UK SME left £70,000 in the red after lightning-fast phishing attack

Two-factor authentication beaten

A Liverpool-based SME has been plunged deep into the red after losing £100,000 ($160,000) to a phishing attack that used social engineering to beat the two-factor authentication security on the firm's bank account, it has been reported.

According to the This is Money website, the money was stolen from industrial varnishes firm AEV on 19 September when a member of staff inadvertently browsed to a phishing site that also asked for the NatWest PIN authentication number; such PINs are only entered into a reader device that generates a verification number but the request seemed convincing.

Eventually staff noticed that two unauthorised payments of $30,000 and just under €99,855 had left its foreign money account only minutes after the attack, taking the firm £70,000 overdrawn. The firm's bank later confirmed that the funds had been directed to accounts in Cyprus and the Ukraine.

The bank was able to recover the $30,000 rogue US dollar transfer but told AEV that it would be liable for the Euro amount because it had entered the authentication PIN under conditions that contravened its terms and conditions. Until it is clear whether the larger sum can be recovered, the fraud has left the firm nursing a large overdraft.

'If we lose this money, I fear the company will go out of business and the 22 members of staff will lose their livelihood,' AEV director Jonathan Kemp told the website.

AEV said it had used antivirus software but had not installed the Trusteer anti-fraud browser client recommended by NatWest because of its effect on performance.

AEV did not reply to a Techworld request for comment on the loss.

The attack serves as a relatively rare example of an SME making public a serious phishing attack but also reminds commerce that the sector is now being targeted by criminals that once would have limited themselves to larger firms. The phenomenon also seem to be on the rise; the This is Money website mentions two other phishing attacks on SMEs that led to bank losses.

It is believed that the malware (read: man-in-the-browser or MitB banking malware) infected the company's systems after being received as an email attachment that appeared to come from a legitimate supplier. That suggests a deliberate targeting of AEV requiring research into its supply chain.

It also underlines that two-factor authentication systems can and are being beaten with relative ease and that social engineering can leave a firm potentially liable for any losses suffered.

The other popular attack currently stalking SMEs is ransomware, with increasingly strong encryption being used to scramble data (potentially including backups) until the individual or firm considers paying up. The most high-profile example of this is Cryptolocker which seems to have had the most success in infecting PCs, even those defended with antivirus software.

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