Preventing Business Email Compromise: Essential Practices to Avoid Costly Mistakes

John W. Harmon, PhD
Feb 12
3 min read

Business Email Compromise (BEC) scams cost companies millions every year. One small mistake, often made in just a few minutes, can lead to losses of $50,000 or more. These scams exploit weaknesses in wire transfer workflows and payment verification procedures, making it critical for small and medium businesses (SMBs) to understand how to protect themselves. This post explains how BEC happens, shares a real invoice fraud example, and offers practical steps to strengthen your defenses.

Close-up view of a computer screen showing an email inbox with a suspicious wire transfer request — Example of a fraudulent wire transfer email

How Business Email Compromise Happens

BEC attacks usually start with a cybercriminal gaining access to a legitimate email account within a company or impersonating a trusted partner. The attacker then sends an email requesting a wire transfer or payment, often using urgent language to pressure employees into acting quickly.

The key to success for these criminals is exploiting workflow weaknesses:

Lack of clear payment approval steps
No verification of payment requests outside email
Employees unaware of fraud tactics
Absence of multi-factor authentication on email accounts

Because these scams rely on social engineering rather than technical hacking, they can bypass many traditional cyber security tools.

Real Invoice Fraud Scenario

Consider a mid-sized company that received an invoice from a regular supplier. The invoice looked legitimate, with correct logos and contact details. The accounts payable clerk received an email from what appeared to be the supplier’s finance department requesting payment to a new bank account due to “bank changes.”

The clerk, pressed for time and trusting the email, approved the payment without verifying the change. Within five minutes, $50,000 was wired to the fraudster’s account. The company only discovered the fraud days later when the supplier followed up about the unpaid invoice.

This example highlights how quickly BEC can cause significant financial damage when payment verification procedures are weak.

Common Weaknesses in Wire Fraud Workflows

Many SMBs have gaps in their wire transfer processes that make them vulnerable:

Single point of approval: One person authorizes payments without oversight.
Email-only verification: Payment instructions are confirmed only via email, which can be spoofed or hacked.
No secondary confirmation: Lack of phone calls or face-to-face checks for changes in payment details.
Inadequate employee training: Staff are not trained to recognize phishing or social engineering tactics.
No audit trail: Poor documentation of payment approvals and changes.

These weaknesses create opportunities for attackers to trick employees into sending money to fraudulent accounts.

Strengthening Payment Verification Procedures

Improving your payment verification process is the best defense against BEC scams. Here are practical steps to reduce risk:

Implement dual approval: Require at least two people to approve wire transfers, especially for large amounts.
Verify changes by phone: Always call the supplier or vendor using a known phone number to confirm any changes in payment details.
Use secure communication channels: Avoid relying solely on email for payment instructions; use encrypted messaging or secure portals.
Train employees regularly: Conduct cyber security awareness sessions focused on phishing, social engineering, and BEC tactics.
Set payment limits: Establish thresholds that trigger additional scrutiny or approvals.
Enable multi-factor authentication: Protect email accounts and financial systems with MFA to reduce the chance of account compromise.
Maintain detailed records: Keep logs of payment requests, approvals, and confirmations for auditing and investigation.

These steps create multiple layers of defense, making it harder for attackers to succeed.

Eye-level view of a desk with a phone, printed invoice, and a checklist for payment verification — Payment verification checklist and communication tools on a desk

The Role of Cyber Security in Preventing BEC

While BEC scams often exploit human error, cyber security measures still play a vital role:

Email filtering and anti-phishing tools reduce the chance of fraudulent emails reaching employees.
Regular software updates and patches prevent attackers from exploiting vulnerabilities.
Access controls limit who can approve payments and access sensitive financial data.
Incident response plans prepare your team to act quickly if a compromise occurs.

Combining cyber security technology with strong internal controls and employee awareness creates a robust defense against BEC.

What SMBs Can Do Today

Small and medium businesses often lack the resources of larger firms, but they can still take effective steps to protect themselves:

Review your current payment approval process and identify gaps.
Train your finance and accounts payable teams on BEC risks and verification best practices.
Implement simple dual approval systems, even if manual, to add oversight.
Use phone verification for any payment detail changes.
Enable multi-factor authentication on all email and financial accounts.
Regularly back up critical data and have a plan for responding to fraud incidents.