Enterprise Bank & Trust

Fraud Prevention: Identifying the Top 4 Types of Fraud

August 25, 2016

You are an expert at your business, but what do you know about fraud prevention? Criminals target small businesses because they know you don’t have the resources to monitor for fraudulent activity. The first line of defense is knowing the most common types of fraud.

How hard does fraud hit small businesses?

For comparison, the FBI shows the average property theft is $2,251 while loss from a single occupational fraud case a cost on average $150,000.


1. Check Fraud

Checks are the most popular type of non-cash payment, making them an easy target. In fact, 73% of American companies were targets of payment fraud. Timing is critical in identifying fraudulent check activity on your accounts.

Types of potential check fraud:

  • Counterfeit
  • Altered
  • Forged maker
  • Forged endorsement
  • Duplicates


    2. ACH Fraud

    ACH fraud is the unauthorized funds transfer that occurs in a bank account. Fraudsters use your account number and bank routing number to make a payment or purchase.

    Common ACH Fraud

  • Cyber thieves use the customer’s account data over the phone
  • Your account number converted to a fraudulent ACH debit


    3. Online Banking Fraud

    Hackers can access your online banking to wire or ACH funds, add payees to bill pay from anywhere.

    Online banking fraud happens all too often, adding to the overall loss endured by small businesses. According to the Association of Certified Fraud Examiners (ACFE), businesses lose an average of 5% of their yearly revenue to fraud. View these common types of online fraud schemes.


    4. Email Hack

    Imagine you receive an email from a known vendor asking you to wire payment to a new bank. What do you do? Never assume the email address is correct. Always call the person from the number you have on file, not the number on the email.

    The FBI reports there are 17,642 victims of email scams” tar, resulting in $2.3 billion in losses.



    You're an expert in your business. But fraudsters know small businesses

  • Lack fraud experience
  • Have fewer employees doing more jobs
  • Depend on family or employees for financial and technology advice
  • Operate in a reactive state instead of a proactive state



    Criminals stop at nothing to access your accounts. It’s up to you to protect your information and staying knowledgeable about fraud is your best defense. Enterprise Bank & Trust can help. Here are some best practices every small business should consider.

    Check Fraud Prevention

  • Use more secure ACH, wire and card payment methods to replace check payment.
  • Implement positive pay services on all accounts.
  • Implement payee positive pay services on all accounts that have positive pay to utilize the highest level of account fraud protection services.


    Electronic Payment (ACH) Fraud Prevention

  • Set up system Security Alerts to receive notifications of electronic transactions.
  • Set authorization limits at both company and individual levels for all online payment transactions.
  • Restrict access to Mange Recipients to prevent modifications of key fields, such as beneficiary information, routing and account number, etc.
  • Implement an ACH Debit Filter to prevent unknown ACH debits from your accounts.


    Online Fraud Prevention

  • Implement dual control and Out-of-Band on all online payment transactions, ACH, Wires, etc. Dual control requires a second level of approval to release online payment transactions.
  • Never respond to an email, phone call or text message requesting you urgently update information, activate an account or verify your identify by calling a phone number or via a website.
  • Perform regular system updates ensuring your antivirus, anti-spyware software and firewalls are up to date. Ensure that the programs are always running and perform regular system scans to detect potential security threats.


    General Fraud Prevention

    Know your employees

  • Run background checks
  • Run credit checks on all new employees who have access to your accounts and cash

    Know your vendors

  • 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
  • Remove all access from all systems for that employee
  • Conduct annual audits of your documentation

    Know these security terms

    To help you identify potential fraud risks, visit our Security Glossary to learn what Account Recon, Corporate Account Takeover, Friendly Fraud, Money Mule and more terms means.

    To learn more, contact your Enterprise Bank & Trust representative today.



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