Types of Fraud Every Business Should Know About

According to the Association for Financial Professional’s (AFP) 2017 Payments Fraud and Control Survey, 74 percent of businesses/organizations experienced payments fraud in 2016 and nearly 50 percent experienced an increase in fraud attempts.

Payments fraud has been an ongoing problem and shows no signs of letting up. The more you can understand about fraud, the more prepared you can be. Let’s look at the four common types of payments fraud that every business should have on their radar.

1. Check Fraud

In 2016, 55 percent of organizations experienced check fraud. The most commonly used protective measures include Positive Pay, Segregation of accounts, daily reconciliations and other internal processes, and payee positive pay. Of the organizations that experienced check fraud, the two main reasons for loss were attributed to lack of positive pay and clerical errors.

2. Business Email Compromise (BEC)

You might have already been a victim of Business Email Compromise (BEC), considering nearly 75 percent of companies were victims of this method in 2016, but do you know what it is? The FBI defines it as a “sophisticated scam targeting businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments. The scam is carried out by compromising legitimate business email accounts through social engineering or computer intrusion techniques to conduct unauthorized transfers of funds.”

3. ACH Fraud

ACH transactions, which are considered more secure than checks, are typically sent from organizations to their banks as large files. Due to the difficulty in committing ACH fraud, criminals often resort to a partnership with internal individuals. Despite the difficulty of fraud success, ACH fraud incidents have gone up and 41 percent of organizations were victims of ACH credit and debit fraud.

4. Corporate/Commercial Cards

While cards can be convenient, retail breaches of the past still have residual effects on their security perception. The trends of card fraud tend to be less stable as they often reflect the timelines of mass card theft via data breaches.