Five Ways to Reduce Fraud and Protect Your Business

Financial fraud has surged as crooks work their ploys against both banks and their clients. Fraud attempts have as much as tripled in recent years, with an ever-widening variety of new scams.

Human vigilance is your front-line protection. It’s not perfect, though. Better to have some block-and-tackle services to help tighten security and prevent fraudulent transactions. Here are five to consider, depending on your business’ needs.

1. Pick a product that uses multi-factor authentication (MFA) for initiating ACH transactions and wire transfers. You might be familiar with MFA methods that ask for answers to one of several specific security questions. That’s called a knowledge factor. But what if the fraudster knows a lot about you or can steal your answers? Possession factors are much stronger because they can only be provided by an authorized user, and the “key” to open the lock changes every few seconds. The strongest are software tokens that continuously generate random numbers to be entered when prompted.
2. Set up dual controls. Dual controls require two people to initiate an ACH transaction or wire transfer. This reduces the chances that someone inside your organization can get away with a pattern of fraud. With dual control, a single user is prevented from creating and initiating an ACH batch transaction or transmitting a wire transfer. A user has the ability to do either action but not both for the same transaction.
3. Maximize use of ACH blocks and filters. The ideal configuration for these filters is to set up pre-authorized transactions using filters for payee and a range for the amount that can be paid. The system can block all debit transactions it doesn’t recognize. Those are presented to the account holder as exceptions for review to “pay” or “return.” Each of these exceptions also allows the user to add a filter to allow future transactions of that same nature.
4. If your business writes a large number of checks, consider enrolling in Positive Pay. Positive Pay works by detecting suspicious check transactions. The bank will match each check that is presented for payment against a list of issued checks you provide them. At a minimum, the bank will match the check number and amount. As an additional layer of protection, you can choose to add payee match, which is highly recommended. Suspicious checks are presented for review for the account holder to “pay” or “return.”
5. Be informed about business email compromise. The fraud Pinnacle sees the most often is business email compromise. It’s the one type of fraud that can only be curbed with user education. Fraudsters have become very skilled at mimicking the email style of common vendors. If you receive an email that is payment related (whether an invoice, a request to change your password or a message that your account terms have been changed), always pick up the phone or visit your vendor’s known website or app to verify that request.

For questions about any of these tips, reach out to your local Pinnacle office and ask to speak to a treasury management advisor.

Deanna Snow is the director of treasury management analyst performance and is based at Pinnacle’s office on N. Main Street in High Point, NC. She can be reached by phone at 336-858-5832 or by email at Deanna.Snow@pnfp.com.