The Essential Guide to Microsoft 365 Email Security: Beyond Native Controls

Cybercriminals are targeting Microsoft 365 inboxes with advanced tactics designed to bypass traditional defenses.

In healthcare, attackers use credential phishing, account takeover, and ransomware to infiltrate Microsoft 365 environments, often by bypassing secure email gateways (SEGs) and exploiting trusted relationships.

State and local governments are also seeing a sharp rise in targeted email attacks delivered through Microsoft 365. According to Abnormal’s 2025 analysis, threat actors impersonate vendors, manipulate invoice workflows, and exploit native collaboration tools within the Microsoft ecosystem to carry out fraud and credential theft.

Generative AI has further changed the game. As Microsoft reports, attackers are now using AI to craft flawless phishing emails, mimic executive voices, and launch multichannel campaigns that fool even experienced users.

With Microsoft 365 powering critical communication across industries, these threats have a direct path to your most sensitive data. Native tools like Exchange Online Protection and Microsoft Defender help, but advanced email threat detection and prevention demand a modern, layered approach to email security.

Microsoft 365's widespread adoption has made it a prime target for cybercriminals, exposing organizations to a range of sophisticated email-based threats. Understanding these key threats is crucial for implementing effective 365 email security measures.

Attacks have grown more targeted and more effective. Here's what you need to watch for.

Phishing remains one of the most prevalent and dangerous threats to Microsoft 365 environments. Attackers employ increasingly sophisticated phishing and spoofing techniques to trick users into revealing sensitive information or granting unauthorized access:

• Credential Harvesting: Cybercriminals create convincing fake Microsoft 365 login pages to steal user credentials. These attacks often exploit gaps in email authentication protocols like DMARC, SPF, and DKIM.

• OAuth Phishing: A growing threat involves malicious OAuth consent requests. When users grant permissions, attackers gain persistent access to email, files, and calendars without needing passwords.

BEC attacks continue to inflict significant financial damage on organizations. Attackers impersonate executives, suppliers, or partners to trick employees into authorizing fraudulent wire transfers or sharing sensitive data.

In fact, Abnormal found BEC threats are surging, not slowing:

• BEC attacks increased by more than 50% between the second half of 2023 and the first half of 2024.

• Since 2015, reported BEC attacks have surged over 1,000%, resulting in more than $14.3 billion in losses.

• In 2023 alone, the average cost per BEC incident exceeded $137,000.

• Smaller organizations saw a nearly 60% spike in BEC attacks, growing from 5.6 to 8.8 attacks per 1,000 mailboxes.

These figures underscore why modern BEC requires more than signature-based detection. Defending against these threats demands behavioral analysis, supply chain visibility, and layered protection.

Cybercriminals are increasingly taking advantaged compromised accounts within an organization's supply chain to launch attacks. For example, threat actors impersonate vendors and send legitimate-looking invoices to relevant stakeholders. A seemingly real invoice paired with urgency is more likely to get a response from an unsuspecting employee. In other words, since these emails appear legitimate and trustworthy, victims are more likely to fall for malicious links or payloads.

Once attackers gain access to a Microsoft 365 account, they can launch internal attacks that are difficult to detect:

• Sending Scam or Malware-Laden Emails: Attackers use compromised accounts to send harmful emails to internal or external recipients.

• Accessing Sensitive Data: Gaining entry to information stored in OneDrive, SharePoint, or connected applications.

• Resetting Passwords: Leveraging access to change credentials for other users and extend control.

Users have reported instances of compromised Microsoft accounts being used to send extortion emails, threatening exposure unless cryptocurrency is paid.

Attackers continue to adapt their methods to better exploit Microsoft 365 environments, leveraging advanced technologies and cross-channel communication.

Cybercriminals are using AI to craft highly convincing phishing emails, clone executive voices, and replicate websites or video calls. According to Microsoft's Cyber Signals report, these deepfake techniques allow attackers to scale deception while maintaining legitimacy.

