutions can mean the difference between recovering funds and permanent loss. Most banks have fraud departments that can help freeze transactions if notified quickly enough. A documented response plan ensures these critical steps aren’t missed during a crisis.

Real-World BEC Examples

The Mega-Million Dollar Mistake

A large tech company lost $47 million when a financial officer received emails seemingly from the CEO requesting wire transfers for a “secret acquisition.” The emails came from a domain that differed by just one letter from the company’s actual domain. The officer, eager to please, didn’t follow verification procedures.

The attack worked because it exploited human factors. The financial officer was relatively new and wanted to show responsiveness to the CEO. The request came during a busy period when multiple acquisitions were being discussed. The criminal created just enough context and urgency to make the request seem plausible, while emphasizing the need for confidentiality to prevent verification.

The Supply Chain Sneak

A manufacturing company had been working with the same parts supplier for years. Criminals monitored their email exchanges and at precisely the right moment, sent an email from a look-alike domain explaining that the supplier had changed their banking details. The company updated their payment information and sent over $300,000 to the criminals before discovering the fraud.

What made this attack particularly effective was its timing and specificity. The criminals didn’t just create a generic invoice—they waited until a real order was being processed. Their fraudulent email referenced specific part numbers, quantities, and other details from the legitimate order.

The HR Heist

An HR employee received an email that appeared to be from the company’s payroll provider asking them to update employee direct deposit information through a provided link. The employee complied, giving criminals access to the entire company payroll database, resulting in diverted paychecks and compromised personal information.

This attack shows how BEC targets departments beyond finance. The email contained company branding and arrived just before the regular payroll processing period. It referenced a plausible system update and emphasized the urgency of completing the change before the next pay cycle.

Conclusion

Business Email Compromise represents one of the most significant threats to companies today. These attacks bypass traditional security measures by exploiting human trust and business processes rather than technical vulnerabilities.

Protection requires a comprehensive approach that combines technical solutions like MFA and email authentication protocols with human elements like training and verification procedures. The good news is that with proper preparation, most BEC attacks can be prevented.

Don’t wait until after an attack to improve your security posture. Review your current email security measures, implement authentication protocols, and train your employees to recognize and report suspicious communications.

Remember: The most effective defense against Business Email Compromise is a well-informed workforce backed by strong technical safeguards and clear procedures.