In the world of virtual transactions, online transfers and email verification, more consumers are falling victim to fraud than ever before. Impostor fraud is one of the most critical security risks organizations face today. By definition, impostor fraud refers to a “fraudster” posing as a person or entity you trust and requesting a payment or a change to vendor payment instructions.
Fraud schemes are constantly evolving as a result of technological developments. There’s a common misconception that only businesses in large cities are at risk, when in fact businesses in small towns are just as vulnerable. According to the FBI, there was a 2,370 percent increase in financial losses from email fraud between January 2015 and December 2016. A common example is when a fraudster gets access to your email account and sends messages to one of your employees asking them to wire money somewhere, likely to their own bank account. Once wire transfers are sent, they are rarely, if ever, able to be recalled. The fraudster then gains access to the funds in seconds.
In order to prevent impostor fraud, it is crucial to identify protective measures. To help protect yourself and your company, here are four easy steps you can take to minimize your risk:
- Verification is key in preventing fraud. Whether it’s verification by email, phone, security questions or voice recognition, it’s important to make sure your bank verifies any transactions through your account using one of these methods. A couple years ago, I received an email from a customer explaining that he needed to wire money to a separate account. The customer went on to explain that he was in the hospital and too sick to come to the branch to verify his identity. When he called the contact number listed on the account, the customer told him he was not in the hospital and the email was fraud. This is one example of how fraudsters try to hack into accounts using email and can easily do so if their identity is not verified.
- Be aware of employee fraud. Employee fraud is one of the most common types of fraud. While employees are often the most trusted, they also have access to the most information in regards to a company’s or customer’s finances. To best protect from employee fraud, have separate people in your office process payables and receivables. This helps to avoid the temptation of an employee writing themselves a check and then balancing the books accordingly.
- Separate as much as possible. Limit your combined accounts by having a separate account for deposits and payables. Then, if the fraudster gets your account number off of a check and steals money from your account, you are at least protecting one of the accounts rather than giving them access to both.
- Talk to your bank. Your bank is a crucial resource in the fight against impostor fraud. Learn more about safeguarding payments and fraud protection services that are available. You would be surprised at the products and services your bank offers to protect you from different types of fraud. Many banks now offer fraud alerts if they believe a charge has made to your account that is out of the ordinary. Some banks also allow you to cancel your card online to prevent any further charges once you suspect fraudulent activity. QCBN
By David Dinerman
David Dinerman is a senior business relationship manager with Wells Fargo’s Business Banking Group in Prescott. He has provided financing and banking services to businesses and commercial real estate investors in the Prescott area since 2004. He can be reached at 928-717-6045 or david.dinerman@wellsfargo.com.
Leave a Reply