Phishing Fraud: A Growing Threat to Every Business
In today’s digital world, one of the fastest-growing threats facing businesses is phishing and payment fraud, and it’s no longer something that only happens to large corporations.
Recently, we’ve seen a couple of local businesses fall victim to banking information scams, where criminals impersonate suppliers, clients, or even internal staff to trick companies into sending payments to fraudulent accounts.
These incidents are becoming more common, more convincing, and more costly.
The good news? With the right safeguards in place, most of these losses are preventable.
What Is Business Phishing Fraud?
Phishing fraud happens when criminals use fake emails, invoices, or messages to manipulate a business into:
- Sending money to the wrong account
- Changing banking details for a supplier
- Paying a fraudulent invoice
- Revealing sensitive financial information
These scams often look completely legitimate, using real company logos, email signatures, and familiar language.
It’s not about hacking technology… it’s about hacking trust.
Why Small and Mid-Sized Businesses Are Being Targeted
A common misconception is that fraudsters only go after large companies.
In reality, small and medium-sized businesses are often easier targets because:
- Payment processes may be less formal
- Fewer people are involved in approvals
- Busy teams may not double-check requests
- Criminals know that one successful payment can mean tens of thousands of dollars
Every business that pays vendors, suppliers, or contractors is at risk.
A Key Insurance Requirement: Verification Procedures
Many insurance companies will offer coverage for phishing-related financial losses, but almost always with important conditions.
A common subjectivity (requirement) insurers include is:
Businesses must have a verification procedure in place when a new payee is set up or when banking details are changed, especially if cybercrime is involved.
In plain terms:
If someone requests a change in payment information, you must verify it before sending funds.
Practical Tips to Protect Your Business
Here are some of the most effective steps businesses can take immediately:
1. Always Verify Changes to Banking Information
If a supplier or client emails with new payment details, treat it as a red flag.
Do not rely on email alone.
Instead:
- Call the vendor using a known phone number
- Confirm the request verbally
- Document the confirmation
Never use the phone number provided in the suspicious email.
2. Require Two-Person Authorization for Payments
One of the strongest fraud-prevention tools is a simple internal rule:
No payment goes out without a second set of eyes.
This could include:
- Dual approval for EFT or wire transfers
- Two staff members signing off on invoice payments
- Management review for any changes in payee information
Even small teams can implement this.
3. Train Staff to Spot Red Flags
Phishing emails often include:
- Urgent or last-minute requests
- Slightly altered email addresses
- Pressure to bypass normal procedures
- Confidential or unusual payment instructions
A quick pause can prevent a major loss.
4. Create a Written Payment Change Process
Insurers want to see that businesses have a system in place, not just informal habits.
Consider a checklist such as:
- Verification call completed
- Second approver signed off
- Vendor confirmation documented
- Updated info stored securely
5. Don’t Assume “It Won’t Happen to Us”
Fraudsters target businesses of all sizes, industries, and communities.
The best protection is preparation.
How Insurance Can Help
Some commercial insurance policies may include coverage for:
- Funds transfer fraud
- Social engineering scams
- Cybercrime-related financial losses
However, coverage often depends on whether the business followed required verification procedures.
That’s why prevention and proper controls are so important.
We’re All Ears
If you’re unsure whether your current business insurance includes protection against phishing or payment fraud, or if you want to review your internal safeguards, our team is happy to help.
Cybercriminals are evolving, and businesses must evolve too.
Let’s make sure your business is protected.