As you know, money is tight right now at businesses across the nation. The effects of the pandemic will be felt for years to come—whether that’s in the form of long-term tax implications or slowed growth.
However, something that we discussed in a recent blog, the past couple months have opened you up to another risk, the risk of fraud.
“Fraud is the intersection of opportunity and ability—what better opportunity for someone with a less than stellar moral compass to skim a bit off the top than when everything is going crazy at the business? Vigilance is key—especially when opportunity exists.”
The Realities of Fraud
For many businesses, a major fraud loss combined with an already-anemic revenue stream may spell disaster. So why are so many business leaders so reluctant to get rid of one of the most fraud-prone payment methods in existence? Paper checks have been around for centuries, and companies still rely on these slow, error-prone, and fraud enabling payment methods.
According to a Wall Street Journal article from January, check fraud has continued to rise:
Attempted check fraud increased to $15.1 billion in 2018—up from $8.5 billion in 2016—and accounted for 60% of attempted fraud against deposit accounts at U.S. banks, according to a survey released Wednesday by the American Bankers Association. Successful check fraud made up 47%, or $1.3 billion, of banks’ fraud losses—a rise from $789 million in 2016—closely followed by debit card fraud losses at 44%, or $1.2 billion.
But this happened before a pandemic forced us into lockdown. As discussed in a recent PYMNTS.com article, it’s likely that the risk of check fraud may even be even higher as a result of the lockdowns. According to the article, many AP professionals ended up not only taking their work into their homes, but the company check printing machines as well.
The combination of these two elements could provide ample motivation for an unscrupulous employee to skim a bit off the top. It could also put you at risk for external fraud. A well-targeted spear phishing attack or business email compromise could result in a payment made to a fraudster. Imagine receiving an email from the CFO saying that you need to pay a vendor. Normally, you could just ask in person or rely on a corporate firewall to protect you from this, but in the work from home landscape, that’s just not plausible. So how can you work to stop it?
Fighting Payments Fraud
From getting rid of paper checks to embracing Positive Pay to training employees on how to stop fraud, the opportunities to mitigate risk are endless. Here are just some of the most popular ways to fight it, according to the 2020 AFP Payments Fraud and Control Survey:
- Train employees on how to identify and avoid falling for a business email compromise attack.
- Implement policies for providing appropriate verification of any changes to existing invoices, bank deposit information and contact information.
- Confirm requests for transfer of funds by executing a call back to an authorized contact at the payee organization using a phone number from a system of record.
Stay Ahead of the Danger with Advice from Controllers Council
As you continue to steer your organization into recovery, it pays to have all the latest information. The Controllers Council was launched to help controllers better navigate the everyday challenges of running the accounting and finance side of the business.
Our rapidly growing national community will provide not only the training, networking, and recognition you want and deserve, we will also host a variety of discussions for members. Learn more by watching the video below and join our community here.