Direct deposit fraud is a growing concern for employers and employees alike. With the rise of digital payroll systems, cybercriminals are finding new ways to exploit vulnerabilities and redirect funds. Understanding how this type of fraud occurs is the first step toward protecting yourself and your business. 

How Direct Deposit Fraud Happens 

Direct deposit fraud typically involves cybercriminals gaining unauthorized access to an employee’s payroll account. Here are the most common methods: 

Phishing Scams

Fraudsters send convincing emails or text messages designed to trick employees into revealing their payroll login credentials. These messages often mimic legitimate company communications, urging the recipient to update their direct deposit information immediately. 

Social Engineering

Criminals may impersonate an employee and contact HR or payroll departments directly, requesting changes to bank account details. 

Malware Attacks

Malware can infect an employee’s device, capturing keystrokes or login credentials. Once the attacker has access, they can change the direct deposit information. 

Account Takeover

Cybercriminals may gain access to an employee’s payroll account through weak or reused passwords. Once inside, they can reroute payroll funds to their own accounts. 

Real-Life Examples 

What does direct deposit look like? Direct deposit fraud can take many forms. Here are a couple of common examples.

Fake Payroll Update Emails

An employee at a mid-sized company received an email claiming to be from their payroll provider. The email included a link to a fake login page where the employee unknowingly entered their credentials. The criminal used these details to redirect the next paycheck. 

Impersonation of HR Requests

In another case, a fraudster called a company’s payroll department, pretending to be an employee who had “lost access to their payroll account.” The fraudster provided new bank account details, successfully rerouting the employee’s pay. 

What’s at Stake? 

For Employees: 

• Loss of wages, which can cause financial hardship. 

• Time and effort to recover stolen funds. 

For Employers: 

• Reimbursement costs for affected employees. 

• Damage to reputation and loss of trust. 

• Potential legal consequences for failing to secure payroll systems. 

In the next post, we’ll explore how to prevent direct deposit fraud and keep your payroll secure.