Insights from Gerry Anderson, CPA Logicon Solutions
In this day and age in 2018, you'd think we have completely moved toward electronic payments. However, only 51 per cent of B2B companies use cheques as the most common payment method, even though electronic payments are increasing in popularity. What we must acknowledge is that fraudsters are becoming more and more sophisticated. The most important thing to remember is to get more tech savvy; don't rely on any outside party or the bank to do it for you.
In fact, 74 per cent of finance professionals report that their companies were victims of payment fraud in 2016. Remember, these are finance professionals, which goes to show that it can happen to anyone. 75 per cent of organizations that got hit with fraud attacks in 2016 experienced cheque fraud, which is an increase from 71 per cent in 2015. Although computers and ERP systems are in place to help improve your business's productivity, they cannot understand ulterior methods which may turn out to be fraudulent.
Common types of payment fraud
1.Cheque: As noted earlier, cheques are most frequently targeted by those committing or attempting fraud as it is the most common way of making payments.
2.Electronic transfer payments: EFT (Electronic Funds Transfer) and ACH (Automatic Clearing House) can be used interchangeably, as both involve moving funds electronically between bank accounts. Even though you must validate information correctly, fraudsters can still attack by changing one or two numbers and you can lose payment completely.
3.Credit cards: If you are impacted by fraud, no credit card company covers all losses. Fraudsters can walk by, pick up your card the minute you look away, and they can start using your credit card immediately. The tap function on your credit card is another factor to be wary about. A way of protection would be to cover the tap area in aluminum foil so you can't be scanned. It is crucial to check your statements on a regular basis and to report any suspicious transactions.
4.Wire transfers: When fraudsters attack wire transfers, it is a lot like identity theft. They need to get enough information and background on the company to create identity theft in corporate world.
Concluding thoughts
Fraudsters are patient and sophisticated and they prey on both people and process vulnerabilities.
ERP systems have become very advanced and can provide great controls to avoid payment fraud. While having the process management and discipline is crucial, it is necessary for the people using the ERP system to be educated, trained and situationally aware of fraud, otherwise they are a weak link for your company's fraud protection. Make sure to stay ahead of the game by keeping yourself and your company informed and educated about payment fraud!
