From one company wiring thousands of dollars to a bogus account after receiving instructions from an unknown vendor to another having a six-figure check altered and cashed out after being stolen from a U.S. Postal Service mailbox, the amount of fraud happening within businesses is staggering.

"For businesses, it's not a matter of 'if', but 'when' these days," said Linda Marcum, director of treasury sales enablement at BOK Financial®, adding that companies need to be prepared for the inevitable because, at some point, a fraudster will try to steal data, information or money from you.

According to the Association for Financial Professionals annual payments fraud survey:

• Checks continue to be the most vulnerable payment method to fraud—65% of respondents reported fraud attempts of this type.
• Fraud due to interference with the United States Postal Service (USPS) has increased by 10% over the past year, with 20% of respondents reporting this type of fraud.
• ACH credits surpassed wires as the most vulnerable payment type for business email compromise-related fraud. Payments made via ACH credits (47%), wire transfers (39%) and ACH debits (20%) were most often targeted via email scams.

Businesses still use checks—and they're getting stolen

The security experts at BOK Financial are seeing the majority of fraud coming from checks, mostly stolen from the postal system in transport. "The U.S. Postal Service continues to raise awareness about the number of items stolen out of the blue mailboxes and postal workers being robbed for their arrow keys which unlock secure lockboxes," said Scott Edwards, director of fraud risk management at BOK Financial.

If businesses want to continue using check payments, they need to know they can't rely on the bank to bail them out if fraudsters use counterfeit checks to drain thousands from their bank accounts. “The bank continually adds protections to help detect fraudulent items, but companies also need to continually review how they are protecting themselves,” she said.   

Proactive protection is necessary

Marcum recommends commercial clients take proactive steps to prevent fraud, including:

• Implement systems such as Positive Pay with payee name verification to add additional layers of protection for check and ACH payments. Then payments are only completed if the amount and recipient have been identified in advance or confirmed by you.
• ACH or check blocks on accounts that companies don't plan to use for transactions.
• Separation of duties to require two approvals on any money movement outside the bank to minimize internal fraud.
• Reconciling accounts daily rather than monthly. Fraud must be caught and reported within a slim 24-hour window if a company hopes to recover stolen funds.
• Develop a training program for your employees to understand the types of fraud and how to identify them.

Business email compromise is a daily threat

Breaches in business emails continue to be problematic for companies and the advances in artificial intelligence (AI) are making it harder to tell what's fake versus real. "It used to be fraudulent emails had broken English and obvious typos," said Edwards. “Now, with AI written communications, it's much more sophisticated, and businesses are having their vendors and ACH payments compromised."

AI can also be used for scam attempts with deep fake voice fraud over the phone and via live chats.

"With AI, one person can do the work of a thousand fraudsters, so the scalability is exponential. They're targeting people overwhelmed with their day-to-day activities and rushing through things without paying attention,” said Edwards.

Both experts agree that investing in ongoing employee education is key. "Train employees on the types of fraud out there and the specific things they need to change in their routine," said Marcum. "If a vendor calls to change where payments are sent, your employees should know how to verify those types of requests."

She stresses that what companies need to do to keep fraud at bay is straightforward:

• Use the fraud solutions from your bank.
• Educate employees.
• Use separation of duties.
• Monitor all transactions daily.

The team at BOK Financial would be happy to discuss these topics and hear about the plans you have for your business. Learn more at www.bokfinancial.com/commercial.