What is CEO Fraud? AI Threats, Examples, and Tips

Austrian aerospace parts maker FACC lost $47 million to a single fraudulent email. How? Cybercriminals used AI to commit a phishing scam known as CEO fraud. 

This growing threat is poorly understood but poses an increasing risk to businesses worldwide, resulting in severe financial loss. The FBI estimates that, in a single three-year period, these schemes cost global businesses over $26 billion. As AI advances, criminals can craft more realistic attacks on a growing number of companies, large and small. 

CEO fraud is costing companies millions, but it doesn’t have to cost yours. In this article, we’ll show you how to avoid CEO fraud with actionable prevention tips and real-world examples.  

What is CEO fraud?

CEO fraud is a sophisticated cyberattack in which criminals pose as a company’s CEO or other senior executives to trick employees into carrying out harmful actions, such as sharing financial information and sensitive company data. It’s also known as CEO phishing, executive phishing attacks, impersonation scams, and business email compromise (BEC). 

Common methods include:

• Email spoofing: This is a broad attack method where generic, non-personalized emails are sent to many employees, mimicking a trusted executive to prompt an employee to click a malicious link or attachment. Even a small success rate can yield significant results. 
• Voice deepfakes: This attack uses AI to create fake phone calls or voicemails, often by cloning a CEO’s voice. These vishing calls (short for voice phishing) are hard to detect and can involve making urgent requests for sensitive files or financial approvals.
• SMS/text fraud: Often called smishing, SMS/text fraud is a phishing attack delivered via text message. Criminals send messages that appear to come from a trusted executive, urging employees to send funds or verify account information.

In all scenarios, attackers work to exploit employee trust and a lack of company verification protocols. All AI spoofing poses a dangerous threat to employees and businesses, putting their personal and company information at risk. 

Why CEO fraud works so well

CEO fraud uses social engineering, which exerts psychological influence, to manipulate users into divulging sensitive information or transferring funds. This method plays on:

• Authority bias: Employees are more likely to follow the instructions of someone in an authority position. 
• Fear of escalation: Employees may fear getting into trouble by not responding to the request right away. As a result, they’re hesitant to bring any doubts or concerns about the request to their manager or IT department. 
• False urgency: Employees are subject to a “false urgency” where fraudsters pretend the situation is dire and needs to be handled right away. 

CEO fraud takes advantage of weak points in company processes. These include finance teams without secondary approvals and support staff with company-wide banking information. Executive fraud also “flies under the radar” since employees may be expecting traditional phishing methods, like those from a stranger or the classic “fake royalty email.”

Even employees who undergo security awareness training may be convinced by a “call” from their CEO that sounds exactly like them. The employee may act according to instructions, bypassing normal security protocol, such as ignoring the message and reporting it to a superior.

At Adaptive, we generate deepfakes of your actual CEO to simulate high-risk scenarios and train your employees to identify them, thereby protecting both themselves and your company. This advanced training prepares employees for real-world scenarios, giving them the tools they need to protect themselves.  

Real-world CEO fraud cases that made headlines

CEO fraud attacks have significant effects on modern businesses. Here are some of the more famous cases that made international headlines. These companies have lost millions of dollars and sensitive information, all from a single-employee action. 

1. Tecnimont India – $18.5 million executive emails fraud

In January 2019, a group of hackers impersonated Tecnimont’s CEO and other senior executives via email, arranging conference calls about a fictitious “confidential” acquisition.

Using these methods, the hackers convinced an executive in Tecnimont’s Indian arm to transfer approximately $18.5 million to banks in Hong Kong, citing supposed regulatory barriers to transferring funds from Italy.

2. Ubiquiti Networks – $46.7 million cyberheist

In mid‑2015, a San Jose-based company, Ubiquiti, disclosed that attackers posing as company executives instructed its Hong Kong subsidiary to wire $46.7 million to fraudulent accounts. 

These attackers may have used executive impersonation and email spoofing via compromised accounts to exploit Ubiquiti's lack of multi-step verification. The company recovered around $8.1 million. Another $6.8 million was under legal injunction, and the rest was still under investigation. 

3. Toyota Boshoku – $37 million email scam

In August 2019, a Toyota Boshoku subsidiary transferred over $37 million to fraudulent accounts. The criminals impersonated trusted executives via email and convinced staff to change the banking details on an electronic funds transfer.

Nervous about severe loss from fraud? Get a free Adaptive Security demo and learn how to protect your company from fraud. 

What traditional security training misses (and why that’s a problem)

Traditional training modules are often static, ignoring new cybersecurity threats like deepfakes and voice impersonation. What good are posters from IT covering password creation when employees are receiving convincing voicemails demanding financial transfers from their boss?

Traditional training should also be frequent and test employee comprehension. Encouraging participation and testing security education ensures your efforts aren’t wasted. 

Adaptive simulates real-world attacks, running employees through scenarios and testing their knowledge on the following fraud attacks:

• Open-Source Intelligence (OSINT) Spearphishing: Craft targeted phishing scenarios using publicly available, real-world information.
• Vendor Impersonation: Replicate a trusted vendor through realistic, pre-built spoofed webpages.
• Business Email Compromise: Impersonate an internal team member or external contact in a convincing plain-text email.
• SMS Phishing: Develop scenarios that encourage interaction via text messages.
• QR Code Phishing: Deliver text messages with embedded QR codes to drive user engagement.

