Social Engineering Fraud (SEF) is a cyber attack involving communication, typically via email, intended to deceive a victim into sending money via ACH or wire transfer to the criminal (see our prior posts here, here & here). It is also called BEC (business email compromise), wire transfer fraud and email piracy. The deceptive communication is typically accomplished through a phishing attack which allows the criminal to access an email account, monitor the communications, and develop a deceptive attack. Many Cyber Risk Insurance policies do not cover SEF, but a few comprehensive policies include coverage.
Consumer Social Engineering Fraud is a special subset of SEF which involves deceptive communication to the customer of a business intending to get the customer to transfer funds to the criminal while thinking he or she is sending the funds to the business. In most cases, there is no breach of the business’s email or systems. This type of cyber attack creates coverage challenges because only a few Cyber Risk Insurance policies will cover this type of cyber attack.
Cyber criminals target businesses that have money, preferably a lot of money, with limited protections. Examples include:
In addition to strong IT security, comprehensive Cyber Risk Insurance is an important financial protection against hacking attacks, including SEF. Coverages vary widely, but comprehensive Cyber Risk Insurance policy forms are available which include coverage for Social Engineering Fraud (SEF).
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