Small Business Guide to Fraud

What is Corporate Account Takeover Fraud?

Corporate account takeover is a type of fraud where thieves gain access to a business’ finances to make unauthorized transactions, including transferring funds from the company, creating and adding new fake employees to payroll, and stealing sensitive customer information that may not be recoverable.

Corporate account takeover is a growing threat for small businesses. In 2011, seventy two percent of data breach cases affected businesses with 100 employees or less1.  It is important that businesses understand and prepare for this risk.

Cyber thieves target employees through phishing, phone calls, and even social networks. It is common for thieves to send emails posing as a bank, delivery company, court or the Better Business Bureau. Once the email is opened, malware is loaded on the computer which then records login credentials and passcodes and reports them back to the criminals.  

Employee Education is Essential, but is Missing the Mark

Ninety two percent of respondents to a recent survey indicated employee education of small business employees was effective in reducing the threat of account takeover2.  However, nearly 80 percent of respondents to a small business survey said they had no formal internet security policy, with almost half indicating they provide no internet safety training to employees3.


How do I protect myself and my small business?

The best way to protect against corporate account takeover is a strong partnership with your financial institution. Work with your bank to understand security measures needed within the business and to establish safeguards on the accounts that can help the bank identify and prevent unauthorized access to your funds.

A shared responsibility between the bank and the business is the most effective way to prevent corporate account takeover. Consider these tips to ensure your business is well prepared:

  • Educate your employees. You and your employees are the first line of defense against corporate account takeover. A strong security program paired with employee education about the warning signs, safe practices, and responses to a suspected takeover are essential to protecting your company and customers.

  • Protect your online environment. It is important to protect your cyber environment just as you would your cash and physical location. Do not use unprotected internet connections. Encrypt sensitive data and keep updated virus protections on your computer. Use complex passwords and change them periodically.

  • Partner with your bank to prevent unauthorized transactions. Talk to your banker about programs that safeguard you from unauthorized transactions. Positive Pay and other services offer call backs, device authentication, multi-person approval processes and batch limits help protect you from fraud.

  • Pay attention to suspicious activity and react quickly. Look out for unexplained account or network activity, pop ups, and suspicious emails. If detected, immediately contact your financial institution, stop all online activity and remove any systems that may have been compromised. Keep records of what happened.

  • Understand your responsibilities and liabilities. The account agreement with your bank will detail what commercially reasonable security measures are required in your business. It is critical that you understand and implement the security safeguards in the agreement. If you don’t, you could be liable for losses resulting from a takeover. Talk to your banker if you have any questions about your responsibilities.


Industry and Law Enforcement Warning to Businesses on Business Email Compromises

Several warnings were released to raise awareness regarding an increase in phishing scams targeting businesses in an attempt to compromise their accounts. Known as Business Email Compromise, this scam is conducted by cybercriminals who compromise legitimate business email accounts to impersonate executives and conduct the unauthorized transfers of funds.

The following alerts outline the various versions of the scam, identify characteristics of the complaints received by law enforcement, and provide recommended mitigation tips:

Additional information

1 Source: VeraCode 2011 fraud survey of small business preparedness
2 FS-ISAC Account Takeover Task Force survey, 2011
3 National Cyber Security Alliance Small Business Survey, 2011

See the American Bankers Association's PROTECT YOUR SMALL BIZ page for more information.

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