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Essential Controls to Minimize ACH Fraud

by : Stan Jaslar

Thieves attempt to steal close to $100 million in ACH fraud every year, and according to the FBI, the majority of the attempted fraud is on accounts from local community banks and credit unions. In 2017, with the rise in popularity of same-day ACH processing, the threat is even bigger—some analysts expect ACH fraud to rise 50 to 100%. To protect your bank and your customers, you need the right controls in place.

Offer Positive Pay

Positive pay is an essential service that you should be offering your commercial clients and possibly even your residential clients. This service lets your customers authorize ACH debits before they clear their accounts. Depending on how you set it up, your customers can manually accept or deny each transaction, or they can send you a list of approved debits which your automated system compares to the pending ACH transactions. When there’s a discrepancy, the system alerts you and you reach out to the customer.

Consider ACH Debit Blocking

You may also want to offer your customers ACH debit blocking services. Through this type of service, your customers can set up filters to catch unusual ACH transactions. For instance, a commercial client may block all transactions that aren’t from an approved list of vendors, or a residential customer may block all transactions over a certain amount.

Warn Your Employees About Phishing Emails

Fraudsters also use phishing emails to get the information they need for ACH theft. On an internal level, these emails may target the managers or loan officers at your bank. If these personnel unsuspectingly click on an infected link or download an attachment, keylogging software gets downloaded onto the computer. This tracks everything your employees enter into the computer and based on this information, thieves get the details they need for ACH drafts as well as other types of fraud.

Make sure that your employees know how to spot suspicious emails. In particular, advise them to never click on links or accept attachments from unknown senders.

Educate Your Clients

Also, remember to talk with your clients about the threats. Use your newsletter to cover phishing emails or other threats, but also encourage your clients to review their accounts and reconcile outstanding checks on a regular basis. If it takes months to notice a discrepancy, it’s harder to find the criminal and recoup the funds. On top of that, remind commercial clients to update account information when employees leave and screen new employees before sharing sensitive data with them.

Use Transaction Fraud Analysis

Consider integrating systems or software that can do transaction fraud analysis as well. Transaction fraud analysis monitors the activity of accounts in your bank and looks for inconsistencies. If it discovers inconsistencies in ACH payments, wire transfers, or internet banking, the system pauses the transaction and alerts you. Safety nets like this can help protect both you and your clients.

At SQN Banking, we’re ready to help you. We offer transaction fraud analysis as well as a range of other tools designed to protect your financial institution and customers from fraud. We offer fraud protection you can trust. Contact us today to learn more about security for your financial institution. 



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