Business Email Compromise – What it is & How it Happens

This question should be standard issue at any cybersecurity pub quiz:

What increased by 108% one day in September 2019?

It’s not the number of data breaches experienced around the world. It’s not even the proportion of businesses now targeted by cyberattacks.

No: it refers to the total amount of money stolen from businesses thanks to Business Email Compromise scams, according to the FBI. The Bureau’s flagship figure of $12.5bn was revised upwards by more than 100% on September 10th, hitting a staggering $26bn.

The two figures don’t cover identical timespans. But if anything, comparing the periods of time used to arrive at the totals generates even more alarm. The original $12.5bn figure was derived from business losses over a five-year period between 2013 and 2018. The new figure of $26bn is the product of just three years of criminal activity, covering June 2016 to July 2019.

So how are attackers able to extract such large sums of money from enterprises? And what can be done to stop them?

Perhaps part of the reason Business Email Compromise (BEC) has been so successful is that everyone has a slightly different definition of what it means, and no clear solution to stop it…

What is Business Email Compromise?

Business Email Compromise (BEC) is when a trusted relationship – between colleagues or counterparties – is hijacked through email. BEC can be accomplished in two ways:

email impersonation (i.e. spear phishing attacks)
email account hacking

Conveniently for attackers, account takeover is often achieved after a successful spear phishing attack.

BEC is a catch-all term often conflated with other kinds of email attacks, like phishing, spear phishing and account takeover. Account takeover (ATO) attacks, for instance, are often described as identical to Business Email Compromise. However, ATO attacks see the attacker literally gain access to an individual’s genuine account, potentially by using brute force “credential stuffing” hacking techniques. BEC attacks, meanwhile, are geared around impersonation. An attacker “compromises” an email account by convincingly impersonating a trusted counterparty of the target. What is being “compromised” in a BEC attack is the trust between the target and the impersonated counterparty.

Because BEC scams rely on people making mistakes and being tricked, attacks can be relatively simple or extremely complex. The initial step involves fraudsters identifying a company they intend to target. Once this is done, before executing the attack itself, the attackers must first impersonate an employee or one of the company’s external counterparties. (Attackers might choose to impersonate a display name or a domain in order to fool their target. To understand more about the different types of email spoofing and impersonation exploited by cybercriminals, head to the this Tessian blog.)

To execute a BEC attack, attackers will send spear phishing emails to targets within the company. Building trust over time comes down to communicating authentically. Although you might have read about spear phishing campaigns convincing people to click on malicious links or attachments, this is no longer a necessity. “Zero-payload” attacks, a growing phenomenon, build trust with targets over time using entirely innocuous communications. The request, when it comes, may be made in writing without the suspicious links or attachments that are easier for traditional security programs to flag.

This example shows an attacker impersonating a CEO, Thomas Edison, asking an employee to change invoicing details. There is no link or attachment required, only text:

It’s clear that subtle and hard-to-detect techniques can have a potentially damaging effect on enterprises. So what are the main methods by which attackers compromise this trust in BEC attacks?

What are common BEC techniques?

Supplier / vendor fraud
The dangers of external impersonation are becoming better understood, but there is still a learning curve for security leaders within enterprises. Every business has a finite number of employees, which makes it easier for security products to keep on top of potentially suspicious activity on “employee” email accounts. But all businesses have networks of suppliers and vendors, which dramatically increases the number of people attackers might choose to impersonate. (Download Tessian’s guide to email impersonation to see this effect in action.)
CEO fraud
CEO fraud is a type of spear phishing attack where attackers impersonate a CEO, CFO or another high-level executive. Attackers aim to trick the executive’s colleagues into carrying out actions that place data, money and/or credentials at risk. As with other BEC scams, the usual aim is to extract money from the targeted business by coercing an employee into making illicit wire transfers.
Whaling
Whaling is related to CEO fraud, with a key difference: instead of impersonating senior executives and targeting lower-ranking employees, attackers target the big fish themselves (hence the term). A whaling attack might involve attackers trying to get the executive in question to divulge key credential information or other sensitive organizational data. This information can then be used to access confidential systems, or to make subsequent spear phishing attacks within the organization more authentic and effective. Because they tend to be very busy, and because of their access to key systems, senior executives can be especially profitable targets for attackers.
Account takeover
As covered above, ATO describes the unauthorized takeover of someone’s actual email account, using brute force hacking to harvest credentials before sending a fraudulent email from the target’s own account. ATO attacks are understandably extremely hard for traditional technologies to identify as the “genuine” email account is in use.
Institutional impersonation
Some of the most impersonated parties around the world are not necessarily businesses at all but institutions. Emails from entities like the IRS (HMRC in the UK), or a communication from a court, have the potential to worry people and cause them to react instinctively, rather than rationally. (It’s worth pointing out that the big tech companies, such as Microsoft and Netflix, are invariably among the most impersonated brands in the world, despite both companies employing DMARC to defend against spoofing.)