Phishing campaigns no longer stop at the inbox. Attackers now follow up emails with messages on encrypted apps like Signal or WhatsApp, creating a false sense of urgency and legitimacy. This multichannel pressure helps move targets quickly through the attack chain.

Abnormal’s threat intelligence reveals that attackers are evolving their tools and strategies. Instead of relying on a single tactic, threat actors increasingly blend methods, combining BEC with internal phishing, or following OAuth phishing with stealthy account takeover.

More campaigns are also leveraging legitimate Microsoft 365 features like SharePoint, Teams, and calendar invites to add credibility and blend into routine workflows.

These tactics evade detection precisely because they look normal and can mimic legitimate behavior, often resembling zero-day email threats that lack known indicators. The sender is authenticated. The domain is trusted. The activity mimics legitimate business communication.

Attackers can operate undetected for longer periods, increasing the likelihood of success, by chaining techniques and hiding behind the familiarity of Microsoft 365.

This evolving playbook highlights the need for behavioral anomaly detection, context-aware threat intelligence, and email security analytics.

A strong defense starts with understanding what your existing tools can do and where they fall short. Microsoft 365 offers foundational protections, but gaps remain that require a more adaptive approach.

Microsoft 365 includes a suite of native tools designed to defend against common email threats. Exchange Online Protection (EOP) and Microsoft Defender for Office 365 form the foundation of this defense.

Exchange Online Protection (EOP) offers:

• Spam Filtering: Machine learning models identify and block spam and phishing attempts before delivery.

• Malware Protection: Email attachments are scanned for malware using signature-based and behavioral techniques.

• Policy Controls: Administrators can tailor spam, malware, and connection policies to fit organizational needs.

Microsoft Defender for Office 365 adds more advanced protection:

• Safe Attachments and Safe Links: Sandbox detonation and real-time URL scanning stop threats before users engage.

• Anti-Phishing Protection: AI models detect spoofing, impersonation, and spear-phishing tactics.

• Automated Investigation and Response: Threats are auto-contained with built-in response workflows.

• Threat Intelligence: Defender provides dashboards and alerts to help security teams track active campaigns.

These tools provide essential baseline protections and are effective at stopping known threats.

Despite their strengths, native Microsoft 365 tools are not designed to detect every type of attack, particularly those that rely on identity deception, behavioral manipulation, or vendor compromise.

Key gaps include:

• Socially Engineered Attacks: Payload-less emails that mimic routine business behavior often evade detection.

• Vendor Impersonation: Native tools can miss signs that a trusted partner’s account has been compromised.

• Lateral Movement: Internal phishing or privilege escalation attempts are difficult to catch without user-level behavioral baselines.

• Over reliance on Reputation: Many phishing sites leverage "safe" services like SharePoint or Dropbox, bypassing static URL filters.

These limitations underscore the need for an additional layer focused on behavior and identity, not just static indicators.

Abnormal integrates directly with Microsoft 365 via API, allowing for real-time behavioral analysis without disrupting mail flow or changing MX records.

By baselining normal user behavior, Abnormal detects:

• Anomalous Communication Patterns: Unexpected recipients, unusual timing, or deviations in tone.

• Vendor Risk Signals: Abnormal’s VendorBase tracks risk indicators across the supply chain.

• Account Compromise: Sudden changes in login behavior, inbox rules, or user activity.

These capabilities fill the detection and response gaps left by native tools. With AI-powered analysis and automated remediation, Abnormal stops advanced threats without the overhead of managing rules, signatures, or manual triage.

Together, Microsoft and Abnormal provide layered protection that adapts to the modern threat landscape.

Each industry uses email and Microsoft 365 differently. Tailor your security systems with your needs to get the best results.

Healthcare organizations face stringent requirements under HIPAA to protect patient data. Key implementation areas include:

• Business Associate Agreement (BAA): Confirm that a signed BAA with Microsoft is in place.

