Facing Fraud Today

Businesses lose billions of dollars to fraud schemes every year. Fraud not only affects your bottom line, but can also affect your reputation and credibility, and even put your customers at risk.

Review the most prevalent fraud schemes businesses face today and learn more about fraud prevention best practices for protecting your business, and the tools CB&T offers to help minimize your risk.

Accounts Receivable Fraud

Scheme

Employees with access to accounts can steal funds from customer payments—online or offline— then fraudulently alter records through fake discounting or write-offs, faulty balancing, and fraudulent debiting. A common accounts receivable fraud method is known as lapping. This is where employees continuously steal customer payments to cover previous customer payment thefts.

Impact

According to estimates, 80 percent of the fraud cases are asset misappropriations, including accounts receivable fraud. (Report to the Nation on Occupational Fraud and Abuse. Association of Certified Fraud Examiners (ACFE), 2002.)

Strategies

  • Separate financial responsibilities and access rights to financial data among two or more employees
  • Be wary of employees who live beyond their means, refuse to take vacations or seem unusually close with a vendor or client

Tools

  • Lockbox

Learn more about fraud-fighting products and services from California Bank & Trust.


ACH Payments Fraud

Scheme

ACH payments fraud is one of the easiest ways criminals can access your accounts because all that's needed is a checking account number and bank routing number, both of which are often collected using malicious software or "malware".

Impact

In 2014, 22 percent of organizations were affected by ACH debit fraud while nine percent experienced ACH credit fraud. (2014 AFP Payments Fraud Survey)

Strategies

  • Access online accounts and services only through one or a few computers that are dedicated to financial transactions to prevent malware downloads
  • Reconcile all accounts daily to monitor for any unauthorized ACH debits
  • Follow the precautions recommended in the Online Account Takeover section

Tools

  • IBM® Security Trusteer Rapport®
  • Positive Pay
  • Dual Control
  • Transaction Limits
  • RSA SecurID Hard and Soft Tokens

Learn more about fraud-fighting products and services from California Bank & Trust.


Wire Fraud

Scheme

Wire fraud can be committed by employees and outsiders. Employees commit wire fraud by creating fake vendor accounts to pay themselves. Other wire fraud criminals pose as vendors you already work with and request that you send payments. These requests are usually made by email or phone.

Impact

In 2013, 14 percent of businesses were victims of wire transfer fraud. (2014 AFP Payments Fraud Survey)

Strategies

  • Adopt company policies so that any request for a wire transfer or change in wiring instructions—whether by phone or email—is verified by calling a known phone number.
  • Set wire transfer limits

Tools

  • IBM Security Trusteer Rapport
  • Dual Control
  • Transaction Limits
  • RSA SecurID Hard and Soft Tokens

Learn more about fraud-fighting products and services from California Bank & Trust.


Credit Card Fraud

Scheme

Credit card theft is one of the most prevalent fraud methods. Criminals use increasingly advanced tactics to steal credit card numbers by setting up fake online stores or using phishing strategies to gain access to this information. They then quickly charge purchases to these cards or use them to secure a cash advance.

Impact

Sixty-five percent of organizations discovered credit card data was stolen and then used to make fraudulent transactions in 2013. (RSA-2013 Fifth Annual Online Fraud Benchmark Report)

For businesses that experienced attempted or actual payment fraud in 2012, 43 percent cited credit cards as the method used. (2014 AFP Payments Fraud Survey)

Strategies

  • Adopt company policies for use of your business credit cards that:
    • Assure that credit cards are only used to make purchases on trusted and secure websites
    • Set usage restrictions for transaction types and amounts
    • Prohibit sending credit card numbers through regular email, which is not secure and can be easily compromised
  • Set up Purchase Alerts and Mobile Card Fraud Alerts for all of your debit and credit cards
  • Review account activity frequently

Tools

  • EMV Chip Card Technology

Learn more about fraud-fighting products and services from California Bank & Trust.


Check Fraud

Scheme

Criminals steal checks from mailboxes and then use check washing methods to erase details from or produce their own fake checks. These checks are used to make purchases or withdraw funds.

Impact

In 2014, 77 percent of organizations experienced actual or attempted check fraud. (2015 AFP Payments Fraud and Control Survey)

Strategies

For protecting your own business checking account:

  • Pay bills online when possible
  • Mail checks directly from United States Postal Service mail boxes
  • Use a special check writing pen (available at most office supply stores) to help prevent check washing
  • Order checks with chemically-sensitive paper to deter alteration
  • Review your bank account often to verify checks have cleared

For protection against accepting fraudulent checks:

  • Train employees on the signs of a fraudulent check, including:
  • Missing address or check number
  • Mismatching fonts
  • Handwritten additions
  • Smooth edges without perforations
  • Stains or discolorations
  • Being wary of a low check number. Approximately 90 percent of bad checks are drawn from accounts that are less than a year old.

Tools

  • Lockbox
  • Positive Pay
  • Remote Deposit
  • Outsourced Disbursement

Learn more about fraud-fighting products and services from California Bank & Trust.


Online Account Takeover

Scheme

Through online "phishing" attacks, installation of malicious software (or "malware"), and setting up phony websites that seem legitimate, criminals can steal login credentials to your online banking tools—and then transfer funds from your accounts.

Impact

Among the businesses that detected a fraud attempt in 2012, 71 percent reported that the scheme was an online account takeover with a fraudulent money transfer. (RSA-2013 Fifth Annual Online Fraud Benchmark Report)

Strategies

  • Maintain up-to-date computer security features, including operating systems, firewalls and antivirus software
  • Adopt company policies to ensure employees:
    • Delete unsolicited emails
    • Never download or install files from unknown sources
    • Never click on web ads or pop-ups
  • Always access the bank's website by typing the calbanktrust.com web address or using a bookmark, never by clicking links
  • Be sure the "s" appears in the web address at the top of your browser ("https://") when you visit the California Bank & Trust website
  • Restrict web usage on computers that are used to access online banking to prevent the installation of malware

Tools

  • IBM Security Trusteer Rapport
  • Dual Control
  • Transaction Limits
  • RSA SecurID Hard and Soft Tokens

Learn more about fraud-fighting products and services from California Bank & Trust.


General Fraud Prevention

  • Educate employees about fraud risks and train them on prevention
  • Set strict password criteria
  • Review privacy policies routinely
  • Dispose of sensitive and unneeded client information securely
  • Notify us immediately if you suspect fraudulent account activity or if credentials are compromised online or due to stolen cards
  • Review your California Bank & Trust account and service agreements that include customer protections (e.g., Visa® Zero Liability program) and responsibilities. For example, under your Treasury Management Master Services Agreement, you are responsible for your Internal Security Controls and all instructions we receive with your Access Credentials even if not actually sent by you.