The consequences of BEC

As we’ve seen, the main motivation behind BEC attacks is commonly financial. But going after an organization’s finances can have wide-reaching consequences, also affecting intangible factors like company morale and brand reputation. Here are some of the main consequences cybersecurity leaders should be wary of.

Data breach / credential harvesting

Data breaches are rarely out of the press these days. One of the scams that resonates most with the media is credential harvesting and the stealing of user data. With organizations now holding more information on individuals (employees and customers) than ever before, these attacks can cause immense harm to people and to businesses.

Financial losses

Of course, a principal aim of BEC attacks is to extract money from targeted organizations. In 2018, film company Pathé lost more than €19m after an attacker posed as the company’s CEO and asked another senior executive to wire funds to a fake account. When second-order financial penalties like fines are taken into account too, BEC can prove extremely damaging to organizations’ balance sheets.

Fines

Nowadays it’s hard to think of data breaches and email attacks without the associated fines brought about by new regulation. Currently, for instance, Yahoo is tackling an enormous class action suit with estimated damages of more than $100m. And legislation designed to make fines more than a slap on the wrist is now ramping up all over the world. In one of the first big GDPR fines, the UK’s Information Commissioner earlier in 2019 announced its intention to fine British Airways £183m after a 2018 data breach.

Reputational damage

It’s harder to quantify on a balance sheet, but after a BEC-triggered data breach, hard-won brand reputations could be put at serious risk. An email security failure can cause share prices to fall and affect organizations’ relationships with their customers. Another second-order effect could be knocking employees’ morale and denting confidence, making rebuilding work still more difficult.

There are a wide range of reasons for businesses to protect themselves against Business Email Compromise, which raises the question: why are most business unprepared to defend against this threat?

Why rule-based technology does not stop BEC

Simply put, security products have not moved as quickly as cyberattackers in predicting and preventing new and emerging threats. Secure Email Gateways do a great job of preventing run-of-the-mill spam and “bulk” phishing attacks, but they do this with static lists of rules that can only stop attacks the software has already seen. They simply aren’t cut out to defend against increasingly sophisticated attackers deploying social engineering techniques and exploiting human frailties in order to trigger dangerous actions. (Read our CTO Ed Bishop’s thoughts on Secure Email Gateways and other legacy technologies here.)

BEC attacks are highly targeted towards particular individuals within organizations. Even the most vigilant employees can be foxed by a spear phishing scam if it is sent on a busy day, delivered in a particular tone, or perceived to be from an authoritative source. Indeed, some threats are confined to IP addresses hidden in email headers – undetectable by employees.

That’s why organizations must invest in technology that explicitly protects theirpeople. And that’s where Tessian’s software, trained on over 1 billion emails, comes in.

Our stateful machine learning engine learns what “normal” email communications look like within complex organizations. Using historical patterns and behavioral signifiers to understand relationships between internal and external parties, Tessian Defender identifies malicious impersonations before they have the chance to deceive employees.

If you’re interested in learning more about Defender or our other Human Layer Security products, sign up for a demo here.

Human Layer Security Spear Phishing

Types of Email Attacks Every Business Should Prepare For

14 November 2019

Corporate email continues to rule in the world of business. Today, the average office worker receives 120 emails every day. While many of these emails pertain to business as usual, not every email is quite what it seems. Now more than ever, organizations are on the receiving end of advanced email attacks that aim to steal money, pilfer data or compromise systems.

What is an email attack?

What is the purpose of an email attack? Email attacks can take many forms but are typically deployed by cybercriminals in order to steal money or data. In order to keep organizations secure, it is important that employees are able to recognize the most common types of email attacks and understand the potential impact that they could have.

Most common types of email attacks Cybercriminals can leverage email in multiple ways to attack people and systems. There are a variety of tactics that range from being very broad to very targeted: Spam. Spam is known as a high volume commercial messaging sent over email.Despite several tools to filter out unwanted email, spam remains a significant challenge for organizations large and small. 56 percent of all email traffic is made up of spam; so while spam is not always the vector of attack, its sheer volume helps obfuscate real attacks, such as spear phishing. Phishing. Phishing is a fraudulent attempt to obtain sensitive information such as usernames, passwords and credit card details by pretending to be a trusted entity.Phishing attacks are sent in high volume, and the legitimate look of the email can trick users into accidentally opening an attachment or clicking on a malicious link. However, phishing emails are not personalized and tend to start with generic greetings like “hello” or “dear sir.” What makes phishing attacks successful is that even though a small percentage of targets fall for the attack, the sheer number of people receiving the email means that the attacker is likely to have some success.

