What Are Phishing Scams and How Do They Impact Businesses

Who would have ever imagined that a simple business email could cause a loss of revenue, ruin a company’s reputation, and leave employees unable to do their work? Yet every day, cybercriminals use phishing scams to attack organizations that must then divert valuable resources to recover quickly and stay in business.

Phishing scams have existed for years, and they remain a serious issue for businesses of all sizes. They’re easy to execute and pose little risk to the cybercriminals who employ them. With 60 percent of SMBs who suffer a cyber attack going out of business within six months, companies must be prepared to defend themselves against these vicious and costly attacks.

What Are Phishing Scams?

It’s estimated over one in five data breaches involve phishing. There are several types of phishing attacks, including standard, spear, clone, SMS, voice phishing, and whaling. Some target an entire company, while others prey on senior staff.

Phishing scams are the fraudulent attempt to gain possession of sensitive data or information such as passwords, usernames, personal identifying information, trade secrets, and more. Cyberattackers typically use email campaigns, bogus websites, instant messaging, and text messaging to fool individuals within a company to disclose this information, download malware or ransomware, or both.

No matter how it’s delivered, a phishing attack poses a substantial risk to your company, regardless of its size or industry. 

The Impact of Phishing Scams on Businesses

Unfortunately, phishing attacks are becoming more prevalent and sophisticated. Some larger companies receive thousands of phishing scams a month. Many businesses still rely on basic spam filtering software to protect themselves against these attacks. Sadly, most of these solutions fail because well-designed phishing campaigns don’t trigger volume-based spam filters until it’s too late.

When a malicious email or other phishing scam makes its way through, the impact on your business can be catastrophic.

Financial Loss

Nearly every company that falls victim to a phishing scam faces financial consequences. Along with the direct costs of the breach, phishing attacks on company personnel can also result in fines for violations of rules put in place by various regulatory bodies. The damages from customers having their data stolen can be steep, and other penalties can be astronomical. 

Intellectual Property Loss

Theft of intellectual property can often be the most destructive loss of all for a business. A phishing attack can compromise trade secrets, formulas, research, customer lists, and new product and service development data. For technology, pharmaceutical, and defense organizations in particular, just one successful breach could easily result in losses of hundreds of millions in research expenditures.

Reputational Damage

Your brand’s reputation is built on trust. Having to disclose a breach can stain the reputation you worked so hard and long to build and sustain indefinitely. If there’s media exposure, your company could quickly be seen as unreliable and untrustworthy. 

Investor and Consumer Confidence

Reputational damage is one thing; losing investor and consumer confidence throws fuel on the fire. When investors and consumers lose confidence in a brand, they tend to shy away from supporting the company and purchase fewer items.

Investors have a moral responsibility to ensure cybersecurity initiatives are given priority during all stages of business development. When Facebook’s user data was compromised in 2018, the company’s total value dropped by $36 billion, a loss it’s still in recovery from. 

In one of the most prominent breaches, 40 million consumers who made purchases at Target stores had their debit and credit card numbers stolen by hackers, and another 70 million had their personal contact information compromised. The fallout for the retail giant was swift and dramatic, with the company spending tens of millions of dollars on legal fees, customer reimbursements, software updates, and other costs. More than 140 lawsuits were filed against the corporation, and profits dropped nearly 50 percent due to eroded customer trust.

Business Disruption

Today, the impact of COVID-19 has disrupted normal business operations and caused sweeping damage for various-sized companies. Attackers have seized the pandemic as a golden opportunity, upping their phishing campaigns by doing everything from impersonating health organizations to distributing virus-related “fake news.” An increase in the number of remote workers has also left many companies more vulnerable than ever to phishing scams.

Your data, reputation, and financial stability are too valuable to leave unprotected. Partnering with an IT managed services provider can safeguard your business against phishing attacks and mitigate the damage of a data breach.

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