LOADING

Type to search

Banking Coronavirus News

Take a layered approach to protecting against payment fraud during pandemic

Share

By Ray Abbott

As the Federal Trade Commission (FTC) reports a dramatic increase in fraud complaints related to COVID-19, now more than ever, businesses must protect themselves and their customers from
the realities of payment fraud.

The FTC — the government agency charged with consumer protection and ensuring business practices remain fair — has already received nearly 8,000 complaints from consumers about COVID-19 related scams, according to a report released in April showing complaints between January and March 2020. The complaints amount to nearly $5 million in losses, an average of almost $600 per person.

Ray Abbott

First, the bad news. Payment fraud touches most of us, our businesses and our customers. The American Bankers Association (ABA) reported that attempted fraud against deposit accounts reached as high as $25.1 billion in 2018.

Now for the good news. American banks prevented $22.3 billion in attempted fraud against deposit accounts that same year. Citing preventative measures, the ABA reports nearly 90% of attempted fraud was stopped in 2018.

How can you take steps to protect your business’ accounts from potential fraud? Mitigating the risks of payment fraud requires a layered approach as schemes evolve. Here are three ways to help protect your accounts from fraud.

Go Digital

Paper checks remain an avid opportunity for fraudsters.

The ABA found in 2018 that check fraud accounted for 47% of account fraud losses — the highest of any fraud that year — and preventative measures stopped 91%, or $13.8 billion, in attempted check fraud.

If you’re still paying bills and employees with paper checks, now, at a time when social distancing is of the utmost importance, is the best time to switch to digital payments – the best practice for payments. Since the coronavirus outbreak, many have become more aware of what digital products banks have available. Consider electronic forms of payments like ACH, wires or even accepting credit cards. If you must accept checks, consider depositing them to your bank with remote deposit capture systems that allow you to send images of checks via your phone, or a high-volume scanner for those with larger number and larger dollar items.

Finally, use positive pay services to prevent unauthorized checks and ACH debits from clearing your account.

Out-of-Band Authentication

While business owners work on protecting online bank accounts, banks should focus on using the right tools to authenticate customers. Most consumers have run into a form of authentication known as Out-of-Band Authentication (OOBA) when logging in to an email account or calling their bank or insurance the company. The user receives a passcode by text message or voice call, which
must be entered for the user to access the account. OOBA can be used on its own or as part of a multi-factor authentication strategy for stepped-up authentication in high-risk transactions. OOBA supports use cases such as new account openings, password resets, transaction verification, and website and mobile app logins.

According to a report by PhishLabs, financial institutions were the top target of phishing scams in 2018. While it may seem like an additional step that could slow workflow and managing online banking, OOBA is among the most important layers for mitigating payment fraud risk. Make sure that your bank is using OOBA to protect business accounts from this evolving and ongoing threat.

Dual Control

In recent years, Greater Delaware Valley law enforcement agencies have alerted the public to email phishing scams where the recipient is prompted to send money or transfer funds to someone. Meanwhile, popular CEO scams spoof company email addresses or phone numbers to trick employees into sending a payment to a fraudster. Unfortunately, this scam has hit our region and continues to slip into our work in boxes, but a layered approach can help here too.

In addition to OOBA, Dual Control is an extra layer of protection that gets a second set of eyes and both parties must approve before the transaction can be made.

This form of authentication is popular because dual controls are already used in so many facets of business. While this may seem like a simple step, dual control is among the most powerful ways to thwart fraud schemes.

Remember to give your business banker a call during the pandemic to ensure your business’ finances are protected through a layered approach. 


Ray Abbott is SVP, Head of Cash Management, for WSFS Bank

Tags:

You Might also Like

Leave a Comment

Your email address will not be published. Required fields are marked *