Organizations lose an estimated 5% of their annual revenues to fraud, translating to a global total of nearly $4 trillion. As the financial environment continues to evolve, so do the tactics of fraudsters. Business accounts, in particular, have become a prime target for fraudsters, with the American Bankers Association reporting that 75% of banks experienced fraud attempts in 2020.
In this article, we’ll delve into the emerging fraud schemes targeting business accounts, explore how integrated platforms can enhance fraud detection, and discuss the importance of building customer education programs to prevent fraud without creating friction.
(Source: Association of Certified Fraud Examiners, American Bankers Association)
Emerging Fraud Schemes Targeting Business Accounts
Fraudsters are constantly adapting their tactics to exploit vulnerabilities in business accounts. Some of the emerging schemes to watch out for include:
Business Email Compromise (BEC) Scams
BEC scams involve fraudsters impersonating executives or vendors, tricking employees into transferring large sums of money to fraudulent accounts.
Protect your FI against BEC scams by monitoring for suspicious email patterns, such as unusual sender domains or generic greetings. Additionally, implement email authentication protocols, such as DMARC which allows your institution to specify how to handle unauthenticated emails. This can help prevent fraudulent emails from reaching your customers. It’s also essential to educate your staff and account holders on how to identify and report suspicious emails.
Account Takeover (ATO) Fraud
ATO fraud occurs when unauthorized access is gained to business accounts, often using stolen login credentials or malware. They then use the compromised accounts to initiate fraudulent transactions or steal sensitive information.
Ensure your FI has robust systems to monitor accounts regularly for suspicious activity, such as unfamiliar login locations or unexpected changes to account information. Implement solutions that alert your team to potential threats and train staff to be vigilant about phishing emails or texts targeting login credentials. Deploy password management solutions that enforce strong, unique passwords across all your institution’s accounts and systems.
Synthetic Identity Fraud
Synthetic identity fraud involves creating fake identities using stolen or manipulated information, such as social security numbers or addresses. These fake identities are then used to open fraudulent business accounts, obtain credit, or commit other financial crimes.
To avoid this implement advanced identity verification processes, such as machine learning-based identity validation. Additionally, monitoring for suspicious account activity, such as multiple accounts opened in a short period, can help detect and prevent synthetic identity fraud. It’s also essential to share information and best practices with business customers to stay ahead of fraudsters.
Integrated Platforms: The Key to Enhanced Fraud Detection
To effectively combat fraud, financial institutions need systems that communicate with each other. When your platforms are connected, your institution can identify suspicious patterns across multiple channels simultaneously. Implementing specialized fraud prevention software that integrates with your various systems creates a comprehensive security approach. This integration allows you to detect sophisticated fraud attempts that might otherwise go unnoticed when systems operate in isolation. By ensuring all your systems talk to each other through a unified fraud management solution, you create a stronger defense while maintaining seamless experiences for legitimate customers.
Finli’s Approach to Fraud Prevention
Finli’s real-time transaction monitoring flags suspicious activities the moment they occur, protecting your institution from emerging threats. We implement thorough compliance verification for all new accounts, effectively blocking fraudulent entities before they enter your system. Every transaction is secured with bank-grade protection measures that maintain regulatory standards while ensuring seamless customer experiences.
Building Customer Education Programs to Prevent Fraud
Financial institutions must build programs that educate customers on how to identify and prevent fraud, without creating friction or compromising the customer experience. This can be achieved by:
- Providing clear and concise information on fraud prevention best practices, such as how to identify phishing emails and suspicious transactions
- Offering interactive tools and resources, such as fraud simulators and quizzes, to engage customers and test their knowledge
- Implementing personalized fraud alerts and notifications that inform customers of potential fraud risks and provide actionable steps to take
- Collaborating with customers to develop a shared understanding of fraud risks and prevention strategies
- Continuously monitoring and evaluating the effectiveness of customer education programs, making adjustments as needed to ensure they remain relevant and effective.
By building customer education programs that prevent fraud without creating friction, financial institutions can empower customers to take an active role in fraud prevention, reducing the risk of financial losses and improving overall customer trust and satisfaction.
Takeaways
To stay ahead of emerging fraud schemes targeting business accounts, your FI must stay vigilant and proactive in detecting and preventing fraud, leveraging integrated platforms and advanced analytics to identify patterns and anomalies in customer behavior.
You also must also build customer education programs that empower customers to take an active role in fraud prevention, without creating friction or compromising the customer experience. By taking these steps, financial institutions can reduce the risk of financial losses, improve customer trust and satisfaction, and stay ahead of evolving fraud schemes.
