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Protect Your Business from Check and ACH Fraud
Resources Protect Your Business from Check and ACH Fraud

Success in business is a constant endeavor to expand your customer base, control costs and outwit the competition. After putting in so great an effort, you don't want to see your profits siphoned off by fraud. But businesses of all sizes can be the targets of payments fraud. In a recent survey by the Association for Financial Professionals (AFP), 60 percent of organizations reported being exposed to actual or attempted payments fraud.* The typical financial loss incurred was $23,100.

“I don’t think a lot of people realize how likely they are to lose money to fraud and how large a typical loss is,” says Kenny Charles, VP Information Security, Athens Federal. “Many also assume that most fraud is electronic, but actually there’s a much higher percentage of check fraud.” In the AFP survey, 82 percent said checks were the primary target for fraud attacks at their companies and 22 percent were exposed to ACH debit fraud.

How fraudsters strike

“Fraud may occur when a criminal creates a check using check stock and a MICR printer purchased from an office supply store,” Charles notes. “If they have a legitimate check from a business, they can reproduce the logo, and they have the account and routing numbers. So it’s relatively easy to produce authentic-looking checks. They’ll take advantage of float — the time between when a check is presented for payment and when it clears the payer’s bank — to cash as many checks as they can before they get caught.”


Protect your accounts

There are several ways you can protect your business accounts, including:

  • Check Positive Pay - guards against fraudulent checks by allowing you to reject unauthorized checks before losses occur. When items are presented for payment, Athens Federal’s Positive Pay Service automatically identifies check numbers, dates and amounts that don’t match your check issue file (you can add payee information, too, if you choose). You’re notified of exception items so you can make timely decisions to pay or return them.
  • ACH (Automated Clearing House) Positive Pay - works in a similar fashion to Check Positive Pay. You provide a list of authorized ACH debitors, and can preassign transaction limits by debitor. You’re notified of exception items so you can decide to pay or return them.
  • ACH Blocking – blocking may be a good idea for accounts that don’t have any ACH activity. “We especially recommend it for money market accounts,” comments Charles. “People often use them for investments and may not remember that it’s actually a checking account. Also, money market accounts often have high balances, so it’s important to protect them.” ACH Blocking automatically blocks all ACH debit and/or credit transactions from posting to your account.

You need internal controls, too ...

“Check Positive Pay, ACH Positive Pay, and ACH Blocking are effective tools to protect against external fraud, but businesses need internal controls, too,” Charles continues. Here are several ways to protect your accounts internally:

  • An employee who issues checks should not make decisions on Positive Pay exception items.
  • An employee who sets up ACH debitors should not be the one who approves ACH transactions.
  • Know who your vendors are and have different employees set up vendors and approve them.
  • Enforce a mandatory vacation policy for employees who handle company finances.
  • Management needs to stay involved and be aware of daily transactions on the account.
  • Stay up-to-date with trends in payments fraud and have regular conversations about it with your accountant, attorney, insurance agent and banker.





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