Enterprise Bank & Trust
Check Fraud Prevention

Business Owner's Checklist to ACH Fraud Prevention

August 25, 2016

Being aware and prepared are the best ways to help prevent ACH fraud. Small businesses are often too busy to dedicate the time and resources to fraud. There are, however, simple steps any business can do to help manage the problem.

You’d be hard pressed to find a small business today that doesn’t use the ACH network. Given its prevalence in the business world, it’s easy to understand why ACH fraud is so popular with criminals.

Frank Abagnale with Intuit Accountants News Central says, “All that is needed to commit ACH fraud is the account number and the bank routing number taken directly from an unsuspecting victim’s check.”

“Punishment for fraud and recovery of funds are so rare, prevention is the only viable course of action.” -Frank Abagnale

 

What are the most common types of ACH fraud?

  • Criminals acquire a customer’s banking information and use it to initiate payment over the phone or internet for products and services.
  • Another scheme involves posing as a retailer to establish a relationship with a financial institution.

     

    Guard Against Internal Threats

    It’s not only your information, but also your customers’ information you need to safeguard. Small businesses are often tight-knit organizations. So it’s hard to imagine a crime might be committed from the inside.

    For many, this is a startling fact: According to the Association of Chartered Certified Accountants (ACCA), more than 85% of fraud is committed from the inside. Here are some steps to consider:

  • Run background checks on all employees, including credit checks.
  • Check at least three references when hiring staff.
  • Get all changes to vendor payment account numbers in writing.
  • Verify with a phone call the number you have on file is correct.
  • Keep account authorizations up to date.
  • Notify the bank when an authorized signer or online banking user leaves and remove all access from all systems for that employee.
  • Conduct annual audits of your documentation.

     

    Guard Against External Threats

    As mentioned earlier, all that’s needed to commit ACH fraud is the account number and the bank routing number. More often than not, fraudsters and hackers commit this crime through some type of phishing scheme.

  • Know the common phishing schemes.
  • Don’t open emails from unknown senders. The action if simply opening the email can increase your risk of malware.
  • Know the common vishing schemes.

    In addition to knowing common phishing and vishing scams, follow these 8 online banking steps to protect and ensure proper security measures are within your process.

     

    ACH Fraud Check List for Small Business

    Being aware and prepared are the best ways to help prevent ACH fraud. Small businesses are often too busy to dedicate the time and resources to fraud. There are, however, simple steps any business can do to help manage the problem.

    1. Set up system Security Alerts to receive notifications of electronic transactions.
    2. Set authorization limits at both company and individual levels for all online payment transactions.
    3. Restrict access to Manage Recipients to prevent modifications of key fields, such as beneficiary information, routing and account number, etc.
    4. Implement ACH Debit Filter service on all accounts.
    5. Return unauthorized ACH debits to your account within the first 24 hours.

    To further help guard against external ACH fraud, consider using a firewall device, anti-spyware and anti-virus software. Check with a technology expert for what works best for your company.

     

    Partner With Your Bank in ACH Fraud

    Your bank wants you to succeed. Talk to them about ways you can best prevent ACH fraud. After all, failing to monitor ACH activity can be costly. CSO (a news organization specializing in security and risk management topics) says both the FBI and the FDIC warned of the increase of this type of fraud late in 2009. Today, it continues. Don’t wait. Take the steps needed to prevent ACH fraud now.

    ACH Debit Block

    This service blocks all ACH debits from posting to your account. If an ACH debit is presented against your account, we automatically block it and return it to the sender.

    ACH Debit Filter

    You provide us the ACH originator IDs of those vendors you authorize to electronically debit your account. If an originator is not on your authorized list presents an ACH debit, you will be alerted.

    Positive Pay

    This tool allows you to monitor checks processed for payment against your account, and reject unauthorized transactions before loss occurs due to fraudulent or altered checks.

    Here at Enterprise Bank & Trust, we offer specific services to help our clients prevent fraudulent electronic debits. Contact your relationship manager, treasury management representative or client services officer today for assistance. Or, read more about security best practices http://www.enterprisebank.com/security

     


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