Trust Exploited: Combating Caller ID Spoofing and Funds Transfer Fraud
Cybercrime is evolving faster than ever, with criminals combining social engineering and technology in ways that bypass traditional security measures. Caller ID spoofing to impersonate banks has become increasingly sophisticated and continues to grow in frequency and impact—especially in schemes that exploit trust. These attacks can lead to unrecoverable financial losses, reputational damage and operational disruption for businesses.
October marks National Crime Prevention Month, a timely reminder of the importance of proactive defense against fraud. By providing education, ensuring coverage clarity and connecting businesses with carrier partners that offer meaningful support and resources, agents help clients to stay ahead of evolving risks. Their insight and strategic partnerships enable businesses to identify vulnerabilities early and respond effectively.
Here are four things agents should understand to help businesses defend against unrecoverable losses and reputational damage:
1) How caller ID spoofing attacks work. Criminals use caller ID spoofing technology to display the number of a legitimate financial institution. Once connected, they warn the target, often a business owner or finance staff member, about supposed “fraudulent activity” taking place on their account.
The fraudster applies pressure, creating a sense of urgency that leads the victim to share account login credentials, multifactor authentication codes or other sensitive details under the belief that they are speaking with their bank. With those legitimate credentials, transfers can be initiated immediately or repeatedly over time, bypassing fraud detection systems entirely.
2) The troubling business impact. Cybercriminals are increasingly targeting businesses of all sizes, and the financial consequences can be severe. Small and midsized companies, in particular, often operate with limited IT infrastructure and informal verification procedures, making them especially vulnerable to these schemes.
Impacts include:
- Significant financial loss from unrecoverable transfers. Money can be sent quickly and gone forever. In one case, a business reported over $1 million in unauthorized automated clearing house (ACH) transfers after an employee was deceived by a fraudster posing as a bank representative. The caller used a spoofed caller ID to appear legitimate and created a false sense of urgency around supposed account irregularities. The employee was instructed to click a link and enter banking credentials, which were then captured and used to access the company’s account portal. Because the credentials were valid, the bank’s fraud detection systems did not flag the activity. The loss went unnoticed until the business reviewed its bank statement, by which time the funds had been dispersed and were unrecoverable.
- Disruption to daily operations. When cybercrime happens, victims often need to freeze accounts, conduct forensic reviews and retrain staff, pulling resources away from core business functions.
- Damage to reputation and customer trust. Businesses that fall victim to spoofing may have to notify clients of the breach, leading to lost contracts and reputational harm that lingers long after the incident.
- Potential legal or compliance challenges. Businesses may face scrutiny from regulators or lawsuits from affected parties, especially if internal controls are found lacking.
3) Actionable insights for agents. As fraud tactics grow more sophisticated, agents have a unique opportunity to provide guidance and deepen their impact—and not just by raising awareness, but by guiding clients toward stronger, more proactive defenses. Here’s how agents can elevate their approach:
- Initiate verification audits. Encourage clients to review and strengthen internal protocols for wire transfers, especially around multi-channel confirmation. Even simple changes, like requiring voice confirmation from a known contact, can block a spoofing attempt.
- Promote secure communication tools. Recommend banking apps with built-in fraud alerts, encrypted messaging platforms and multi-factor authentication for transactions.
- Clarify coverage boundaries. Help clients understand where their social engineering and funds transfer fraud coverage begins and ends.
- Use real-world scenarios to prompt action. Share anonymized case studies or hypothetical examples that mirror the client’s industry.
4) Partner for protection. Cybercrimes continue to evolve in complexity and scale, making it more important than ever for agents to align with carrier partners who offer deep expertise and responsive support. Leading carriers, like The Hanover, serve as a trusted ally in this space, delivering the tools and insight agents need to help clients stay ahead of emerging threats.
Agents who partner with The Hanover benefit from:
- Specialized crime underwriting expertise tailored to the nuances of social engineering and funds transfer fraud.
- Client-ready risk management resources that educate and empower businesses to strengthen internal controls.
- Responsive claims support that helps clients recover quickly and mitigate reputational damage when incidents occur.
Together, carriers and agents can help ensure clients aren’t just insured, but informed and prepared. In a fast-changing environment, partnership and expertise are one of the most powerful defenses.
Caller ID spoofing is only one example of fraud tactics that will continue to emerge. By staying connected, sharing knowledge and aligning coverage with real-world risks, agents and carriers can help their clients navigate these challenges with confidence. Explore actionable strategies and resources to combat caller ID spoofing and other evolving cybercrimes by clicking here.
Eric M. Schuler is president of management liability at The Hanover.
