Guest Column: Businesses need to protect themselves from payments-related fraud

Robin D. Arco
Robin D. Arco

By Robin D. Arco
Vice President, Treasury Management, Riverside Community Bank

Payments-related fraud is more common than you may think. In 2012, two-thirds of businesses reported actual or attempted fraud related to payments, according to the Association for Financial Professionals Payments Fraud and Control Survey. The average loss from payment fraud was $20,300.

You may not be able to prevent fraud attempts, but experts believe you can reduce the risk. One of the most effective strategies is to focus on preventing fraud before it occurs. Dealing with fraud to your business after it has occurred is often fruitless. Even if the perpetrator is caught, chances are you will never get your money back. Here are some important tips for protecting your business before fraud occurs.

• Prevent check fraud. To protect your business accounts, purchase check stock from known vendors that includes built-in security features. Store checks, deposit slips and statements securely. Establish a policy for employee check orders and reorders. Reconcile accounts daily using online banking. Also, recognize that electronic payments are often more secure, so move to ACH (Automated Clearing House) for payroll, billing and vendor payments.

• Prevent electronic payments fraud. Keep criminals from hijacking your ACH payment origination system through malware or “phishing.” Dedicate separate computers for Internet browsing and online banking access. On computers used for banking, block plug-ins and pop-ups. Also, be sure to keep your software up to date, change employee passwords frequently, and reconcile your accounts daily online. Use Positive Pay (an electronic system for comparing cleared items with a file of known issues) and ACH Debit Filters and Blocks to identify suspicious transactions.

• Prevent insider fraud. You also need to guard against insider fraud. An unscrupulous employee may manipulate ACH files and wire transfers or provide fraudsters with login credentials for a fee. To combat insider threats, implement “dual control” for all payment methods and segregate employee duties. Ensure employees log out of online banking sessions when not in use. Also, never store sensitive information on portable devices.

Establish robust policies and procedures that govern your entire payments process — including prompt reporting of any suspicious transactions. Work with your bank’s treasury management department to ensure sophisticated fraud-prevention methods are in place. Finally, always maintain skepticism and remember, an ounce of prevention is worth a pound of cure! Especially when it comes to payment-related fraud.

Riverside Community Bank is a member of Heartland Financial USA, Inc. Riverside Community Bank has assets of $450 million with four banking centers and an extensive ATM network, many in Road Ranger convenience stores throughout the northern Illinois area. The bank offers an array of credit services, wealth management, investment services and deposit accounts, all with a focus on personal service. Member FDIC. Equal Housing Lender.  Online at

From the Dec. 25-31, 2013, issue

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