Fraud can come at your business from any number of sources, especially checks and wire transfers. In fact, a recent survey by the Association for Financial Professionals (AFP) found that checks and wire transfers continued to be the payment methods most impacted by fraud activity in 2020.
The best way to avoid becoming the next victim is knowing what to look out for. Learn below how you can protect yourself from these common fraud practices.
Check fraud refers to the use of paper or digital checks to obtain money illegally. It remains the most popular method for business-to-business payments in the U.S, which is why this scheme is so appealing to criminals.
Types of Check Fraud
- Paper hanging: purposely writing checks on closed accounts
- Check kiting (floating): deliberately accessing funds deposited in one account before the bank clears them from another
- Forgery: falsifying the signature or endorsement of a check
- Identity check theft: opening a bank account in the victim’s name and writing bad checks from that account
- Chemical alteration (washing): using chemicals to remove information from a check
- Counterfeiting: illegally printing checks using information from the victim’s account
How to Prevent Check Fraud
- Keep your account details and routing number secure to prevent your checks from being reproduced
- Check your bank account often to see which checks have cleared
- Use Positive Pay to detect counterfeit and fraudulent checks
- Use cash management to initiate ACH payments to your vendors
- Make electronic bill payments
Wire Transfer Fraud
Wire transfer fraud involves any scheme to defraud or obtain money under false pretenses via electronic communications such as the telephone, email or internet. It’s popular among scammers because it’s easy to take the money and disappear with little hope of recovery.
Types of Wire Fraud
- Telemarketing fraud: using the telephone to scam victims out of money illegally
- Business email compromise: fraudsters obtain access to a business email account and imitate the owner’s identity in order to initiate a fraudulent wire transfer
- Real estate wire scams: attacker targets people in the closing process of buying or refinancing a home
How to Prevent Wire Fraud
- Require that all employees confirm payment requests received by email with each requestor in person or over the phone
- Mandate call backs to verbally validate any new payment instructions or administration changes you receive via email
- Train all employees to look for inconsistencies with email addresses, grammar and spelling
- Create shared protocols with vendors and suppliers
- Implement a two-step verification process for all wire transfers and transactions
Fight Growing Fraud Today
Union Bank has the tools and services to help your business stay ahead of check and wire fraud. If you suspect fraud, immediately contact your local branch at 1-866-638-0552.
For more information on how to protect yourself against frauds and scams, visit our Fraud Resource page.