The Electronic Payments Association (NACHA) reports that ACH payments exceeded 19.4 billion in 2010 – a 3.44 percent increase over the previous year.
While ACH payments were once considered low risk, their increasing accessibility and popularity have attracted the attention of criminals who use the high volume and relative anonymity of such transactions to commit fraud on a growing scale. The 2011 AFP Payments Fraud and Control Survey conducted by the Association for Financial Professionals (AFP) revealed that 71 percent of businesses surveyed reported being the target of such fraud.
Poor economic conditions and the growing popularity of electronic payments have provided criminals with fertile ground, and everyone is at risk. Larger institutions that have higher volumes and more complex ACH transaction mechanisms have largely done away with the callbacks and manual controls that could prevent some fraud, and smaller institutions, which are often unprotected from and unaware of online security vulnerabilities, have been hit hard in recent years by online security breaches that lead to ACH and wire fraud.
As business customers adopt more electronic payment vehicles, the ongoing prevalence of ACH and wire fraud will require constant vigilance and a range of analytical fraud-fighting tools including:
- Data management capabilities that support holistic behavioral analysis.
- Flexible alert-management strategies based upon risk exposure.
- Fraud network analysis to reveal hidden relationships between originators, intermediaries and receiving institutions.
- Case management capabilities that facilitate investigations and enable the capture and display of all pertinent information.
- Detection and alert-generation to prevent suspicious electronic funds transfers prior to execution based upon transactional analysis or analysis of ACH batches.
Here’s a white paper that you can download with more about the tools and best practices for detecting, preventing and investigating fraud.