Fraud has been on the rise for several years. Today it’s a fact of life that can’t be ignored. According to the Federal Trade Commission, people reported losing $10 billion to scams in 2023. That’s $1 billion more than 2022 and the highest ever in reported losses. Interestingly, the number of fraud reports (2.6 million) was not much higher than in 2022 (2.5 million), but the losses have soared. This means scammers are becoming more successful in their attacks, with many leveraging A.I. to make them more sophisticated and harder to detect.
How to Prevent Fraud
The number one thing you can do to protect yourself and your company from fraud is to be diligent. It’s simple, but so important. The majority of fraud reports we receive are because a client unknowingly shared information with bad actors. If you receive an unexpected email, phone call, or social media message, look for red flags. Ask yourself:
- Are they prompting you to respond immediately?
- Does the message have spelling errors?
- Was it sent during normal business hours?
- If the message came from someone you know, do they normally send these requests?
- If the request contains a link, does the URL look like a legitimate site when you hover over it?
Do NOT click on any links or call the number in the message, and do not give out any confidential information. If you feel the need to verify the request, use an alternate number or email address.
Additional fraud prevention tactics:
- Avoid mailing checks. Instead, use electronic forms of payment or hand deliver checks if needed. If mailing is necessary, do not use outside blue post office boxes.
- Never share your PINS or passwords. Additionally, it’s crucial to store your PINs and passwords in a secure location, such as a password manager, which not only helps generate complex passwords but also securely stores them, reducing the risk of using the same passwords across multiple platforms.
- Automate any manual processes to cut down on human error.
- Have internal controls and segregate duties in accounts payable to mitigate risk.
- Train every member of your organization on fraud prevention measures. Anyone can be targeted, from interns to CEOs, and they can all result in serious losses.
Be sure to utilize your bank’s fraud prevention tools as well. Midwest BankCentre offers fraud prevention tools like ACH filters, which can block certain types of transactions to protect you from losses. If your business relies on check payments, we suggest implementing Positive Pay, a protective service that automatically matches each check presented for payment with the initial company-issued checks to detect counterfeit checks.
If you suspect that you’ve been a victim or your business has been defrauded, report it to your accounting department and/or call your bank immediately. They may be able to control damage and minimize losses.
Midwest BankCentre takes fraud prevention extremely seriously. As our clients’ trusted advisors, your financial security and well-being is our top priority and we take every possible measure to protect it.
Always report any suspicious activity if you feel you have fallen victim to Midwest BankCentre using this phone number: (800) 894-1350.
Originally published in the St. Louis Business Journals Ask The Expert Column on 5/24/2024 by Danny Pogue, President – Commercial, Retail & Small Business Banking.