Protecting Payables: Managing Fraud Risks to Keep Company Assets Safe

Protecting Payables:  Managing Fraud Risks to Keep Company Assets Safe

As new forms of payment evolve and become widely adopted the threat of fraud remains top-of-mind for businesses of all sizes and across all industries. While electronic payment options, such as ACH, have their advantages when it comes to fraud, none are completely immune from risk. Adding to the challenge, paper checks remain a mainstay throughout the business world, creating ongoing vulnerabilities.

Regardless of whether you’re using paper or electronic payment tools, security of those payments needs to be a priority. Understanding the threats and the protection solutions that are available is critical for putting a good strategy in place.

The Many Faces of Fraud


Paper checks continue to be a preferred form of business payment, which is why check fraud is still so prevalent. Amongst the different types of check fraud, counterfeiting is one of the most common techniques employed by fraudsters.  Counterfeiters take several different approaches. One is to intercept a company check issued to an employee in order to capture and compromise the information on the physical payment. This allows them to create a reproduction of the company check that is nearly identical to the original with the goal of fooling the bank into cashing it. Often times a paid surrogate, also known as a “mule,” is used to make the in-person transaction in the bank, reducing the risk of the fraudster him or herself getting caught.

Another method employed by fraudsters is the Business Email Compromise (BEC) scam. In this scam, a fraudster compromises an employee’s email using a phishing, social engineering or malware scheme to obtain enough information to take over an account, or effectively impersonate an employee, customer or business partner and trick treasury or finance personnel into sending payments unwittingly to the fraudster. According to FBI statistics, there was a 270% increase in BEC fraud from January to August 2015 with a total of $747 million exposed in the U.S. alone.

Don’t Let Fraud Keep You Up at Night

Fraudsters will go to great lengths to perpetrate the theft of your business assets. That’s why security of those payments must be a treasury imperative.  

One of the best tools to fight a BEC scam is communication. When a request for a wire, check, or ACH is received, it’s important to follow up and verify its authenticity. Never rely only on an email. A quick phone call can ensure this is not a fraudulent payment request. It’s vital for companies to examine their corporate culture and make sure communication channels are open. In many cases, treasury personnel won’t feel empowered to question a request that purportedly comes from the CEO or other senior executives. Creating a culture of openness can be an invaluable tool for preventing fraud.  

A banking partner can help you address your vulnerabilities. Fifth Third Bank offers a range of tools and solution that can help mitigate fraud risks. These tools include Dynamic Tokens, One-time Passcodes and Multi-factor Authentication that enhance the security of transactions and connections.  Another solution is Trusteer Rapport, which encrypts keystrokes and locks down browsers, so prying eyes can’t intercept sensitive account information.

Positive Pay is a proven tool for protecting your business against altered checks and counterfeit check fraud. With this solution, check numbers and amounts are verified against a file provided to the bank. If they don’t match, payment is halted. Some businesses are reluctant to implement positive pay because of its IT and technology requirements and initial costs, but this tends to be shortsighted as the cost of fraud far outweighs the investment in protection.

Vigilance is a Virtue

When it comes to preventing payments fraud, vigilance is a virtue. Businesses should take a layer approach to security in order to ensure they are doing everything they can to protect themselves.

Working with a trusted banking partner is key to putting in place an effective strategy to mitigate the risks of fraud. Fraud prevention is a mindset that must be embraced across the entire organization. Everyone must take responsibility and look for ways to secure information so it isn’t exposed.

Taking simple steps such as locking up check stock and deposit tickets is crucial, as are more sophisticated methods such as the bank solutions previously mentioned. Gaining a better understanding of the threats that exist to your payment function is instrumental for identifying the security measures that can be implemented to keep your company’s assets safe.