Criminals are getting more sophisticated in how they steal money from businesses of all sizes, though small businesses are especially at risk as they may not have the personnel and resources to catch a fraud attempt on their own. If you’re a small business owner wearing many hats, we understand how hard it can be to run a business, and we want to make it as easy as possible to keep your business profitable and your funds secure.
The right approach to business banking fraud protection involves separating your business and personal finances, using the right digital tools to monitor your accounts and set up alerts, and following the best practices for business and banking security. This is especially true as criminals are using all kinds of digital tools to trick you into sending them money they didn’t earn or giving them access to your accounts.
A recent report by the Federal Reserve revealed that bank account takeover fraud remains a persistent threat for financial institutions, with increases in financial losses as well as the frequency and sophistication of account takeover schemes. This trend is driven by criminals using techniques such as impersonation, social engineering, and compromising someone’s credentials through an increasing level of sophistication in social engineering-based attacks. This includes sharp increases in account business email compromises, unauthorized debits, and account takeovers, with substantial growth in impersonation and digital payment fraud.
Why Business Banking Fraud Prevention Matters
When criminals steal your funds it can lead to all sorts of problems, especially for small business owners. The financial impact can significantly damage your profitability and your reputation as well. Customers who see their payment information misused or vendors that don’t get paid on time could be reluctant to do business with you.
Of course, it can also take up significant amounts of time for victims of fraud to recover. The time you have to spend investigating the source of a scam, changing your accounts, notifying anyone who might be affected, and reporting it to the authorities can result in a major loss of productivity. That’s why fraud prevention for small businesses is so important; it can help reduce your risks of getting scammed in the first place.
Separate Business and Personal Finances
Many small business owners are sole proprietors or have a small number of employees or contractors working for them. It can be tempting for someone to run a business using their own personal checking account, especially at first. Separating your business and personal finances with a business checking account is important for many reasons:
- It’s easier to keep track of business expenses and profitability.
- It prohibits employee access to your personal funds.
- Makes it easier to justify your business deductions to the IRS or state taxing authorities.
- Reduces the financial impact that fraud against your business could have on your personal funds.
Use Digital Banking Tools to Monitor Account Activity
Business online banking security starts with making the most of the tools you already have available from your local bank.
Set Up Account Alerts
You can set up account alerts for transaction alerts based on the parameters you choose, such as:
- When your balance drops below a certain level.
- Transactions or large transfers that exceed a certain dollar amount.
- Notifications for any password changes or suspicious activities.
Review Transactions Frequently
One way to reduce business fraud risk is also one that makes good business sense—to review your transactions on a regular basis to look for signs of unusual activities while also making sure that your payments are being received and made on time.
Use Secure Online and Mobile Banking
We make it easy for you to set up alerts and monitor your accounts, as well as initiate payments using our online and mobile banking platforms. With our mobile banking app you can also deposit checks using your phone, without having to visit a bank branch or an ATM.
Add Layers of Protection to Payments
Business banking best practices involve making a most of your bank’s fraud protection tools, having the right payment procedures in place, and training your staff to remain vigilant when it comes to protecting your accounts, email, and payment information.
Use Positive Pay
The FBI and U.S. Postal Service issued an alert last year that criminals were stealing checks from mailboxes and blue collection boxes. They then alter the checks to change the recipient and the amount, or they use software and modern printers to create several forgeries that are typically in small amounts, in an attempt to steal as much money before someone notices.
Scammers have also been known to hack into email systems, send fraudulent emails, and use information from online sources to impersonate someone and initiate bogus payments or change someone’s payment information. For example, they might impersonate a vendor and try to convince someone that the vendor’s bank account was changed. Another tactic is to submit phony invoices for payments.
Positive Pay can help you catch these kinds of fraudulent activities, before scammers can still your funds. You can use Positive Pay with both paper checks and automated clearinghouse (ACH) payments. When you issue checks or ACH payments, you have this information sent to our Positive Pay system. When someone attempts to receive a payment, our system will automatically compare each check or payment for details such as the date, the amount, the check number, and the recipient. If something doesn’t line up, we’ll flag it for your review so you can decide whether to approve or reject payment. This can reduce your risk of fraud as well as the time you spend reconciling your accounts and watching for signs of illegal activities.
Require Approval Steps for Payments
Every business should have well-established procedures for making and receiving payments. If your business receives an email that appears to be from a vendor trying to change their payment information, one of your employees should call and verify this information, using a contact number that they know is legitimate (not the number that’s listed in the email).
The same goes for phone calls that involve changing someone’s payment information. Depending on how many employees you have, you might require the approval of more than one person to authorize a payment or change payment information. You should also train your employees to avoid making rushed decisions. Scammers often try to create a sense of urgency, to get someone to act without thinking about what they’re doing or to take the time to verify a request.
Watch for Check, ACH, and Wire Fraud
Scammers will try all kinds of ways with multiple businesses trying to steal their funds, and their tricks only have to work once to make a profit. Don’t just initiate a payment without verifying that you already received an invoice and verified that it’s legit.
Build Safer Savings Habits for Your Business
Here are a few things to consider for how to protect your business against fraud:
- Teach your employees how to recognize and report phishing attempts.
- Use complicated passwords and password reset questions that would be hard for someone to guess (not your home address or your pet’s name).
- Take a close look at any email involving invoices or payments. Is it from the client’s actual email address or is it a spoofed alternative?
- Verify every email or text that involves tapping or clicking on a link. A scammer might use this to hack into your email system, gain access to your bank accounts, or steal passwords.
- Be careful what you post online about your business and yourself. Scammers can use artificial intelligence to pull information from multiple sources and use it to hack into the passwords of yourself and your employees or impersonate someone to initiate a payment.
- Use multifactor authentication whenever possible, to protect your systems from being hacked or misused.
- Maintain firewalls and software updates.
- Never use an unsecured device or network (such as free public Wi-Fi) to access any of your sensitive business systems, such as email, accounting, and banking.
How FVCbank Supports Safer Business Banking
Our treasury management tools make it easy for your business to manage your funds, make and receive payments, while also protecting your accounts through alerts, Positive Pay, and secure online and mobile banking platforms. We can also provide your business with a scanner that you can use to deposit checks remotely.
Take the Next Step Toward Stronger Fraud Protection
At FVCbank, we want all of our business customers in the DMV to succeed. If you’d like to review your business banking set up, enable account alerts, and explore our digital banking tools, please contact one of our representatives today by calling 703.436.4740. You can also contact us online, or visit one of our locations in Fairfax County, Loudoun County, Arlington County, Virginia; and Washington, DC.
