Preventing Fraud in Your Business Accounts
By Fulton Bank
Over the last few years, we have seen a dramatic rise in payment fraud trends. All types of companies and industries are impacted, and fraudsters are using advanced technology and knowledge to commit payments fraud, in addition to “old fashioned” check theft and forgery. Be aware of the types of fraud businesses experience, and train all of your employees on how to be alert for each type.
VARIOUS TYPES OF FRAUD CONDUCTED BUT NOT LIMITED TO:
- Check Fraud – Fraudulent checks are created based on stolen or compromised accounts
- Payroll Fraud – Fraudsters will use compromised email to request employers to change their bank account information or issue fraudulent checks on these accounts
- Mail Fraud – Fraudsters steal mail and then sell account information for fraud purposes
- Business Email Compromises and Email Fraud – Fraudsters will hack business emails to create fraudulent instructions for electronic payments
- Invoice Fraud Schemes – Third-party submits fake invoices to a company with intent to extract money
- Data and Identity Theft – Cybercriminals use stolen personal information to impersonate individuals to perpetrate fraud
- Attorney Escrow Fraud – Fraudsters pose as a prospective client seeking assisting in collecting/recovering money. Firm receives check and then is pressured to wire funds to fraudulent recipients
PAYMENTS FRAUD ACTIVITY
In 2021, at least 71% of organizations were targets of payment scams. A significant share of companies continues to be impacted. Checks are still highest level however have stayed level since last year.
ACH FRAUD CONTINUES TO INCREASE
- We have seen a slow shift from check payments to more electronic payment methods.
- Conduct daily reconciliations rather than monthly, if possible.
- Utilization of ACH debit filters/blocks for security
- Review process via audits.
As ACH transactions are typically considered safer and more difficult to compromise, the increased focus on ACH transactions suggests that fraudsters are acquiring more sophisticated techniques when targeting organizations based on the 2022 AFP Payments Fraud and Control report.
BEST PRACTICES
- Implement Dual Control for online payments: Separate entry/ release functions for outgoing payments.
- Use Fraud Protection Services: Payee Positive Pay, Max Pay and ACH Positive Pay.
- Reconcile and review accounts daily.
- Use effective security features on checks
- Segregate accounts (disbursement, collections, payroll etc.)
- Ensure disaster recovery plans include the ability to continue with strong controls (in event of data security breaches/malicious attacks)
BE AWARE
- Educate employees on the danger of Business Email Compromise (BEC)
- Avoid clicking on links or attachments sent from email addresses outside of your organization or from unknown senders
KNOW YOUR SOURCE
- Use trusted sources for up-to-date, fact-based information.
- Watch for unsolicited emails claiming to be from known organizations
CYBER SECURITY
- Internal training on security measures
- Cross-training within the company
- Verification procedures to insure authentication
- Remote Access protocols and backup procedures
90% of companies that have data breaches did not have Multifactor Authentication processes in place. As cyberattacks grow in both number and sophistication, organizations are increasingly under pressure to protect themselves from compromise.
SECURITY/REMOTE SECURITY
- Upgrade authentication procedures/devices used to access company network
- Restrict access for payments to company issued laptops and restrict network access for payments via mobile devices.
- With remote working trends on the rise, it is important that your business network is secure and each employee’s home office maintains the same level of security.
- Use a dedicated PC for payment origination (without any links to email, web browsing, social networks)
- Ensure Wi-Fi networks are secure and properly handling sensitive files which is vital to keeping fraudsters at bay.
Business owners and operators work tirelessly for the money they earn. Don’t lose the money you’ve earned because of poor practices or loose security in your accounts. Know how to protect yourself from all forms of fraud and theft. For more information about how Fulton Bank helps its customers protect their funds, please contact Van Dang, Cash Management Specialist at VDang@fultonbank.com or Bill Maeglin, Commercial Relationship Manager at WMaeglin@fultonbank.com.