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Best Practices for Safeguarding Against Payment Fraud

October 8, 2014 Laura Danni 

In the previous post on fraud protection, we presented a variety of common security threats that could leave businesses vulnerable to payment fraud and a significant loss of funds. Methods such as phishing emails, compromised legitimate websites, and malware are often employed to obtain bank logon credentials, which can ultimately lead to fraudulent attempts to conduct unauthorized Automated Clearing House (ACH) transactions and wire transfers.

These types of electronic funds transfers could present lucrative opportunities through the eyes of fraudsters. Here are some basic safeguards to help protect against unauthorized ACH and wire transfer activity:

Carefully and frequently monitor your electronic account activity.

  • Reconcile your accounts daily, and utilize ACH blocks and filters designed to protect against unauthorized electronic ACH transactions. Enabled users can authorize specific ACH debits or block certain ACH debits.
  • Utilize multi-user (dual) control approval settings and establish user limits to initiate, approve and send ACH, wire transfers and other financial transactions.
  • Verify all payees and other transaction information for accuracy under a dual control review approach before ACH and/or wire transfer transactions are initiated.
  • Limit the number of online banking users that can initiate and/or approve ACH and wire transactions, ensure each online banking user has a unique ID and password to enter the system, and never share access credentials.
  • Designate a computer to be used by properly-authorized individuals when accessing online banking to conduct ACH and wire transfer functions. Prohibit all other internet traffic and email access on the designated computer to reduce the vulnerability of attacks.
  • Identify questionable items, confirm which may be suspicious, and report them to your financial institution immediately.

In addition to the above, it’s always important that you stay informed of current security risks, periodically review your controls to keep your business protected, and immediately report any fraudulent activity to your financial institution and local law enforcement agency.

The views, opinions, beliefs, conclusions, and other information expressed in this material is not given, verified, or endorsed by Square 1 Bank, a division of Pacific Western Bank. Instead, this material is solely the work of the author, and represents his views, opinions, beliefs, conclusions, and other information he wishes to present, in all cases without any manner of endorsement from or verification by Square 1 Bank, a division of Pacific Western Bank.

This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that the author believes to be reliable, but which has not been independently verified by the author or Square 1 Bank, a division of Pacific Western Bank, and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal, or other advice, nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to this material should be construed as a solicitation, offer, or recommendation to acquire or dispose of any investment, or to engage in any other transaction.

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