Fraud Is Crushing Small Businesses—And Banks Can’t Afford to Sit on the Sidelines
America’s small businesses are under constant attack. From invoicing scams to identity theft and unauthorized payments, fraudsters target SMBs at alarming rates—and the financial fallout is devastating. What makes matters worse? Many financial institutions don’t offer small businesses the right fraud prevention tools and leave their customers to fend for themselves in an increasingly sophisticated environment.
Over the past few years, this issue has gotten out of hand. According to the Association of Certified Fraud Examiners, small businesses suffer a median annual fraud loss of $200,000—nearly double that of larger firms. Most of these businesses lack dedicated fraud prevention controls, and in roughly 60% of cases, the losses are never recovered.
This number has surged 70% since 2020, as fraud losses have gone up amongst SMBs and cost financial institutions in the US alone billions each year. A LexisNexis study found that for every $1 lost to fraud, U.S. financial institutions spend an average of $4.41 on investigations, reimbursements, fines, and lost business.
Small businesses simply aren’t in a position to fight these levels of fraud on their own. They don’t have expertise or resources to implement sophisticated fraud prevention systems—and they shouldn’t have to. This kind of protection should come from their financial institution. But too often, banks offer little more than post-incident apologies and paperwork, leaving SMBs exposed and unsupported when it matters most. The traditional response from Financial Institutions after monetary losses—”file a report with the FBI”—isn’t just ineffective. It’s a failure to protect the very businesses that banks and credit unions claim to serve.
The upcoming NACHA 2026 fraud prevention rules aren’t just another compliance checkbox—they’re an opportunity for financial institutions to lead. By embedding stronger fraud protections into payment processes, banks and credit unions can not only meet regulatory requirements but also deliver real value to their small business clients. These changes give institutions a clear path to reduce risk, protect deposits, and build deeper trust with SMBs who are increasingly vulnerable to sophisticated fraud tactics. With the right tools and partners, compliance becomes a competitive advantage—and a chance to truly support the businesses that drive local economies.
Understanding the Threat—and the Path Forward
The types of fraud targeting SMBs today go far beyond phishing emails or one-off scams. Fraudsters are creating fake businesses to launder money, using stolen identities to open accounts, and even intercepting legitimate invoices to reroute payments. These aren’t isolated incidents—they’re systemic attacks exploiting the very infrastructure small businesses rely on to get paid.
Without embedded safeguards, SMBs have no way to verify if a new customer is real, if payment information has been compromised, or if their own business data is being spoofed elsewhere. And when something goes wrong, they don’t just lose a transaction—they risk damaging customer relationships, draining cash flow, and exposing their bank to liability.
Finli helps prevent these scenarios before they occur. Our invoicing and billing systems continuously monitor transactions and user behavior to flag anomalies in real time. We vet business entities, verify customer identities, and maintain a dynamic risk engine designed to spot fraud patterns across our network. These protections are built into the suite tools SMBs already use within our platform—quoting, invoicing, payment collection—making fraud prevention seamless and scalable.
For financial institutions, this means reduced exposure, greater visibility, and meaningful progress toward NACHA 2026 compliance. While not a complete compliance solution on its own, Finli’s infrastructure plays a critical role in helping banks and credit unions strengthen their fraud prevention efforts—by equipping small business clients with built-in protections and contributing to the broader risk management strategy required under the new rules.
Making Sense of the NACHA 2026 Fraud Rules
The new NACHA rules set to roll out in 2026 mark a major shift in how financial institutions are expected to detect and prevent fraud—especially when it comes to ACH payments. For years, the standard was vague: institutions needed “commercially reasonable” systems. Now, that’s no longer enough. NACHA is making it clear—if you’re involved in moving money, you’re responsible for actively spotting fraud before it happens.
So what does that actually mean?
