Processing online payments and receiving direct deposit transfers are some examples of electronic financial transactions using automated clearing house (ACH) transfers. If your business accepts and processes online payments and other electronic financial transactions, then you’re using ACH.
Automated Clearing House (ACH) transfers refer to digital, bank-to-bank money transfers. Financial institutions like banks use this processing system to aggregate financial transactions for processing, usually happening thrice a day.
What Is ACH Fraud?
The National Automated Clearing House Association (NACHA) runs the ACH network since 1974. This electronic funds transfer system provides ACH transactions such as payroll, tax refunds, direct deposit, tax payments, consumer bills, and other payment services in the United States. However, fraud could also happen in ACH.
ACH fraud pertains to the theft of funds via the ACH financial transaction network linked in the banking system of the United States. When someone sends an electronic payment, it lingers in the ACH network or central clearing facility, awaiting banking destination clearance. You can read this article to find out more about how ACH fraud works.
ACH Fraud Signs
ACH transfers are convenient, fast, and easy ways to receive payments from your customers and pay your business bills too. But how do you know if there’s ACH fraud in your business? Learn the signs of ACH fraud within your business by reading below.
1. Receiving Suspicious Emails
Cybercriminals target ACH transactions because the ACH network is the central hub of digital payment transactions linked with the national banking system. That’s why they use different infiltration methods and exploit system vulnerabilities.
One sign of an ACH fraud attempt is phishing or receiving suspicious emails. Phishing emails can lure business owners if they’re not keen, compromising their financial data and their customers’ sensitive information. Protect your business from fraud by knowing the warning signs of suspicious emails.
Authorized employees for ACH transactions deliberately receive an email, leading to an infected site. Once it’s clicked, a keylogger is installed, allowing access to the authentication information. Once the cybercriminal can access the data, the thief impersonates the organization’s authorized representative and then withdraws the funds.
Here are the warning signs of phishing or suspicious emails:
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Demanding Action Or Sence Of Urgency
If an email threatens negative consequences, treat it with suspicion. Reading the email quickly leaves room for not detecting inconsistencies of a phishing campaign.
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An Unfamiliar Greeting Or Message Tone
Suspect phishing if you read an email that seems inappropriate such as an employee who becomes overly familiar or friendly in the tone of messages. Somebody must be using your employee’s email to steal valuable information.
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Email Feature Inconsistencies
Consider any discrepancies in email addresses, links, and domain names a red flag.
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Grammar and Spelling Mistakes
Legitimate businesses use grammar and spell-checking tools before they email their message to the sender. You should expect error-free emails that originate from a professional source such as your suppliers.
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Others
Suspicious attachments and requests for payment information, credentials, and other personal details are also signs of phishing emails that you need to be aware of at all times.
2. Noticing Suspicious Financial Transactions
You should consider suspicious financial transactions as a red flag if there are unauthorized returns on an account and an invalid routing number. Detecting ACH fraud is more effective if you have a risk verification system.
A risk verification tool is an indispensable solution to avoid ACH fraud, protecting businesses and consumers. Business owners use this tool to help detect ACH fraud easily, enhancing their depository system.
Using a risk verification system shows suspicious financial transactions in real-time by:
- Validating bank routing number
- Complying with the web debit rule
- Providing optional Office of Foreign Assets Control (OFAC) checking
- Providing decision code on transactions
- Identifying closed accounts
- Identifying not found accounts
- Validating bank account number
- Providing account positive and negative history
- Providing new routing number
3. Financial Transaction Data Discrepancies
Cybercriminals attempt to change personal data such as mobile phone numbers on the system for them to receive the authentication code on their number and access the financial data information of a company or a client. If you notice any discrepancies in your financial data or your client’s data, extensive verification is a must.
You can prevent causing worry to your loyal customers by using a risk verification system to detect discrepancies. In this way, you can take prompt action before it’s too late. A risk verification system can detect any discrepancies in financial transactions by:
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- Checking names, addresses, and telephone numbers linked with the account
- Providing first and last dates that the account has detected in the risk verification database
- Determining the average number of days for refund or payment on returned items
- Identifying details of return reasons
- Checking additional retail and financial databases
- Detailing unauthorized returns on the account
- Providing risk level codes on all transactions
4. Seeing Your Business Info Somewhere Else
If you notice you caught your business information being advertised or used other than your authorized platforms, then you’re a victim of business identity theft. Hence, fraud detection and identity proofing are crucial to your business. One of the best ways to detect fraud is by monitoring transactions. You can hire an analyst or assign someone to do this for you or invest in transaction monitoring software.
Investing in transaction monitoring software can help you monitor customer transactions in real-time daily. This software program combines this information with the profile and historical information of the customer, creating alerts for any suspicious activity. A reliable transaction monitoring software can monitor wire transfers, cash deposits and withdrawals, peer-to-peer transfers, and ACH activity.
Conclusion
ACH network is the central clearing facility of electronic fund transfer (EFT) transactions. However, cybercriminals attempt to access a customer’s credentials by generating an ACH file in the name of the originator and quickly withdrawing funds, which is then too late for the victim to discover fraud. Be keen on determining any data discrepancies in ACH transactions by using reliable tools that can help protect your business.
