You’ve likely read about the risks of B2B payment fraud. But you may not be aware of just how rampant the issue has become. According to the 2019 Association for Financial Professional (AFP) Payments Fraud and Control Survey, 82% of financial professionals surveyed report that their businesses experienced attempted or actual payment fraud in 2018 – the largest percentage since AFP began tracking such activity†.
Moreover, criminals often take advantage of crisis moments to increase their efforts. The COVID-19 pandemic presents that kind of opportunity and business owners need to be aware of the risks and act to manage, control, and mitigate those risks.
1. How it happens
Payment fraud occurs through a variety of methods, from age-old schemes to new, technology-driven tactics. Here are the most common types reported in the AFP survey†:
- Check Fraud remains one of the most prevalent forms of payment fraud, primarily because businesses commonly use paper checks.
- Business Email Compromise targets individuals who perform wire transfer payments by requesting payments to a seemingly legitimate account.
- Wire Transfer Fraud has risen sharply, from 27% in 2014 to 45% in 2018. The dramatic increase is likely due to the increasing number of Business Email Compromise scams.
- Automated Clearing House transactions have historically been considered more secure than checks. However, in 2018, 33% of survey respondents reported ACH debit fraud, and 20% of survey respondents reported ACH credit fraud.
2. Why it matters
Financial losses from payment fraud can cripple a business, but damage to the reputation of an organization should also be considered. Businesses need to be aware that criminals are getting more savvy, and technology is getting more complex. Criminals may use the COVID-19 crisis in their schemes, and taking steps to mitigate fraud is critical. Without it, the chances of being compromised are almost certain.
3. What you can do
The first step to managing and mitigating payment fraud is to acknowledge that it’s a reality. Then, create a plan. Talk to a Huntington banker to better understand the ways you can minimize exposure for your business.