Fraud Prevention Best Practices for Businesses
Article By: Deirdre Tumm
Fraud poses a significant threat to businesses of all sizes, potentially leading to financial losses, reputational damage, and even legal consequences. As fraud tactics become increasingly sophisticated, companies must take proactive measures to protect their assets and confidential customer information. Here are some best practices for fraud prevention to help safeguard your organization against potential threats.
Verify - Business clients may receive requests to update payment information data from a vendor. Often these requests are received via email communication. While most of these requests are in fact valid, the best practice is to always validate any payment change request verbally before initiating the change. Utilize a validated phone number for the vendor/payee in question. Verbally verify that the payment change method request is valid and review the details of the payment change request you received.
Disputing Fraud - Business clients have only 24 hours to uncover a fraudulent transaction on their account and work with their financial institution to dispute the charge (specific to the guarantee of the returning of the funds in question). After the 24-hour timeline, the financial institution can and will still dispute the fraud by working with the depositing/cashing financial institution, but there is no guarantee that the funds will be returned. It is critical that business clients utilize online banking services allowing them the ability to review transactions on a daily basis. Financial institutions are seeing regular cases of check washing where the payee's name is being altered. For this reason, business clients need to be performing a daily deep dive into transaction information to ensure that not only is the check number and amount valid, but also the payee's name line is correct.
Positive Pay Services - SFB offers Positive Pay Services via its advanced online banking platform (cash management). Positive Pay Services is a fraud prevention service allowing business clients to upload (or manually input) check register data. As checks clear the business client's account, these checks are compared against the check register material provided (issue date, amount, payee, check number). Should any of these four items not match that of the check data input by the client, the check is considered an exception, and the client is notified. Upon notification, the business client will log into their cash management online banking, review the check in question, and elect to pay or return the check.
ACH File Filtering Services - SFB offers ACH file filtering services. ACH file filtering service is a stop payment/block of all ACH files on a business account. The business client provides the bank with a listing of approved/authorized ACH companies. This approved listing is added to the client's ACH file filtering service as exceptions. When an ACH transaction is attempting to clear the client's account, it is compared against the listing of all approved/authorized ACH companies. Should the ACH transaction be from a non-approved company, the business client is notified and is asked to review the ACH transaction item for authentication.
For more information on SFB's treasury management services, Visit the Treasury Management page. If you are concerned that you or your business is a victim of fraud, please contact us at 888.254.0615.
Deirdre Tumm is the senior treasury management officer for Security Financial Bank, a Wisconsin financial institution that specializes in lending to insurance agencies. Deirdre uses her cash management expertise to seamlessly guide SFB's insurance agency clients with their depository needs and specialized business services. Some of those services include remote deposit capture, Positive Pay, and ACH services.
