More midsize companies are being attacked by cybercriminals at the same time they're spending less on security, says a McAfee report released Wednesday.

Across the world, more than half of the 900 midsize businesses (51 to 1,000 employees) surveyed by McAfee for its report, The Security Paradox, said they've seen an increase in security breaches over the past year. Despite the threat, the recession has caused most of these companies to freeze their IT security budgets.

(Credit: McAfee)

McAfee found that the costs of dealing with a security attack can be high. Over the last year, one of five midsize companies surveyed lost $41,000 in sales on average as a result of a breach. In China alone, 38 percent of the businesses questioned lost an average of $85,000 due to an attack. And more than 70 percent believe a serious data breach could put them out of business, noted the report.

(Credit: McAfee)

But as the recession has grown, IT budgets have dropped. Almost 40 percent of the companies trimming their IT security budget plan to limit the purchase of new security products. And more than a third are switching to cheaper security software to cut expenses, even though they realize that may put them at greater risk.

"An organization's level of worry and awareness about increasing threats has not overcome the downward pressure on budgets and resources," said Darrell Rodenbaugh, senior vice president of global midmarket for McAfee, in a statement. "But this creates a vicious cycle of breach and repair that costs far more than prevention."

Midsize companies also may underestimate their risk, according to McAfee. Among companies with fewer than 500 employees, more than 90 percent believe they're protected from cybercriminals and feel they don't face the same threats that larger firms do.

But McAfee discovered that businesses with 101 to 500 people had on average 24 security breaches over the past three years, compared to 15 breaches for those with 501 to 1,000 employees.

In the long run, dealing with the aftermath of a security attack eats up a company's time and expenses. The study found that 65 percent of firms spend less than four hours a week on IT security, but around the same percentage have spent more than a day recovering from security breaches.

"Our research shows that organizations that put more effort on preventing attacks can end up spending less than a third as much as those that allow themselves to be at risk," said Rodenbaugh.

The study was conducted by research firm MSI International, which surveyed 100 midsize businesses in each of the following countries: U.S., U.K., Australia, Canada, China, France, Germany, India, and Spain. The results were compared with prior studies done in North America and Europe.

On the heels of one fake Facebook e-mail scam, a researcher warned on Wednesday of another such campaign in which users of the popular social network are being tricked into revealing their passwords and downloading a Trojan that steals financial data.

In the latest scam being blasted to e-mail in-boxes, a legitimate-looking Facebook notice asks people to provide information to help the social network update its log-in system, said Fred Touchette, a senior security analyst at AppRiver. When the user clicks the "update" button in the e-mail, they are directed to a fake Facebook log-in screen where their user name is filled in and they are prompted to provide their password.

This is a screen shot of the message in the body of the fake Facebook e-mail.

(Credit: AppRiver)

When they provider that information, victims are taken to a page that offers an "Update Tool," but that is actually the Zeus bank Trojan that is designed to steal financial and personal data, Touchette said.

Users of smart phones that have the Facebook app installed can also easily be duped because the phishing e-mail appears as an actual Facebook notification complete with Facebook icon, he said. The message is received in the e-mail in-box on the phone as well as under the Facebook notification section in the app itself, he added.

There are likely to be a lot of victims given how many e-mails the scammers are sending. AppRiver has captured about 6 million e-mails in its filters and noticed that the messages were coming in at a rate of 30,000 a minute at one point, according to Touchette. That's about 10 times the usual botnet e-mail message rate, he said.

More details are on the AppRiver blog.

On Tuesday, researchers reported that a different botnet, Bredolab, was distributing fake "Facebook Password Reset Confirmation" e-mails that included a Trojan. As of late Wednesday night, security provider Cloudmark said it had seen more than 730,000 of the Bredolab-related e-mails.

To protect against such phishing attacks, people should be extremely cautious about clicking on links in e-mails and they can mouse over the link to see if the domain is a legitimate domain, Touchette said.

Meanwhile, Facebook users should easily be tipped off that the latest scam is just that, a scam, he said. "Facebook doesn't need all of its users to update their accounts in order for them to make changes to their site," he added.

If there is any question about the legitimacy of the e-mail or the link, users should close the e-mail and go directly to the site to check for important notices to customers, he said.

This is the prompt Facebook users get as part of the latest phishing scam. Downloading the "update tool" installs a Trojan.

(Credit: AppRiver)