In today’s connected world, small businesses may be at increased risk for financial fraud. Business owners and employees should learn to recognize business banking scams and be familiar with best practices to prevent fraud. Here are some common financial scams that impact businesses:
ACH Fraud
What is ACH fraud? ACH fraud can occur when hackers obtain your business’s account information and send a payment to themselves. Watch out for phishing attempts and impostor websites when making payments online – hackers will use these tools to collect routing and account numbers.
How can you prevent ACH fraud?
- Use a dedicated account for your ACH transactions.
- Set up Royal’s real-time account alerts so you can identify unexpected transactions quickly.
- Get to know normal ACH transactions for your clients and vendors so you can spot unusual activity.
Wire Fraud
What is wire fraud? Scammers will attempt to impersonate a vendor or customer and provide wire instructions that direct money to their accounts. Once a wire is sent, funds move between accounts immediately, and it’s nearly impossible to reverse the transaction.
How can you prevent wire fraud?
- Call the client or vendor directly if you receive an unusual wire request. Be sure you are calling a phone number that you’ve verified via a reliable source.
- Watch out for impostor emails containing wire instructions. Odd email addresses, strange message formatting, and errors in the message’s information can be signs of a scam.
- Limit the number of employees who can approve or send wire transfers from your business accounts.
Invoice Fraud
What is invoice fraud? Fraud actors target small businesses with fake invoices, requesting payment for goods or services that appear legitimate. If the business pays the invoice, the fraudster collects the money.
How can you prevent invoice fraud?
- Double check your invoices against purchase orders and contracts.
- Ask the vendor to provide the name of the person who authorized the invoice.
- Be extra cautious about invoices requesting fast payments that are different from your usual invoice terms.
For a small business, fraud can present a significant risk. Not only could fraud result in the loss of your business funds and cash flow, but it could also take up valuable time that could be better spent serving the needs of your customers. By staying aware of the potential ways that fraud can happen, small businesses can help protect themselves.
Looking for more resources to help protect your business from fraud?
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