Independent Banker - May 2023 - 26

PORTFOLIO
FOCUS FRAUD
Tackling business
payments fraud
Multiple types of business payments fraud are on the rise.
We spoke with experts on how to effectively protect your
community bank and its customers. By Katie Kuehner-Hebert
usiness payments fraud is
growing and wreaking havoc
not only on banks' commercial
customers, but also on the
banks themselves.
B
One of the most frequently
perpetuated fraud of this type is
via business email compromise
(BEC), says Chad Quarles, senior
CISO advisor at Hartman Executive
Advisors, an independent strategic
IT and cyber advisory firm in
Timonium, Md.
A BEC attack usually begins when
the threat actor gains unauthorized
access to an email account belonging
to a bank or one of the bank's
business partners, such as a title
company, Quarles says. The threat
actor will monitor the title company
employee's email until they identify
a conversation discussing payment
instructions and then impersonate
the recipient of the payment and
redirect the wire transfer to an
unrelated account.
" By the time the victim realizes
what's going on, " he says, " the wire
has been sent and the account has
been drained. "
According to the FBI's Internet
Crime Complaint Center, BEC
fraud is one of the most financially
damaging internet crimes, leading
to roughly $2.4 billion in global
cyber losses in 2021. The FBI also
reports that between July 2019 and
December 2021, BEC losses surged
by 65% and have cost organizations
about $43 billion from June 2016 to
December 2021.
Fraudsters targeting
business payments
Another common type of business
payments fraud is perpetrated
via vendor payment change
request, when an accounts payable
representative receives an email or
letter from a vendor providing new
automated clearing house (ACH)
instructions, says Jeff Olejnik,
principal, cybertech practice leader
in Wipfli LLP's Minneapolis office.
" Your company [often] doesn't
realize it's duped until the vendor
starts making collection calls and
they say they never sent a payment
change, " he says.
According to Olejnik, other types
of business payments fraud include
fake wire transfer requests, W-2
scams and ransomware.
The biggest entry points for fraud
are account takeover attacks, where
an attacker, through a variety of
means, can impersonate someone's
digital persona to steal money, says
26 // ICBA Independent Banker // May 2023
Illustration by Adrian Niederhäuser/Adobe

Independent Banker - May 2023

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