In the world of payment fraud protection, how does your company compare?

Schemes to steal money from organizations by manipulating payments like checks, ACH transactions, wire transfers and credit cards are becoming more and more common. The recent Payments Fraud and Control Survey conducted by the Association for Financial Professionals showed that nearly three out of four organizations polled had experienced attempted or actual payment fraud attacks in the past year.

The study also revealed:

  • There are a number of processes that businesses feel are important to develop and/or modify as a way of reducing potential payment fraud. They include increasing the use of electronic payments for business-to-consumer and business-to-business transactions (83 and 88%, respectively), restricting the use of online data communications (80%), and stopping the practice of providing payment instructions by phone or fax (78%).
  • Many organizations use separate accounts for different payment methods as a fraud control technique: 67% have separate accounts for disbursement and collections, 56% have separate bank accounts for checks and ACH payments, and 46% maintain separate accounts for different payment methods and types.
  • Organizations turn to a number of services provided by their banks to help control fraud: positive pay/reverse positive pay (83%), ACH debit blocks (77%), ACH debit filters (58%), and payee positive pay (52%).

Fraud control products and services available through your financial institution can provide numerous avenues of protection for your company’s payables and receivables. Your bank’s cash management representative can also help. He or she may suggest locking up your signature stamps and check stock if you haven’t done so already, setting up dual controls so that one person initiates a payment and another person approves it, or other easy-to-implement changes that will add to your fraud protection.

You may also want to ask about insurance recommendations; cyber liability insurance is a growing area of coverage for many companies that find their commercial general liability policy excludes the types of losses that would stem from cyber crimes such as data and identity theft or accidental transmission of a computer virus.
What steps have you recently taken to protect your business, or what steps do you plan to institute this year?  Leave your answers in the comments section below.

*Source: 2010 AFP Payments Fraud and Control Survey, sponsored by J.P. Morgan