ACH Payroll Processing & Fedwire Blog

ACH Payroll Processing & Fedwire Blog

3 Ways to Fight ACH Fraud

Wednesday, March 09, 2016
3 Ways to Fight ACH Fraud

As time goes on and technology becomes more and more advanced, fraudsters find new and improved ways to steal people's sensitive information. Unfortunately, Automated Clearing House payments (ACH) – used by businesses for direct deposit, cash transfers and more – has become a target for hackers since they only need a bank routing number and checking account number to do their damage, according to CSO. Companies need to develop strategies for preventing these scenarios to better protect their employees and customers. Let's take a look at three examples:

1. Instruct employees on safe online practices
Sometimes, ACH fraud finds its roots from an internal source. Most often, employees partake in unsafe online actions, leaving them susceptible to theft of critical data. Instances of spear phishing – where fraudsters send workers with access to ACH credentials a professional-looking email, which when opened, will allow hackers to install software to help them gain passwords in a matter of minutes – are still very common, according to TechTarget. Unsuspecting employees could think nothing of the situation and fail to report the event, putting the company further in danger.

Organizations must educate their workers on safe online practices to reduce the possibility of ACH fraud. People should avoid opening any suspicious correspondence and reach out to colleagues for verification if their names were at all attached to the message. Companies should also create a procedure for reporting and handling these types of cases.

"Positive pay examines companies' requested transactions against current ACH filters."

2. Implement positive pay tactics
Businesses need to introduce methods that will lessen the likelihood of ACH fraud. One such technique is positive pay, which examines companies' requested transactions against current ACH filters, according to Digital Transactions. If the two elements don't match, the bank will notify the organization. The business can then accept or decline the payments. This protective step gives companies additional time to figure out if activity is legitimate or fraudulent. Organizations can complete this practice on a daily basis to ensure same-day transactions are accurate.

3. Complete regular reviews
It may seem like common sense, but organizations should analyze their credits and debits on a frequent basis. CSO suggested completing this practice daily, as a way of pinpointing any fraudulent activity. It's important for companies to monitor their accounts as often as possible to recover any stolen funds they discover missing. Although consumers often have up to 60 days to report theft, businesses sometimes only have a few days. This rule of thumb makes it even more crucial for departments in charge of ACH processing to check their records often.

As ACH payments become more advanced – including gaining same-day processing – companies will need to find ways to combat fraudsters' increasingly intelligent tactics. By educating employees on proper online practices, introducing positive pay and regularly reviewing their accounts, businesses can better protect the sensitive information of their workers and customers.

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