• Data Encryption: Use Microsoft 365’s encryption tools like TLS and Office Message Encryption.

• Access Controls: Enforce MFA, RBAC, and Conditional Access policies.

• Audit Logging: Enable Unified Audit Log and Advanced Audit for complete PHI access tracking.

Full HIPAA alignment with Microsoft 365 requires deliberate security configuration.

To meet the demands of GLBA, PCI DSS, and SOX, financial institutions should:

• Encrypt all financial communications.

• Customize data loss prevention (DLP) policies to protect sensitive data.

• Enforce multi-factor authentication (MFA) and log user access consistently.

• Enable immutable email archiving and retention policies.

Microsoft Defender for Office 365 offers protection from phishing and malware, and email authentication protocols like SPF, DKIM, and DMARC help prevent impersonation attacks.

Educational institutions balancing openness and privacy should:

• Restrict access to student data in email workflows.

• Encrypt messages containing academic records.

• Create DLP policies aligned with FERPA and COPPA.

• Monitor communications involving minors and apply role-based access controls.

Security must support educational freedom while safeguarding personal and federally protected information.

Organizations handling EU resident data must:

• Support data subject rights like access and erasure.

• Enable encryption and configure privacy by default.

• Establish breach response processes meeting 72-hour notice requirements.

Microsoft Information Protection can help identify andprotect personal data, while DLP and retention policies enforce GDPR requirements across email environments.

A strong email security strategy is rooted in careful implementation, informed users, and continuous refinement.

Here’s how to make Microsoft 365 email security work in practice.

Start with a comprehensive security evaluation. This will identify:

• Specific vulnerabilities and misconfigurations

• Gaps in policy enforcement

• User risk levels and awareness

• Industry-specific compliance requirements

With a clear baseline, you can prioritize actions that strengthen defenses without disrupting business.

Effective security depends on correct implementation. Key configuration actions include:

• Set Up Email Authentication Protocols: Configure SPF, DKIM, and DMARC to protect against spoofing.

• Deploy Multi-Factor Authentication: Require MFA for all users, especially admins and high-risk roles.

• Use Conditional Access Policies: Apply policies based on user location, device compliance, and login behavior.

• Implement Data Loss Prevention Policies: Prevent data loss and enforce compliance through DLP settings.

• Enable Microsoft Defender Features: Activate Safe Links and Safe Attachments for real-time threat detection.

Native Microsoft tools provide essential protection, but sophisticated threats still get through. Combining Microsoft’s baseline with Abnormal’s behavioral detection closes critical gaps:

• Abnormal adds context-aware detection for social engineering, BEC, and vendor compromise.

• VendorBase surfaces third-party risk across the supply chain.

• API-based deployment means fast setup without disrupting mail flow.

Together, Microsoft and Abnormal create a layered, adaptive defense that scales with your risk.

Technology alone isn’t enough. Human error remains one of the biggest vulnerabilities.

• Conduct role-based security training with AI agents and realistic phishing simulations.

• Establish clear reporting channels for suspicious emails.

• Reinforce a security-first culture that encourages diligence.

In parallel:

• Use Microsoft 365’s built-in dashboards to monitor threats in real time.

• Test and refine your incident response plan.

• Schedule periodic audits to stay aligned with best practices.

Email security isn’t static—it’s a continuous process of adapting to evolving threats. As attackers innovate with AI and social engineering, defenses must evolve faster.

The strongest Microsoft 365 strategies:

• Layer Microsoft’s native protection with behavioral AI.

• Automate detection and response to reduce dwell time.

• Train users continuously to strengthen the human firewall.

• Regularly reassess policies and attack surfaces.

Abnormal enhances Microsoft 365 with behavioral insights that detect account compromise, stop supply chain attacks, and catch threats traditional tools miss—all without disrupting mail flow.

Ready to go beyond the baseline? Book a demo to see how Abnormal protects Microsoft 365 from the most sophisticated threats with adaptive, behavioral AI.