KPM

Charity Scams Employee Fraud Fraud Loss In Multiple Locations Early Revenue Recognition Liquidity Overload Keep Fraud Out Of Your Restaurant Guarding Against Fraud with Gen AI Lifestyle Analysis To Investigate Fraud Fraud prevention FinCEN Beneficial Owner Scam Vendor Fraud Residual Risk Antifraud Tax-Avoidance Scams Remote work Social Engineering in ACH/Wire Transfers Fraud risk Money Laundering Fraud FTC Accounts Receivable Phoenix Companies

Technology’s Dark Side: How to Prevent ACH Fraud

The convenience of instantaneous information can blind us to technology’s drawbacks, including cyberattacks and data breaches. But there is another, lesser-known technology-enabled crime to watch for — Automated Clearing House (ACH) fraud.

What is it?

Consumers use the ACH network to make electronic payments directly from their checking or savings accounts to other parties’ accounts, eliminating the need to pay bills with paper checks or physical credit cards. Likewise, companies use it for business-to-business transactions and to pay their employees, contractors, and vendors.

Businesses of all sizes can become ACH fraud victims, but small to midsize ones may be most vulnerable. Even when they have substantial financial assets, these companies typically have fewer up-to-date information security measures in place.

How is it perpetrated?

Perpetrators need only obtain an account number and bank routing number to commit ACH fraud. This can be accomplished through:

  • Phishing (tricking email recipients into divulging personal data)
  • Legitimate but hacked websites
  • Malware
  • Account hijacking

For example, a thief might launch phishing attacks against a bank’s customers. When recipients click on the link in the fake email, they are taken to a phony bank website and prompted to enter their login information. Thieves capture that information and use it to access online banking accounts, and then initiate ACH payments to their own accounts at a different bank. Finally, the funds are transferred by wire to a third (in most cases, offshore) bank.

What can you do?

No single defense will protect every individual and business that uses the ACH, but some simple steps can reduce risk. First, install firewalls and antivirus, antispyware, and antimalware software on computers and keep these programs updated. Also, make sure that computers, smartphones, and networks require complex passwords that must be changed frequently. Finally, ignore unsolicited emails with attachments, links in the body of the message, and pop-ups that request personal information.

Using a separate browser for online banking purposes, checking bank accounts daily for unauthorized activity and accessing financial websites only by entering the URL also help. Consumers and employees should pay attention to computers that have slowed down or that repeatedly reboot. These issues can indicate the presence of malware or a virus.

Reducing vulnerability

With a bit of care, you can reduce the risk of ACH fraud and make sure your everyday transactions go forward unimpeded. Contact us for more information.

Related Articles

Talk with the pros

Our CPAs and advisors are a great resource if you’re ready to learn even more.