Many businesses, especially small businesses, expect their financial institution to be the ADT of fraud – a source of tools, resources and information to protect business accounts against potential fraud!
However, as resources are allocated toward those fraud mitigation tools, resources and information for Originators, we need to know…Who does fraud affect? Does it really affect everyone? Where should businesses focus their fraud mitigation resources?
In March, the Association of Financial Professionals (AFP) released the 2015 AFP Payments Fraud and Control Survey to its members, and it is evident that no one is immune from fraud and that fraudsters are equal opportunists!
An overwhelming 62% of companies were subject to payments fraud in 2014!!! While it probably doesn’t surprise you that larger companies are more likely to be attacked (65%), the number of small businesses (less than $1 billion in revenue) who reported an attempted fraud attack in 2014 was an astounding 56%! And, shockingly, smaller businesses reported a 32% increase in fraud occurrences over 2013.
The truth of the matter is that is does not matter how large the organization, check fraud still leads the pack, with 77% of the total fraud attempts considered check fraud. Corporate Credit/Debit Card, Wire Transfers, ACH Debits and ACH credits each accounted for less than 40% of the total fraud.
Who can we blame for committing the fraud? According to the study, outside individuals made up 76% of the criminals, where internal parties only claimed 6% of the blame.
The good news? “Most organizations [as high as 78%] who were subject to at least one payments fraud attempt in 2014 did not suffer any actual financial loss resulting from the fraud,” according to the study. And, this can be attributed to tools financial institutions have implemented like positive pay, reversed positive pay and debit blocks on accounts. Although, encouraging companies to reconcile their accounts daily sure hasn’t hurt the trend!
So, is fraud really as rampant as we hear it is? Unfortunately, yes! I leave you with wise words from the study, “…it is important for all businesses to take preventive measures to prevent cyber fraud by educating their employees on current payments fraud practices and implementing the products and processes they need to protect their corporate assets.“
