What is CEO fraud?

What is CEO fraud?

CEO fraud is a growing cyber threat that can cost Danish companies millions. CEO fraud phishing is a specific type of CEO fraud involving deceptive email scams that impersonate high-level executives. This sophisticated form of cybercrime involves cybercriminals impersonating high-ranking executives to deceive employees into transferring funds or sharing sensitive information. CEO fraud email scams and phishing attacks are among the most common methods used.

Definition and explanation

CEO fraud, also known as business email compromise (BEC), is a targeted cyberattack where fraudsters impersonate a company’s CEO or other high-level executives to manipulate employees. These attackers commit CEO fraud by spoofing the email address of a high-level executive, making it appear as though the email is coming from the CEO. These attacks often lead to unauthorized wire transfers, data breaches, and financial losses.

By exploiting trust and authority, cybercriminals craft convincing emails that pressure employees into bypassing standard security protocols. Unlike generic phishing attempts, CEO fraud involves extensive research, making it highly convincing and difficult to detect.

How CEO fraud works

CEO fraud typically follows a structured pattern, involving multiple steps to manipulate employees into acting without proper verification. A CEO fraud attempt is the initial stage where attackers impersonate executives to initiate the fraud process. Attackers rely on deception, urgency, and authority to execute their schemes successfully.

1. Research: Attackers gather information about the company, its employees, and executive communication styles using publicly available data, social media, and leaked credentials.

2. Spoofing & impersonation: Cybercriminals create fake email addresses that closely resemble legitimate ones or hack into actual executive email accounts.

3. Phishing & social engineering: Fraudulent emails are sent to targeted employees, often in finance or HR, requesting urgent payments or confidential data.

4. Urgency & pressure: Attackers create a false sense of urgency, warning of serious consequences if the request isn’t completed immediately.

By following these tactics, criminals trick employees into making costly mistakes, leading to financial and reputational damage.

How to identify CEO fraud emails

Recognizing CEO fraud attempts is crucial in preventing successful attacks. Employees should look out for the following warning signs that indicate a fraudulent request:

• Unusual sender address: The email appears to be from a high-level executive but contains slight misspellings or incorrect domains. Always verify the correct email address to ensure it is legitimate.

• Urgent & confidential requests: Attackers insist on immediate action, discouraging verification.

• Uncommon financial transactions: Employees are asked to transfer money to foreign bank accounts or pay unfamiliar invoices.

• Poor grammar & formatting: Some emails contain typos, odd phrasing, or inconsistent tone, especially if generated by non-native speakers.

• Compromised email accounts: If the CEO’s email has been hacked, fraudsters may send emails from the actual account with altered payment details.

Common CEO fraud attack methods

CEO fraud attacks come in different forms, but all share the goal of deceiving employees into taking unauthorized actions. Here are the most common techniques used by cybercriminals:

CEO fraud targets often include employees in finance and HR departments due to their access to sensitive information.

1. Email phishing attacks

Fraudsters send emails that appear to come from company executives, a tactic known as CEO fraud phishing, involving deceptive email scams that impersonate high-level executives. These emails often request financial transactions or access to sensitive data.

2. Domain & email spoofing

Cybercriminals register domains with slight misspellings (e.g., “@moxso.com” becomes “@mooxso.com”) to trick employees into believing the emails are legitimate. It is crucial to verify the correct email address to avoid falling for spoofed emails.

3. Social engineering manipulation

Attackers exploit human psychology, using the authority of the company's CEO, trust, and urgency to manipulate employees into taking action without verifying requests. Learn more about how social engineering works and how to defend against it.

4. CEO fraud via phone (vishing)

Some scammers call employees, posing as executives, and demand immediate money transfers or access to confidential data

Who is targeted in CEO fraud?

Certain employees and departments are more likely to be targeted by CEO fraud due to their roles in handling sensitive information and finances. The main targets include:

• Finance teams: Employees in the finance department are often targeted due to their involvement in financial transactions, such as handling wire transfers and payments.

• HR departments: Those with access to employee records and payroll information.

• Executives & senior staff: High-level decision-makers who authorize financial transactions.

How to prevent CEO fraud

Preventing CEO fraud requires a combination of security measures, employee awareness, and strict verification processes. Here are key strategies to protect businesses:

1. Train employees in cybersecurity awareness

• Conduct regular training sessions to educate employees about the latest phishing techniques and how to recognize suspicious emails.

• Utilize simulated phishing attacks to evaluate overall security posture and gauge employee awareness. This approach also helps in identifying potential vulnerabilities related to human error within the organization.

• Encourage employees to report any suspicious activities immediately.

• Enable multi-factor authentication (MFA) to enhance security by adding an additional verification step for sensitive accounts.

• Establish strict verification processes for financial transactions, including verbal confirmation for large transfers.

• Regularly update and patch software to protect against known vulnerabilities.

2. Implement verification procedures

• Require two-step verification for fund transfers.

• Confirm requests via phone calls or in-person verification.

• Establish a multi-approval process for high-value transactions.

• Verify account details before processing any transactions.

3. Strengthen email security

• Enable multi-factor authentication (MFA) for executive accounts.

• Use email filtering tools to detect spoofed addresses and phishing attempts.

• Implement DMARC, SPF, and DKIM protocols to prevent email spoofing.

• Emphasize the importance of protecting sensitive financial information like bank account numbers to prevent CEO fraud scams.

3. Train employees in cybersecurity awareness

• Conduct regular phishing simulations and cybersecurity training sessions.

• Encourage employees to be skeptical of unexpected requests for money or data.

• Teach staff to check for subtle email discrepancies and suspicious sender details.

• Emphasize the importance of training employees to recognize and respond to a phishing attack, particularly sophisticated ones like CEO fraud.

4. Limit publicly available information

• Reduce the amount of executive information available on company websites and social media.

• Educate executives on the risks of oversharing personal details online.

5. Monitor and audit transactions

• Implement real-time transaction monitoring to flag unusual payment activity.

• Conduct regular security audits to identify potential vulnerabilities.

• Emphasize the importance of monitoring financial transactions to detect unauthorized attempts to transfer funds.

Protecting against CEO fraud scams

CEO fraud scams are a type of business email compromise (BEC) attack that can have devastating consequences for organizations. To protect against these scams, it’s essential to understand how they work and take proactive measures to prevent them. Learn more in our article: On the Rise: Business Email Compromise.

Understanding CEO fraud scams

CEO fraud scams typically involve a cybercriminal impersonating a company’s CEO or other high-level executive to trick employees into transferring funds or divulging sensitive information. These scams often rely on social engineering tactics, such as phishing attacks, to gain the trust of the targeted employee. By exploiting the authority and urgency associated with executive requests, fraudsters can manipulate employees into bypassing standard security protocols.

Conclusion

CEO fraud is a serious and evolving cyber threat that businesses must proactively address. By implementing strong security measures, educating employees, and verifying financial transactions, companies can reduce their risk of falling victim to these sophisticated scams. Stay vigilant, train your staff, and enhance your cybersecurity defenses to protect your organization from CEO fraud attacks.