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What Is CEO Fraud? How It Works & How to Prevent It

CEO fraud is a type of business email compromise (BEC) where criminals impersonate a CEO in an attempt to trick employees into paying invoices, sharing sensitive information, or otherwise compromising a company’s cybersecurity infrastructure.

CEO fraud is a spear phishing scam in which attackers impersonate a company’s CEO or other high-ranking executives to trick employees, partners, or vendors into sending money, credentials, or sensitive data. It’s also known as executive impersonation.

This form of executive phishing is a subset of business email compromise (BEC), which can spoof any trusted contact. Successful CEO fraud attacks are expensive. In fact, the FBI’s 2024 Internet Crime Report shows BEC losses reached $2.7 billion.

Understanding how these attacks work and deploying layered defenses is the fastest path to prevention.

How Does a CEO Fraud Work?

Like other spear phishing campaigns, a CEO fraud attack targets specific employees by sending a personalized email to trick the person into sharing sensitive information or installing ransomware on their computer.

Here’s how CEO fraud works.

First, the attacker gains access to an account that belongs to a company executive or C-suite employee. Some methods attacks use include:

  • Account Takeover: Steal executive credentials with a credential phishing email, then send from the real inbox.

  • Look-Alike Domains: Register addresses one character off the real domain, fooling employees into entering credentials.

  • Display-Name Spoofing: Use the correct name with a different address.

  • Header Forgery: Manipulate technical fields as part of email spoofing.

Once in control, the attacker sends various types of phishing emails requesting wire payments, tax documents, or that the target install ransomware using the trusted, authoritative account. These emails exploit trusted relationships and use social engineering tactics to execute a campaign successfully.

CEO fraud attacks are effective because employees are likely to overlook suspicious requests when they come directly from an executive. These attacks often contain time-sensitive and urgent messages, such as "Please pay this invoice immediately!”

How to Identify and Stop CEO Fraud?

Preventing CEO fraud and BEC scams requires regular cybersecurity training that helps employees spot fraudulent emails.

Here are some telltale signs that an email isn't authentic:

  • Unexpected requests to transfer money, buy gift cards, or change banking details.

  • Mismatched display name and email address, or an almost correct domain.

  • Language that pressures immediate action, discourages phone confirmation, or invokes secrecy.

  • Attachments or links are inconsistent with the executive’s normal communication style.

  • The presence of Punycode tricks.

In addition to security awareness training, companies should also build a robust cybersecurity stack.

Here are some steps that organizations can take to do that:

  • Simplify Reporting Procedures: Make forwarding emails to security teams as simple as possible.

  • Implement Verification Policies: Mandate secondary confirmation before large fund transfers, such as a phone call.

  • Require Multi-factor Authentication (MFA): Protect executive accounts so attackers cannot log in even with stolen passwords.

  • Advanced Email Security: Traditional secure email gateways focus on malware signatures and often miss social engineering. Behavioral AI tools that understand normal communication patterns catch impersonation.

Invest in AI-powered tools specifically designed to catch and block CEO fraud attempts.

Abnormal vs. CEO Fraud

Abnormal blocks emails that appear to come from trusted executives by scanning for signs beyond traditional indicators of compromise, including:

  • Detecting suspicious language and tone

  • Inspecting email headers for spoofed domain names

  • Understanding communication patterns to identify unusual behavior

Abnormal prevents employees from accidentally interacting with email scams such as CEO fraud.

Using natural language processing, Abnormal evaluates email authenticity by analyzing sender and recipient behavior to detect unusual patterns, like untimely invoices and urgent requests.

This advanced email security prevents CEO fraud and phishing attacks from reaching your employees’ inboxes.

Book a demo to see how Abnormal protects your organization.

Frequently Asked Questions (FAQs)

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