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Payments fraud is a serious and ongoing challenge for treasury practitioners, requiring an increasing amount of vigilance and foresight. According to the 2023 AFP Payments Fraud and Control Survey, 65% of organizations reported being victims of payments fraud in 2022, including attempts and successful attacks​​​​. This statistic highlights the need for robust fraud prevention strategies.

Payments fraud comes in several flavors, but Business Email Compromise (BEC) is especially prevalent. In fact, BEC affected 71% of victim organizations in 2022. BEC scams are a type of social engineering (like phishing) that aims to deceive organizations into making fraudulent payments. Additionally, traditional payment methods like checks continue to be vulnerable, with well over half (63%) of surveyed organizations experiencing check fraud​​​​.

Fighting Payments Fraud

To combat these risks, treasury practitioners can adopt several strategies. 

Comprehensive Staff Training

Regular training sessions keep staff updated on the latest fraud tactics, especially payment scams. Equip employees to recognize phishing emails and understand the correct procedures for verifying payment requests. Role-playing scenarios and regular drills can reinforce this training, ensuring staff remains vigilant and prepared to identify fraudulent activities.

Robust Internal Controls

Establishing strong internal controls is vital. Organizations should consider multi-factor authentication, dual approval for significant transactions, and regular audits of financial processes. Additionally, setting up internal controls for payment authorization and transaction verification can significantly reduce the risk of fraud. Internal controls are not a “set-it-and-forget-it” task. Teams must regularly review and update these controls in response to emerging threats.

Advanced Technological Solutions

Employing advanced fraud detection tools like AI and machine learning can help identify unusual transaction patterns and alert teams to potential fraud. Secure payment systems and encryption technologies can also safeguard sensitive financial data from unauthorized access.

Ongoing Security Updates

New threats emerge daily, so treasury practitioners must regularly update their security measures to guard against the latest attacks. This includes updating all software, using strong and regularly changed passwords, and consistently reviewing access controls to sensitive financial information.

Frequent Risk Assessments

Conducting regular risk assessments helps in identifying vulnerabilities within the organization’s payment systems. These assessments should be comprehensive, covering all aspects of the payment process, from initiation to settlement.

Establishing a Payments Fraud Response Plan

A well-defined incident response plan is crucial. This plan should outline what steps to take in the event of a fraud attempt, including immediate actions to prevent loss and procedures for investigation and reporting.

Promoting a Culture of Security Awareness

Creating a culture where every employee feels responsible for fraud prevention can be highly effective. Encourage open communication about potential threats and reward employees for identifying and reporting suspicious activities to foster a security-first culture.

A Proactive Approach to Payments Fraud

The risk of payments fraud remains high. An effective security stance requires a proactive approach that combines education, technology, and strong internal controls to guard against existing and emerging threats. Building a security-minded culture can not only protect your organization against financial losses but also maintain the integrity and trustworthiness of the organization.

Are you looking for help in creating a robust security defense against payments fraud? Our team of seasoned payments experts can help you build and refine a strategy tailored for your organization. Reach out for a free consultation today. 

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