If you’re an Originator, ODFI, Third-Party Sender, or Service Provider, you’ll be expected to have risk-based systems in place to catch fraud initiated under “false pretenses.” That includes things like a fake business submitting payroll files, someone pretending to own an account, or a fraudster using a stolen identity to push payments. You’ll need to monitor for unusual transaction activity, shifts in behavior, and changes in customer usage patterns—and update those systems regularly as fraud tactics evolve.
Receiving Depository Financial Institutions (RDFIs) will have their own set of responsibilities. You’ll need to flag suspicious incoming credits, like accounts receiving unusually high volumes or transactions coded incorrectly. And for the first time, NACHA is giving RDFIs formal authority to return entries they believe were initiated fraudulently—thanks to a new return code, R17. This gives receiving institutions more power to stop fraud in its tracks before funds disappear.
There are also some technical updates that will help with detection:
- New standard entry codes like “PAYROLL” and “PURCHASE” will become mandatory to help FIs better categorize transactions.
- The definition of “false pretenses” has been clarified to cover things like business email compromise, vendor impersonation, and other common attack types.
The rollout will happen in two phases:
- Phase 1 (March 20, 2026): Targets large institutions that processed 6M+ originated or 10M+ received ACH entries in 2023.
- Phase 2 (June 19, 2026): Expands to all remaining originators, third-party senders, and RDFIs.
The good news? This isn’t just more red tape. These changes give banks and credit unions a real chance to step up—protecting both their clients and their own risk exposure. With the right systems in place (or the right partners like Finli), FIs can stay ahead of compliance requirements and offer meaningful fraud protection where their SMB clients need it most.
Where to Start: A Roadmap for Financial Institutions
With NACHA’s 2026 fraud prevention rules approaching, the institutions that act early will be best positioned to protect their customers, reduce risk exposure, and turn compliance into a competitive advantage. Here’s how to get started:
- Assess Your Existing Risk Infrastructure
Begin by evaluating how your institution currently monitors ACH activity—both incoming and outgoing. Where are the gaps? Are you able to flag unusual patterns, confirm sender identity, and intervene before funds are lost? - Evaluate Your SMB-Facing Tools
Small businesses are a growing target for fraud, yet most lack the resources to stand up their own fraud prevention infrastructure. Consider what tools you’re offering them today—and whether they’re helping or leaving your customers exposed. - Align Internal Teams
Compliance, operations, treasury, and digital banking teams all need to be aligned on how fraud is detected and managed under the new rules. Ensure your staff understands how to recognize high-risk behavior and how to take swift action—especially using tools like the new R17 return code.
How Finli Helps Banks Deliver Fraud Protection and Compliance—at Scale
Finli’s invoicing and billing platform was built for small businesses—but with financial institutions in mind. When you offer Finli to your SMB customers, you’re not just providing modern billing tools. You’re embedding fraud prevention directly into their day-to-day operations.
Here’s how it works:
For SMBs: Every transaction initiated through Finli goes through payer verification, real-time monitoring, and transaction-level anomaly detection. That means SMBs are protected from impersonation, invoice redirection, and unauthorized payment methods—without needing to buy or manage fraud software themselves.
For Financial Institutions: You gain visibility into customer and transaction-level behavior. Finli’s systems help you meet NACHA’s evolving requirements by:
- Verifying business identity and payment authority
- Monitoring transaction velocity and behavioral anomalies
- Providing clear audit trails and dashboards aligned to ACH fraud prevention standards
- Equipping your teams with data-driven tools to act quickly and return suspicious entries under R17
Whether you’re working toward Phase 1 or Phase 2 compliance, Finli helps reduce operational lift while enhancing your fraud detection capabilities—through a white-labeled platform that integrates seamlessly with your existing systems.
The Opportunity Ahead
Fraud prevention is no longer optional. But it doesn’t have to be a burden, either. With the right strategy and partners, NACHA’s new rules can become a catalyst for smarter systems, safer transactions, and stronger SMB relationships.
At Finli, we’re helping financial institutions across the country turn compliance into a value-add—and protect the businesses that keep our communities running.
Ready to get started? Let’s talk.
