63% of Businesses are Victims of Check Fraud

Checks and ACH debits were the payment methods most impacted by payment fraud activity in 2022. According to the 2023 AFP Payments Fraud and Control Report, 63% of organizations were victims of check fraud in 2022, and 30% were victims of ACH debit fraud.

Small businesses are frequently the targets of fraud because they have fewer resources. Small businesses with fewer than 100 employees have a median loss of $150,000 from fraud, according to the Association of Fraud Examiners., according to the Association of Fraud Examiners.

Fraud continues to be on the rise and it’s no longer a matter of if you experience it, but when.

Positive Pay

Positive Pay is a fraud prevention tool that prevents check fraud by verifying that checks being cashed or deposited are legitimate. This tool protects your business from financial losses from check and ACH fraud to increase security and provide peace of mind.

With Positive Pay, a business provides its bank with a list of checks it has issued, including check numbers, dates, and amounts. When a check is presented for payment, the bank compares the information on the check with the list provided by the business. If the information matches, the check is paid. If there is a discrepancy, such as a check being for a different amount or check number, the bank will contact the business to confirm whether the check is legitimate.

Positive Pay can protect your business in several ways:

• Fraud Prevention: Positive Pay prevent checks fraud by verifying that the checks being cashed or deposited are legitimate, reducing the risk of fraudulent checks being cashed.
• Early Detection: Positive Pay detects fraudulent checks early in the payment process. This allows you to catch any fraudulent activity before it is too late.
• Cost Savings: Positive Pay saves your business money by preventing financial losses from check or ACH fraud.
• Increased Security: Positive Pay provides an additional layer of security for your business by verifying that only authorized checks are being paid. This can give you peace of mind knowing that your finances are protected.

Fraud Prevention

One of the most important things you can do to protect your business from ACH fraud is to verify any requested changes to payment details. For example, if you receive an email requesting a change, do not make that change until you confirm with the company or person via a second communication method, such as over the phone or in person. Do not use the phone number that is in the email request or any other contact information in the email request. Instead, use a previously established number, or search for the business’s phone number on a search engine like Google.

Remember these tips:

• If you are originating ACH transactions to send funds to a merchant or direct deposit to your employees, always verify any changes made directly with that party. Do not accept changes or modifications through emails.
• If you do receive an email to change ACH payment instructions, confirm the request via telephone or another secure communication channel, such as a merchant portal or instant messaging service you already use with that party.
• Be wary of any instructions for follow-up the sender includes in their email request. Any request you receive could be a fraudulent email, so the instructions could push you closer to the fraudster.
• Don’t click on any attachments or links in an unsolicited email or text message asking you to update or verify account information.

Fraudulent URLs

As mentioned above, it is extremely important to be wary of any links sent to you. Before clicking the link, review it for any misspellings

Recently, scammers designed a fraudulent website to look like the real Choice Bank website with the intent of stealing login credentials and other personal information from our customers. In this situation, it was important for us to notify and educate our customers and our team on this potential threat while we were working to have the fraudulent website taken down. We shared the following talking points with our staff when speaking to customers regarding this scam:

• Thank the customer for alerting us.
• Assure them we are taking action to remove the site.
• Remind them to be diligent in checking URLs before clicking, and that we will never send or ask them to send us confidential information via unencrypted email.

We also created a form to record all affected customers who entered personal information into the fraudulent website.

This goes to show that no business is immune to cyberattacks and fraud. Make sure you and your staff are prepared by promoting cybersecurity education and utilizing tools like Positive Pay.

Learn more about Choice Bank’s fraud prevention tools, such as Positive Pay, and request a meeting with our cash management officer at bankwithchoice.com/positivepay.