According to the Association for Financial Professionals’ (AFP) 2023 survey‡, 65% of treasury and finance professionals reported payments fraud attacks and attempts in 2022. Companies continue to look for strategies for preventing fraud, which is leading businesses to make every effort to try to stay one step ahead of these threats.
From altered checks to wire transfers and corporate credit cards to employee theft, payments fraud comes in all forms. Fortunately, many businesses are more aware of the different types of fraud than ever before, and many are putting measures in place to combat the growing issue. This includes educating themselves and their staff on proactive measures they can take to minimize risk.
However, for those who have ramped up their efforts and for those who are looking to do so, there are a few risks that stand above the rest. Here are two of the biggest issues the survey uncovered, and actions you can take to protect your business.
Ditch the paper, get a card
Checks continue to be one of the most common forms of payments fraud with 63% of organizations being impacted in 2022. And although check fraud is on the decline, it still accounts for significant financial loss for an organization when it occurs.
If you’re still using checks regularly, there are several reasons to consider a shift to electronic payment methods, such as a commercial cards program, which can meet a variety of business spending needs. In addition to fraud mitigation, commercial cards can also help businesses:
- Increase cash flow
- Pay bills faster
- Retain cash and float payments for longer periods
- Participate in reward programs and receive cashback and rebates
- Lower administrative costs by streamlining payments and reconciling employee purchases automatically
- Save costs in transaction fees—the median cost of processing a paper check is $3, double the cost of a purchasing card transaction
From a safety perspective, built-in protections such as EMV chips and payment controls allow administrators to closely monitor and regulate card spending, which creates a fraud risk management infrastructure that is significantly stronger than that of check security systems.
Numbers tell the story
- 65% of companies were targets of payments fraud in 2022
- 45% of organizations cited wires as the top payment method for business email compromise (BEC) in 2022
- 63% of organizations experienced check fraud, maintaining checks as the most vulnerable payment method
- 44% of organizations reporting payments fraud in 2022 were unable to recoup any of the stolen funds
The evils of email
Another growing area of fraud is business email compromise (BEC), and it’s one that is growing quickly. BEC is a form of fraud that targets employees through email to gain access to company finances and deceive individuals into making money transfers.
An example of BEC is when attackers gain access to an executive’s email account and then monitors their behavior over a period of time. The attacker will identify when the executive is traveling or most vulnerable and send a note requesting an associate make a payment or click on a malware link.
So, how do you protect your business and employees from BEC? It’s important to have a plan in place and to leverage all the safeguarding tools available to your business. Ensure your employees have the proper education and training for fraud detection, which means having regular training with your team. We recommend you encourage questions among your team to create an atmosphere where employees feel free to share any unusual behavior or emails.
Concrete examples to help curb email fraud include reducing your check writing, outsourcing payroll responsibilities, and having dual controls in place so one person is not in charge of all financial decisions and actions.
The bottom line
While preventative measures can help protect against fraud, it will always exist in one form or another. What you can do is educate employees, make sure they are using the most up-to-date technology, and work with your financial partner to ensure the best practices and protective measures are in place. When it comes to payments fraud, the old saying remains true, “An ounce of prevention is worth a pound of cure.”
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