Fraud Worries Continue to Dominate the Conversation

Attendees of the recent treasury and cash management conference, the Windy City Summit, covered discussions on treasury management trends like rates, cards and real-time master payments, but one topic continued to be a significant threat that touches on nearly every conversation, especially those that focus on technology: fraud.

The financial industry reeled from the Equifax breach of 2017—a massive data breach that affected nearly 143 million customers around the world—prompting banks to put stronger protections in place. However, criminals continue to look for opportunities to compromise systems nearly every day from every possible inlet, such as cards, wire transfers, ACH and email takeovers.

“ACH fraud has been of significant concern for clients,” said Chuck Garcia, Former Executive Vice President and Director of Commercial Deposits and Treasury Management at Associated Bank. “A fraudster gets hold of a client’s credentials. They track them and see what they’re doing and then, at the right time, go in and create their own false transactions.

“They don’t have to do them in large quantities, but they hit them and that money, now with same-day settlement of ACH versus a two-day settlement, goes much quicker,” Garcia continued. “Not as quickly as a wire transfer, but it’s a little more difficult for corporations to be able to see that money gone because they’re not getting the notification immediately.”

How can companies fight these kinds of intrusions? According to Garcia, it can be as simple as exercising standard diligence on the web. For example, organizations should encourage employees to not click on unfamiliar emails or unknown links that may offer Starbucks cards or other rewards for taking “a brief survey.”

On a deeper level, fintech companies have also developed better tools to mitigate opportunities for these attacks, such as automated fraud alerts or ACH blocks on unauthorized debits.

Are those committing fraud being caught? Unfortunately, no. Technology fraud is difficult to track down and the capture rate is incredibly low. “They’ll hit one place today, and be off to another entirely different location or country, for the matter, the next day,” said Garcia.

The emphasis should still rest on the prevention of fraud. Once a company has been victimized, it can get some assistance from its financial institution, but, according to Garcia, “if it has already gone into the system, depending on whom it is or where it went, that gets far more difficult.”