Spear phishing. Spear phishing is an advanced phishing attack that is targeted at one or a few individuals. This type of attack targets a specific individual and tries to impersonate a person or an entity that they trust. Before the attack is launched, the attacker spends time researching their target to gain information such as their name, or suppliers that the target uses in order to make the email appear legitimate. Because spear phishing emails are more sophisticated in their construction and convincing in execution, they are harder to catch.

Business Email Compromise (BEC) is when a relationship is hijacked through email – an attacker tries to trick someone into thinking they are a trusted contact in order to steal money or information. BEC can be accomplished through spear phishing or account takeover. Read more about BEC here. According to the FBI, BEC attacks cost organizations $26bn between 2018 – 2019. In fact, BEC attacks have now overtaken both ransomware and data breaches as the main reason that companies file a cyber-insurance claim according to insurance giant AIG.

Consequences of email attacks There are a variety of outcomes that can occur from the above email attacks. Here they are: Malware: Malware is a computer software that has a malicious intent. Some of the different types of malware include ransomware and spyware, which have the goal of gaining control of infrastructure, farming credentials or gaining access to passwords. Ransomware is a type of malware that essentially holds a target hostage; attackers will demand a fee in exchange for unencrypting the target’s systems. Like malware, ransomware is a payload that is often deployed by phishing or spear phishing emails. Ransomware can have a significant impact, as seen with the WannaCry attack, which was estimated to have affected more than 200,000 computers across 150 separate countries. The financial outcome of ransomware has made it attractive for attackers, with over $1 billion being racked up by criminals annually. Businesses and governments continue to get inundated with ransomware attempts and reports even suggest that more than 600 US government entities have been hit with ransomware so far this year. Credential Theft. Credential theft occurs when an attacker is able to steal the credentials of the target by executing a successful phishing or spear phishing attack. Often, the email will include a link which will take the target to a fake login page where the target’s credentials are ultimately harvested. Wire-transfer fraud. Wire-transfer fraud is when a target wires money to an attacker’s account. Wire-transfer fraud can be accomplished by the attacker including bank details in a phishing or spear phishing email, and requesting the target to pay a specific amount. Another way that this can be achieved is if the attacker tricks someone into changing the details of the bank account to which a recurring payment is paid.

Why are email attacks so successful? Phishing and BEC attacks are difficult to detect because cybercriminals are utilizing social engineering techniques in order to build trust. The attacker manipulates the target by posing as a trusted individual or organization and will oftentimes engage in a conversation over several emails, before requesting the target to divulge credentials, confidential data, or to wire money to an account they own. Social engineering is what contributes to the success of these attacks because attackers use convincing language to get people to act instinctively, not rationally. For example cybercriminals were able to access payroll information of 700 current and former employees at social media behemoth Snapchat by posing as CEO Evan Spiegel in an email and tricking a junior employee into sending them the confidential data. Email impersonation can take on a variety of forms, such as display name impersonation where the attacker sets a deceptive display name on their email account, or spoofing where an attacker forges an email to make it appear as if it’s been sent from another email address. Email authentication protocols such as DMARC, DKIM and SPF have been introduced over the years as an attempt to stop spoofing. The problem with these three protocols, though, is that many organizations have yet to adopt them and weaknesses can be exploited. For example, 80% of Fortune 500 companies do not have DMARC policies set up. As well, this email authentication only prevents an employee’s individual domain from being spoofed but it does not prevent them from receiving emails that have been spoofed. Finally, it’s easy for attackers to figure out which counterparties don’t have email authentication set up as DMARC records are publicly available.

Email attacks continue to cause sleepless nights for IT administrators everywhere. Although many organizations have implemented employee training programs into their security strategy, these programs often are not designed to account for human error. Human error is the main cause for the majority of data breaches, and it can easily occur because employees can become distracted or tired which leads to mistakes being made over email. The assumption that employees can become an effective line of defense after undertaking just a few hours of security training is unrealistic. Security teams need to implement the right technology to support employees without getting in the way of their day-to-day business.

How can machine learning help stop sophisticated email attacks? Defending against targeted email-borne threats requires superior email security. Legacy tools have not been able to keep pace with evolving email attacks. Rule-based systems may be able to block simple impersonations, but struggle to detect more complex ones. Complex impersonation attacks cause more damage for organizations. It is time for organizations to adopt a more intelligent approach to inbound threats – one that understands historical email relationships and communication patterns, and can therefore, automatically detect anomalies and threats. Tessian’s stateful machine learning engine learns the difference between normal and abnormal email communications. In real time, Tessian automatically prevents the most advanced forms of spear phishing, accidental data loss and data exfiltration. This ensures that organizations can stay ahead of attackers and protect the data that they hold most dear. To learn more about how Tessian is helping organizations like Arm keep data safe, talk to one of our experts today.