Fraud Security Protocols Can Create a False Sense of Security for Businesses

Fraud Security Protocols Can Create a False Sense of Security for Businesses

Between investing in fraud detection systems, adding multi-factor authentication, and implementing firewalls, many businesses believe their security protocols are enough to keep scammers out. Unfortunately, this can create a false sense of security.

The speed and sophistication of today’s scams combined with the ever-present risk of human error still make fraud one of the biggest threats businesses face. One of the most effective and underutilized tools to protect your money is building a strong, ongoing partnership with your bank.

The best defense is a good offense. That’s why every business needs its own fraud protection plan and why keeping your bank in the loop is essential.

Scammers Are Targeting Businesses More Than Ever

Just as criminals are constantly refining their tactics, businesses shouldn’t rest on their laurels and must continually improve their defenses. Fraudsters exploit even the smallest vulnerabilities, and their attacks are systematic and persistent. How prepared are you to handle these growing threats?

  • Phishing emails that mimic legitimate sources, often lead you to fake websites or secretly installing malware.

  • Check fraud, including alterations and forgeries, which remains a major risk despite the growth of electronic payments.

  • Beneficiary change scams, where fraudsters pose as vendors or partners and trick staff into redirecting payments to criminal accounts.

  • AI impersonation scams, using voice cloning or deepfake videos to impersonate company leaders and trick employees into revealing sensitive data or even transferring funds.

These aren’t one-off attempts—they are sophisticated, organized, and increasingly difficult to detect. Without vigilance and strong detection controls, businesses can unintentionally leave the door wide open to fraudsters.

The Cost of Fraud Goes Beyond Money

Fraud doesn’t just hit your bottom line—it threatens your entire operation and business reputation. A single incident can:

  • Disrupt operations when accounts must be closed and reopened.

  • Delay payments, straining vendor relationships and payroll schedules.

  • Void cyber insurance coverage if prevention protocols weren’t properly followed.

  • Damage trust with clients, partners, and employees who rely on you to safeguard sensitive data.

In short, the ripple effects of fraud can be more damaging than the initial financial loss.

Practical Steps to Build a Fraud Protection Plan

Fraud prevention works best when it’s proactive, layered, and customized to your business. Here’s where to start:

  • Partner with your bank. They can provide customized safeguards, transaction alerts, and expert guidance. Keeping them informed helps prevent losses and avoid false alarms.

  • Implement Positive Pay. Pinnacle’s Positive Pay service matches each check presented for payment against your issued check file. If a mismatch is found, the check is flagged, and you’re immediately alerted and given the chance to approve or reject the payment—essentially reconciling your account daily and reducing check fraud risk.

  • Strengthen cyber defenses. Keep systems updated, require strong passwords or multi-factor authentication, and educate staff to spot suspicious emails, texts, and calls.

  • Train your team. People are your first line of defense. Fraud awareness training, especially around phishing and beneficiary change scams, is one of the most effective controls.

  • Plan your response. Have a written fraud and cyber response plan so employees know exactly what to do and who to contact when something goes wrong.

The Bottom Line

Every business, regardless of size, is a potential target for fraud. The continued shift to electronic payments doesn’t eliminate risk—it just changes how criminals try to access your funds.

A strong fraud protection plan, developed with your bank’s expertise, helps reduce risk, protect your reputation, and keep your operations running smoothly.

Pinnacle associates strive both personally and professionally to protect our firm and the clients we work for, so we don’t take the risks lightly.  Reach out to learn how we can help safeguard your business and stay one step ahead of fraudsters.

Doreen Langley is a Treasury Management Advisory at Pinnacle’s Louisville Lakeview office.
She can be reached by email at
Doreen.Langley@pnfp.com and by phone at 502.645.0952

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