Employees must practice recognizing and reporting CEO fraud emails, texts, and calls to protect sensitive data and financial information. The best firewall cybersecurity defense is an educated, prepared staff. 

How to prevent CEO fraud for all roles

Companies need a multi-pronged approach to prevent fraud across the entire organization. No role or title is exempt from training and prevention since all employees are vulnerable. Adaptive Security can help prepare you for attacks from all angles, and prepare for executive-targeted fraud with advanced simulations.

First, let’s identify high-value targets and sensitive workflows that could be exploited, including an audit of your executives' public-facing content. For example, is your CFO's social media public and littered with password hints and activity updates? 

You can also monitor emerging threats in your business sector and update risk priorities accordingly. For example, if your competitors' HR team was recently targeted by CEO text fraud, it's time to put all employees on notice, especially your HR personnel.

Next, let’s evaluate existing programs, model financial loss, and establish risk tolerance. 

1. Evaluate: Assess the security of high-risk communication channels, test employee workflows for exploitable gaps, and take note of these vulnerabilities. 
2. Model: Assess financial loss scenarios and reputational harm from deepfake-enabled fraud—map compliance risks under General Data Protection Regulation (GDPR), the Sarbanes-Oxley Act (SOX), or the Health Insurance Portability and Accountability Act (HIPAA) to prioritize your investment.
3. Risk: Assess and document board-approved risk thresholds. This includes listing applicable compliance requirements and updating incident playbooks to address deepfake-specific threats.

Finally, it's time to go on the offense. Preventing CEO fraud for all roles means enabling AI detection, running training modules, and simulating deepfakes. 

4. Detect: Run AI-based deepfake detection for video, audio, and images, and integrate tools with security information and event management (SIEM) and security orchestration, automation, and response (SOAR) for contextual tracking. You'll need to set up real-time, company-wide fraud attempt alerts.  
5. Train: Deliver role-based, scenario-driven modules tied to real attack vectors. These trainings should define employee escalation paths (who they should report potential fraud to) and reinforce training with regular updates. Provide employees with relevant and updated information, like deepfakes security awareness training tips and how to prevent quishing (QR code phishing). 
6. Test: Conduct controlled simulations of deepfake phishing or voice attack simulations and test employee detection and response. These drills should happen regularly and employees must be led through post-drill debriefs.

These preventative steps work, and organizations with anti-fraud training see lower losses. Even with the best deepface scenarios and model planning, it’s still better to have a prepared incident response plan. Create playbooks that cover various CEO fraud possibilities and continuously monitor your organizational resilience. 

Turning executive risk into organizational strength

CEO fraud isn’t a distant threat. It’s a fast-growing, high-impact cybercrime. One convincing email or one unverified request and millions can vanish overnight. 

Weak internal controls, like a lack of secondary approvals, create ideal conditions for these scams to succeed. Traditional phishing awareness training often fails to address them. Simulation-based training that replicates real-world attack methods is far more effective in improving detection and response.To recap, these are some of the best ways to stay protected against CEO fraud:

1. Adaptive Security Awareness Training: The #1 defense against deepfake and impersonation threats. Adaptive uses real-world simulations, AI-driven training, and executive-targeted attack scenarios so employees recognize and stop fraud attempts before damage is done.
2. Implement Multi-Step Approval Workflows: Require secondary approvals for high-value transactions, wire transfers, or sensitive data requests.
3. Establish Strong Verification Protocols: Confirm unusual or urgent requests via a separate communication channel, like a direct phone call.
4. Educate Executives and Assistants: CEOs and their close staff are prime targets; they need special training to spot fraud techniques.
5. Use Email Authentication Tools (DMARC, SPF, DKIM): These technical safeguards reduce spoofed email threats from reaching inboxes.
6. Monitor and Audit Regularly: Continuous oversight of payment systems, access logs, and suspicious activity flags potential fraud early.

Curious what a deepfake of your CEO looks like? Book a personalized demo and see how Adaptive simulates executive-targeted fraud. Explore Adaptive’s advanced Security Awareness Training and arm your employees against potentially disastrous next-gen phishing attacks. 

Frequently asked questions about CEO fraud

How common is CEO fraud?

Over 400 companies are attacked daily, using business email compromise tactics to target corporate bank accounts and sensitive information. More than a third are small and medium-sized enterprises (SMEs), which can be ruined or bankrupted by these attacks. 

Why is the C-suite the new threat surface?

Company executives typically have more access to confidential information and funds than more junior employees. Scammers don’t want to waste their time on employees who can’t transfer funds without oversight. 

What are common red flags of CEO fraud?

The most effective cybersecurity is a well-informed, prepared team. Employees should be trained to recognize the most common signs of CEO fraud, including pressure to act immediately, an exaggerated sense of urgency, altered invoices, or suspicious attachments. 

Red flags also include unusual attention or unexpected communication from an executive, especially if it comes through an unfamiliar channel. Poor spelling and threatening language can also indicate that the message may not be legitimate.