When most people think of cyberattacks, they picture ransomware locking down computer screens or hackers breaking through firewalls. But the single most financially devastating cyber threat facing small businesses today involves nothing more than a carefully written email. Business email compromise, commonly known as BEC, has quietly become the costliest form of cybercrime reported to law enforcement, and small businesses are squarely in the crosshairs.

What Is Business Email Compromise?

Business email compromise is a targeted attack in which criminals impersonate a trusted figure — such as a company executive, a vendor, or a business partner — to trick employees into transferring money or sharing sensitive data. Unlike the mass phishing emails that flood inboxes with obvious spelling errors and generic greetings, BEC attacks are carefully crafted for a specific target. The attacker has done their homework. They know names, job titles, business relationships, and even the tone of voice the person they are impersonating would use.

This is what makes BEC so dangerous. There is no malicious attachment to scan, no suspicious link to flag, and no malware to detect. It is simply a convincing email that asks someone to do something that sounds perfectly reasonable in a business context — pay an invoice, update a bank account number, or send over employee tax information.

How BEC Attacks Work

BEC attacks follow a methodical process. Understanding each stage helps you recognize where your business is vulnerable and where defenses can be built.

Step 1: Research the target. Attackers begin by gathering intelligence about the company. They study LinkedIn profiles to identify who handles finances, read company websites to learn about leadership, and monitor social media for travel schedules and business announcements. If the CEO posts about attending a conference overseas, that is the perfect window to impersonate them — they will be busy and hard to reach for verification.

Step 2: Compromise or spoof an email account. The attacker either gains access to a real email account through stolen credentials or creates a lookalike domain. For example, they might register "company-inc.com" instead of "companyinc.com," a difference that is nearly invisible at a glance. In some cases, they use social engineering tactics to obtain actual login credentials, giving them access to the real mailbox and all its history.

Step 3: Build trust and context. Rather than making an immediate request, sophisticated attackers may exchange several normal-looking emails first. They might reference a real project, a recent meeting, or an actual vendor relationship. This establishes credibility and lowers the target's guard.

Step 4: Make the request. Once trust is established, the attacker makes the financial request. This could be a wire transfer to close a deal, a change to vendor payment details, a batch of gift cards for a client appreciation event, or a redirect of an employee's direct deposit. The request always carries urgency — it needs to happen today, before the end of business, or before the boss gets out of a meeting.

The 5 Most Common BEC Scenarios

While BEC attacks can take many forms, most fall into one of five well-documented patterns that every business should know.

  1. CEO fraud. An attacker impersonates the CEO or another senior executive and emails someone in finance with an urgent request to wire funds. The message typically says something like "I need you to handle a confidential payment before end of day. I'm in back-to-back meetings so just handle it and I'll explain later." The combination of authority and urgency is extremely effective.
  2. Vendor invoice manipulation. The attacker poses as a known vendor or supplier and sends a legitimate-looking invoice with updated banking details. Because the company has an existing relationship with the vendor and regularly pays invoices, the payment goes through without question — directly into the attacker's account.
  3. Payroll diversion. An attacker compromises or impersonates an employee's email and contacts the HR or payroll department requesting a change to their direct deposit information. The next paycheck is deposited into an account controlled by the criminal. These attacks often go unnoticed until the employee reports not receiving their pay.
  4. Attorney impersonation. The attacker pretends to be a lawyer or legal representative handling a confidential matter. They pressure employees to act quickly and quietly, often claiming that discussing the matter with others could jeopardize a deal or legal proceeding.
  5. Data theft. Rather than requesting money directly, some BEC attacks target sensitive information such as W-2 forms, tax records, or employee personal data. This information can then be used for identity theft or sold on criminal marketplaces. These attacks typically spike during tax season and target HR departments.

Why BEC Is So Effective

BEC succeeds where other attacks fail because it exploits human behavior rather than technical vulnerabilities. There is no malware for your antivirus to catch, no malicious link for your email filter to block, and no attachment for your sandbox to analyze. The email itself is clean — it is just text asking someone to do their job.

These attacks exploit the natural tendency to comply with requests from authority figures, especially when those requests come with urgency. When the CEO says "handle this now," most employees do not push back. When a trusted vendor says their bank account has changed, the accounts payable clerk updates the record and processes the payment.

BEC attackers also benefit from the fact that their research makes the emails incredibly convincing. They use the right names, reference real projects, and match the communication style of the person they are impersonating. In cases where the attacker has actually compromised a real email account, the message comes from the genuine address, complete with the real email signature and full conversation history. Even cautious employees can be fooled when every detail checks out.

