In a recent analysis, it was discovered that a staggering 55% of businesses across the United States fell victim to payment fraud in 2022. Alarmingly, nearly 60% of these companies reported experiencing at least one attempted fraud incident within the past year. However, these figures may not fully capture the extent of the issue.
Jeff Taylor, the head of Commercial Fraud Forensics, expressed his concern about the reliability of these statistics. “I believe these numbers could be even lower than reality, as many individuals are hesitant to come forward and disclose their experiences as victims of fraud,” he remarked. This sentiment underscores a growing consensus: payments fraud is becoming increasingly prevalent, compelling businesses to adopt a proactive stance in identifying and mitigating such threats.
Recently, Taylor, alongside Meriwether Martin, who manages the Non-Financial Risk Management group, engaged in a discussion with Tim Mills, the manager of Regions’ Emerging and Digital Payments Group. Their conversation delved into the troubling rise of payment fraud targeting businesses and explored strategies organisations can implement to safeguard themselves against these deceitful practices.
Among the various tactics employed by fraudsters, impersonation fraud has emerged as one of the most frequently encountered methods. Martin pointed out that criminals often masquerade as legitimate vendors or even banking institutions. In cases of vendor impersonation, for instance, fraudsters will pose as a trusted supplier that a business regularly transacts with. They may reach out through official-looking communications requesting that the company alter its payment instructions—often directing funds to a fraudulent account. When this deceitful practice occurs via email, it is typically referred to as Business Email Compromise.
As the conversation unfolded, it became clear that awareness and vigilance are paramount in combating the rising tide of payment fraud. Organisations are urged to stay informed about these typical schemes and take necessary precautions to protect their financial assets from those who seek to exploit vulnerabilities.
In the world of finance, a growing menace lurks in the shadows as fraudsters increasingly impersonate reputable banks like Regions and other financial institutions. Martin sheds light on this troubling trend, explaining how these deceitful actors mimic legitimate communications—crafting emails and text messages that appear strikingly authentic in their efforts to extract sensitive information from unsuspecting customers.
As technology evolves, so too do the tactics of these criminals, making their imitations more convincing than ever. This raises a pressing question for businesses: How can they safeguard themselves against such sophisticated schemes?
To navigate this treacherous landscape, Taylor outlines three key strategies that companies should adopt to bolster their defences against fraud.
First and foremost, businesses must take proactive measures to protect their digital domain. Taylor emphasises the importance of conducting a comprehensive evaluation to uncover potential weaknesses within their systems. Collaborating closely with IT departments or external vendors is essential to ensure that firewall protections are robust and that all software is consistently updated with the latest patches. Additionally, implementing strong password policies and utilising banking products like Positive Pay and ACH Alert can further enhance security measures.
Next on the agenda is the establishment of an employee training program. “Employees are both the most vulnerable and valuable assets within any organisation,” Taylor points out. Therefore, it’s vital to equip them with the knowledge necessary to identify potential scams and understand how to respond to threats. Regions offer a variety of resources at com/stop fraud to assist businesses in this endeavour. Furthermore, Taylor recommends conducting regular phishing drills to test employees’ ability to recognise and report suspicious activities effectively.
Lastly, developing a comprehensive fraud and risk governance plan is crucial. This plan should articulate the organisation’s tolerance for risk while outlining a clear response strategy in the event of a fraud incident. It should include contact details for all key personnel involved in recovery efforts. “Think of it as part of your business continuity plan, akin to what you would activate during a natural disaster,” Taylor explains.
By embracing these practices, businesses can better fortify themselves against the evolving threats posed by fraudsters, ensuring they remain vigilant in an increasingly perilous environment.
Mills acknowledged that there isn’t a one-size-fits-all remedy for combating fraud. However, when he inquired about a straightforward action that companies could take immediately to kickstart their anti-fraud measures, Taylor had a practical suggestion: implementing a callback verification system for payment requests.
In the realm of Regions, this approach is referred to as Stop-Call-Confirm. The protocol is simple yet effective. When employees receive an email or text message that requests changes to a payment or even initiates a new payment, they don’t rush ahead. Instead, they pause—this is the “STOP” phase. They take a moment to ensure that everything is in order.
Next, they move on to the “CALL” part of the process. Rather than dialling the number provided in the suspicious message, they reach out to the individual who supposedly sent the request using a known and trusted contact number. This crucial step helps to verify whether the request is genuine or if it’s part of a deceptive scheme.
Finally, they complete the cycle by executing the “CONFIRM” stage. By communicating directly with the requester, they can ascertain the legitimacy of the transaction before proceeding with any changes. This method not only safeguards against potential fraud but also instils a sense of diligence and care within the organisation. It’s a simple yet powerful way for businesses to bolster their defences against fraudulent activities right from day one.
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