When owners think about fraud, they often picture sophisticated hackers and complex cyberattacks. In reality, losses from fraud start with much simpler tactics. That’s why it’s important to understand the most common scams and how to protect your business.
Check Fraud Remains a Real Threat
Despite the ease and accessibility of digital payments, check fraud is still one of the most common forms of business fraud.
Criminals may create counterfeit checks using stolen account information. Others intercept legitimate checks and alter the payee, amount, or other details before attempting to use them. Forged endorsements and duplicate deposits also remain common threats.
Because account and routing numbers are printed on every check, businesses that issue checks should consider how they are monitoring activity and identifying suspicious transactions.
ACH Fraud Can Happen Quickly
Businesses often focus heavily on wire fraud and cybersecurity threats while overlooking the risks associated with ACH activity.
When criminals get ahold of account and routing information, they may attempt unauthorized ACH debits against business accounts. If those transactions aren't identified quickly, the financial impact can be severe.
One of the best tools to combat this is consistent account monitoring to identify unusual activity before it becomes a larger issue.
Compromised Email Schemes Continue to Grow
Email remains one of the most effective tools for fraudsters.
A fake email may appear to come from a vendor, customer, or coworker. A request for a wire transfer, payment change, updated banking instructions, or confidential information can appear legitimate at first glance.
Often, the only clue is a sense of urgency or a small inconsistency within the message.
Businesses should establish procedures requiring independent verification of payment requests, vendor changes, and banking updates before any action is taken.
Build Verification into Everyday Processes
While technology is a strong prevention tool, so too is the use of established processes.
Businesses can, and should, independently verify requests that involve:
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Vendor payment changes
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New account information
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ACH instruction updates
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Wire transfers
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Requests for sensitive business information
Using a trusted phone number already on file rather than contact information included in an email can help prevent many fraud attempts.
Fraud Prevention Tools Can Add Another Layer of Protection
Strong internal procedures are important, but financial technology can also help. Starion offers solutions designed to help businesses identify suspicious activity before losses occur.
Check Positive Pay: Check Positive Pay helps compare checks presented for payment against information supplied by the business. This helps identify counterfeit, altered, or suspicious items before they clear the account.
ACH Positive Pay and ACH Controls: Similar to checks, ACH Positive Pay and ACH fraud controls help businesses monitor electronic transactions and identify potentially unauthorized activity before funds leave the account.
Dual Control and Multi-Person Approval: Dual control adds another layer of protection by requiring more than one individual to approve certain transactions. This can help reduce risk, particularly for higher-value payments and account changes.
Daily Reconciliation: Reviewing account activity every day remains one of the most effective ways to identify fraud quickly and respond appropriately.
The Best Fraud Prevention Strategy Is Consistency
A solid prevention strategy isn't just about implementing a single product or policy. It requires creating habits that make your business a more difficult target.
Review accounts regularly. Verify payment changes. Question urgency. Lean on available fraud prevention tools. Train employees to recognize red flags.
And when questions arise, don't hesitate to talk with your Starion business banking team. We can help you explore treasury management tools and fraud prevention strategies that align with the way your business operates.
