The Uniform Commercial Code (UCC) requires businesses to observe “reasonable commercial standards” to prevent fraud. Establishing consistent fraud prevention practices is the first step in creating a fraud prevention program.
We offer the following best practices to help you create a payments fraud prevention program for your organization.
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Define your fraud prevention program
Assess your payment fraud risk, segregate payments by account and apply appropriate bank solutions.
Manage employees and organize tasks
Educate employees to recognize fraud and separate account management and cash management tasks.
Maintain a secure electronic environment
Maintain up-to-date systems and software, and establish policies and procedures that maintain secure passwords and security tokens.
Issue secure checks
Ensure your accounts are set up properly and notify your bank when changes occur relating to your check authorization.
Secure check storage
Separately maintain check supplies and check producing equipment in a secure, locked facility.
Accept authorized checks
Ask for appropriate identification and use check verification services to ensure check authorization.
An example of a payments fraud prevention best practice put to work
An organization initiates ACH transactions over the internet for vendor payments and payroll direct deposit. A malware-infected workstation has detected ACH payments by capturing an employee’s keystrokes. This enables the hacker to send a fraudulent ACH payment, which results in the loss of tens of thousands of dollars.
Dual controls for payment initiation and payment approval would have prevented this loss.
With new payments innovations growing, the need for greater fraud protection is essential.
Contact U.S. Bank for more information.