As the owner of a small to medium-sized business, you likely know your product and client base inside and out. It’s what’s made your business successful, after all.
It is also why you defer to experts in their fields to keep your business thriving – accountants for financial advice, lawyers for legal questions, for example. A regular check-in with your banker should also be on your list of to-dos.
Often business owners will only speak with their banker when they have a problem, but it’s important to schedule a regular review of your accounts and business plans to make sure you’re tracking to your goals. There may be new loan products to help fund a technology investment or business expansion that you may not be aware of, and your banker can also help ensure your fraud security is up-to-date and protecting your business and assets.
In 2020, the FBI’s Internet Crime Complaint Center investigated 19,369 cases of business email fraud, amounting to $1.8 billion in losses. Given that this only represents cases investigated federally, it’s likely a gross underrepresentation.
Business owners who haven’t experienced fraud may have a false sense of security and believe they’re protected, but as criminals get more sophisticated, businesses need to stay even more vigilant.
Staying on top of fraud tactics
Fraudsters can attack businesses in a variety of ways, such as phishing – emails or texts asking recipients to click links or provide information – or by sending requests for payment or money transfers.
Consider a longstanding vendor you might have who’s overseas. Because of the time difference, you might rarely, if ever, speak in person, conducting your business via email and wire transfers instead. One day you receive an invoice from your usual contact with a note with new payment instructions.
Everything appears legitimate, so you go ahead and pay the invoice, and the next, and the next, until you discover that you’ve paid tens of thousands of dollars to a fraudulent account, with little chance of getting the money back.
Fortunately, you can protect your business from these types of schemes by following these three steps:
- Pick up the phone. Any time you receive payment instructions, or there are any changes in payment instructions, it’s a good idea to pick up the phone and call your contact to verify the information. Do this using an established phone number and do not rely solely on the authenticity of email messages or replies. This will stop fraud nearly 100 percent of the time.
- Use a dual control system every time you’re transferring or wiring money. A second set of eyes can help identify potential fraud and prevent mistakes.
- Utilize your bank’s fraud protection services. Check fraud is a common scam that can catch businesses unaware, but most banks can have a service, often called Positive Pay, that can help protect your business. Essentially, you’ll provide your bank with information about all the vendors and electronic payments you’ve authorized, and they’ll block payment to anyone else.
Treasury management services are essential for good business operations, but it’s not enough to put these measures in place and call it good. Technology and fraud techniques are always evolving, meaning your protection tactics must evolve, too. Regular check-ins with your banker can go a long way toward keeping your financial information secure and protecting your businesses from fraud.
Jim Slowik is a Vice President and Commercial Banking Officer at the Peoples Bank Oak Harbor Financial Center. To learn more about how to protect your business from fraud, please contact a local lender at our Peoples Bank branches in Coupeville and Oak Harbor.