The Financial Impact

The numbers behind BEC are staggering. The FBI's Internet Crime Complaint Center has consistently ranked BEC as the costliest category of cybercrime, with reported losses in the tens of billions of dollars globally. The average loss per BEC incident is significantly higher than other forms of cybercrime because each attack targets a specific high-value transaction rather than casting a wide net for small amounts.

Small businesses bear a disproportionate share of this burden. Larger organizations typically have segregation of duties, multi-layer approval processes for payments, and dedicated security teams watching for anomalies. Small businesses often rely on a single person to handle finances, rarely have formal verification procedures, and may not have the email security tools needed to catch spoofed addresses.

Perhaps most devastating is that money lost to BEC is rarely recovered. Once a wire transfer is sent, the funds are typically moved through multiple accounts and across international borders within hours. Unlike credit card fraud, where transactions can be reversed, wire transfers are designed to be fast and final. By the time the victim realizes what happened, the money is gone.

For many small businesses, a single successful BEC attack can mean the difference between staying open and closing the doors permanently.

How to Protect Your Business

The good news is that BEC is one of the most preventable forms of cybercrime. Because these attacks rely on process failures rather than technical exploits, the defenses are primarily procedural.

Establish verification procedures

The single most effective defense against BEC is a mandatory verification step for any financial request that arrives by email. Implement a two-person approval process for all payments above a set threshold. Require that any request to change payment details, bank account information, or payroll direct deposits be verified through a phone call to a known number — not a number provided in the email itself. This one step alone would prevent the majority of BEC losses.

Implement email authentication

Configure DMARC, SPF, and DKIM records for your email domain. These protocols help prevent attackers from sending emails that appear to come from your domain and help your email system identify spoofed messages from other domains. While this will not stop every BEC attempt, it raises the technical bar significantly and catches many lookalike domain attacks. Pair this with multi-factor authentication on all email accounts to prevent attackers from compromising your real accounts in the first place.

Train your employees

Every employee who handles money, payments, sensitive data, or vendor relationships needs to understand how BEC works. Training should cover the common scenarios described above, the red flags to watch for (urgency, secrecy, changes to payment details), and the exact steps to follow when something seems off. Run realistic simulations so employees experience the pressure of a BEC attempt in a safe environment before facing the real thing.

Flag external emails

Configure your email system to add a visible banner to any message that originates from outside your organization. This simple change helps employees immediately recognize when a message claiming to be from the CEO or a colleague is actually coming from an external address. It is a small visual cue that can interrupt the automatic trust that BEC exploits.

Review payment procedures regularly

At least once per quarter, review your financial processes with an eye toward BEC risk. Ask questions like: Who can authorize payments? Is there a single point of failure? How do we verify changes to vendor banking details? Are our approval thresholds still appropriate? Document these procedures and make sure every relevant employee knows them.

What to Do If You Fall Victim

If your business falls victim to a BEC attack, speed is critical. Every minute counts when trying to recover funds.

  • Contact your bank immediately. Call your bank's fraud department and request a recall of the wire transfer. If you act within the first 24 to 48 hours, there is a chance the receiving bank can freeze the funds before they are moved.
  • Report to the FBI IC3. File a complaint with the FBI's Internet Crime Complaint Center at ic3.gov. The FBI's Recovery Asset Team has had success recovering funds in cases reported quickly, particularly for domestic transfers.
  • Preserve all evidence. Save every email, screenshot every conversation, and document the timeline of events. Do not delete anything. This evidence will be critical for law enforcement investigations and any insurance claims.
  • Notify affected parties. If employee data was compromised, notify the affected individuals so they can take steps to protect themselves from identity theft. If vendor relationships were involved, contact the real vendors to alert them and verify all account details.
  • Review and strengthen procedures. Use the incident as an opportunity to identify the specific process failure that allowed the attack to succeed and implement the controls needed to prevent a repeat. Every BEC incident reveals a gap that can be closed.

The Bottom Line

Business email compromise is not a sophisticated technical attack. It is a con — executed through email, powered by research, and successful because businesses lack the simple verification procedures that would stop it cold. The criminals behind BEC are patient, detail-oriented, and persistent. But they are also predictable. The same scenarios play out over and over again, which means they can be anticipated and defended against.

The defenses do not require expensive technology. A phone call to verify a payment request costs nothing. A two-person approval process is a policy change, not a software purchase. Employee training transforms your biggest vulnerability — the people who open and act on emails — into your strongest line of defense.

At CyberLearningHub, we help small businesses build exactly these defenses through targeted training programs, realistic BEC simulations, and clear procedural guidance. Because when it comes to protecting your business finances, the most important investment you can make is ensuring that everyone on your team knows what a BEC attack looks like and exactly what to do when they see one.