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Safeguarding and Controlling Payment Fraud for Your BusinessBy Gale Ige Young, Vice President and Manager,
Cash Management
The already complex process of running your business has an added component – fraud. You struggle daily to stay ahead of your competition and the last thing that you need is finding out that your hard-earned funds have been diverted by fraud.
In a survey by the Association for Financial Professionals, respondents reported safeguarding their organizations against fraud as a top concern.*
Almost three-quarters (72%) of organizations surveyed experienced attempted or actual payments fraud in 2006. Check fraud and ACH debit fraud topped the list as the most frequently experienced types of fraud. More than half (58%) of those surveyed experienced financial losses from fraud, with a median loss of $23,300. The companies that avoided financial loss did so primarily by using defensive services provided by their financial institution.
Check Fraud
While paper checks are declining as the preferred payment method of choice, many businesses and consumers continue to write checks. Take a look at a check and you will see the wealth of information available. Included on a check are name and address, sometimes a telephone number, the checking account number and the bank routing number. Opportunity for fraud is available during any part of the check clearing process, from the clerk that starts the check clearing process to the courier that transports the check to the paying bank. Add to that mix the potential theft of checks from your office or mailbox.
Common forms of check fraud include altered payee names; counterfeit checks with the organization's own MICR (magnetic ink character recognition) line but another organization's name; and lost, stolen or counterfeit paychecks.
Central Pacific Bank can help your business control check fraud with our Positive Pay service. The Positive Pay service provides you with a strong, reliable means to prevent check fraud by reconciling check issuance files against check presentment files. When there is a difference in records (called "exceptions"), you are notified and have the opportunity to either reject or approve payment of the "exception" checks.
Central Pacific Bank also makes electronic transactions, otherwise known as ACH, available to our business clients. Eliminate the need to write checks to pay your vendors by using ACH (automated clearing house). ACH is safe and reliable and provides reporting capabilities, as well as the ability to manually create and import transactions from your accounting system.
Both Positive Pay and ACH are available through Central Pacific Bank's business Internet product – iBusiness Central.
ACH Fraud Prevention
While ACH transactions that your business creates to eliminate the need to write a check are within your control, that is not the case with incoming ACH transactions that can debit your account without your authority. While safer than paper checks because of the limited amount of information available, ACH transactions still have risks associated with the process. Fraud is made possible when account information is provided to or intercepted by the wrong individuals and can result in unauthorized debits to your account.
The standard cautions of providing your bank information only to trusted companies and protecting account information by not leaving documents unprotected that contain that information can mitigate most of the risk; however, it is inherent on every business to closely monitor account activity.
Central Pacific Bank can help you with account monitoring of ACH transactions with our ACH Debit Block and/or Debit Filter services.
ACH Debit Block service will stop the posting of any ACH debit transactions to the designated account. Any ACH transaction that attempts to post to the designated account will be returned as unauthorized. ACH Debit Filter service will stop the posting of unauthorized ACH debit transactions. You provide us with the information on those companies that are authorized to debit your checking account (utility payments, automobile payments and insurance payments may be examples of authorized payments). Central Pacific Bank's ACH Debit Filter service will allow these authorized payments to post to the designated checking account. All other ACH debit transactions will be returned as unauthorized.
Let Us Help With Your Fraud Protection Needs
Central Pacific Bank can help you and your business control risks that may lead to fraud in your checking account. Our Positive Pay, ACH, and ACH Block and ACH Filter services are tools that can help you and your business with fraud prevention.
Contact our Cash Management Department at 544-6815 for further information.
The articles and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material. All credit products mentioned in this publication are subject to credit approval and certain restrictions apply. Your Money Matters is published by Central Pacific Bank Marketing Division. Images may be from one or more of these sources: ©Jupiterimages, ©Getty Images, ©iStock, ©PhotoSpin. © 2008 Central Pacific Bank