We Almost Became the Victim of Third-Party Vendor Fraud

Cybercrime isn't just happening to large corporations. It's happening to organizations of every size and recently, it happened to us.

We recently identified and stopped a sophisticated third-party vendor fraud attempt. 

It was a textbook example of social engineering.

Cybercriminals know that it's often easier to manipulate people than to break through firewalls. By impersonating trusted vendors, they attempt to convince employees to change payment instructions, update banking information, or authorize wire transfers.

Fortunately, our verification process worked, and we caught the fraud before it became a financial loss.

The experience reinforced an important lesson: cybersecurity isn't just about protecting your network it's about protecting your organization's decision-making.

For nonprofits, this risk is especially important. Many organizations rely on third-party vendors for payroll, accounting, fundraising platforms, IT services, and benefits administration. Every one of those relationships creates another potential avenue for fraud.

Here are a few simple practices that can dramatically reduce your risk:

• Never rely solely on email to verify changes to payment instructions or banking information.

• Require employees to confirm financial requests through a separate, trusted communication method, such as a known phone number.

• Regularly train staff to recognize social engineering tactics.

• Review vendor contracts to understand each party's responsibilities following a cyber incident.

• Work with your insurance advisor to confirm that your cyber policy includes coverage for social engineering, funds transfer fraud, and losses involving third-party vendors.

Our close call was a reminder that even organizations with strong controls can be targeted. The difference is having processes in place that allow your team to recognize the warning signs before a mistake becomes a loss.

The best cyber defense isn't just technology—it's informed people, strong procedures, trusted vendor relationships, and insurance coverage designed for today's evolving threats.

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Please reach out if you would like more information or to have a conversation, have a safe and happy holliday!