Every time another high-profile company like Target falls victim to fraud, both consumers and businesses scramble to ensure they have safeguards in place to keep it from happening to them.
It’s a tough battle to fight, of course, as criminals are always plotting to find a way around the latest security software and protocols to stay one step ahead of the authorities.
“There is always something new,” says Maha Banoub, AAP, CTP, vice president for treasury management services at Bridge Bank. “And that is why there is no bulletproof solution. It’s a combination of fraud protection programs and behavior to reduce the risk. ”
Smart Business spoke with Banoub about what you can do to protect your business.
What are the latest trends in fraud?
There is still the traditional check fraud, where a check that the company issued is stolen and washed for a different name and amount or the fraudsters create a check from the business account’s routing number.
There is the Automated Clearing House (ACH) debit fraud, where a fraudulent ACH collection is initiated against the business account or the account numbers are used to pay the criminal’s own bills.
Fraudsters can also hack email addresses, either personal or business, and send the bank instructions to wire funds from the company’s account to the fraudster’s account. This is known as masquerading.
What type of business is most susceptible to fraud?
It’s usually small or midsize businesses. Large businesses are protected by firewalls and usually have very good controls.
The main focus of smaller businesses is usually not fraud control, but rather growth, making them very open to hacking. For example, accounts may be reconciled only monthly rather than daily, and once fraud is detected, it will be too late to return unauthorized transactions.
What can you do to protect your business?
Companies should continually educate their employees on the latest trends in fraud. Use fraud prevention programs such as Positive Pay, where your bank reconciles checks with a list provided by the company, and ACH filtering, where you set rules on how ACH debits are approved by your bank.
Reconcile or at least review accounts on a daily basis and keep an eye out for anything that seems out of the ordinary.
Discuss security that is available with your bank on a regular basis such as segregation of duties and dual authorization on outgoing payments or administration functions.
Educate employees to never open unknown or unexpected email attachments and to be cautious about opening attachments even from known sources.
Use complex passwords and change them often.
The rule of thumb is if something looks suspicious, it probably is. Your bank will never ask you for login information, for example, so be very cautious when communicating outside the company both via phone and email.
One practice that can increase security is to use a stand-alone workstation to conduct online banking activities. It should be a computer that is only used for that function and not for email or browsing the web.
How do you avoid living in constant fear?
If you’re protecting your outgoing payments, your checks and your ACH collections with filtering, it should give you some level of comfort. In general, banks are always reviewing transactions.
When the bank calls you to verify a wire, respond right away so they can detect potential fraud attempts. The most important thing to remember is that this should be an ongoing effort.
Regular employee education and discussions with your bank on preventative measures will ensure the best chance of preventing fraud on your business.
How much of an issue is cost?
Many of the online banking protection tools that banks offer are free.
There might be some cost involved with tools such as Positive Pay and ACH filtering, but if you consider the amount of money your business is saving by reducing the risk of fraud, the costs of these products is minimal.
If a check is written for $30 and is cashed for $300,000, that’s a huge loss for your company. When you compare the pricing, it’s nominal compared to the savings and peace of mind you’ll have. ●
Insights Banking & Finance is brought to you by Bridge Bank