Types of Bank Fraud That Affect Business Accounts

Consumers lose around $5.8 billion to fraud every year. The numbers now being reported are some of the highest on record, with new and innovative ways being pioneered by criminals. So how do you avoid becoming a victim?

Knowing how the scams operate is the first line of defense. Read on as we discuss the most common types of bank fraud. 

Bank Account Takeover

Account takeover is one of the most well-used types of bank account fraud. It begins when someone gains access to a bank account without authorization. They then take the personal information and transfer the funds to their own accounts. 

As bank transfers can not be reversed like credit card payments can, it is hard to claim back the money. There are several ways people may employ to gain access to an account. These could be phishing scams, cybersecurity vulnerabilities, or social engineering. 

Most banks are now implementing two-factor authentication to make this harder. You can learn more about it here. 

Wire Fraud

Wire fraud is another bank account fraud type that involves tricking someone into authorizing a wire transaction from a small business account. They may begin by posing as a legitimate business interest such as a customer. When they find out who can authorize transfers they send for a payment request.

You can prevent this by double-checking information. Call the customer using the number you have on file. Limit the number of employees who can authorize them. 

New Account Fraud

New account fraud is an extremely complex process. It involves using fake identities and user impersonation to open an account. Mainly, it impacts new banks that forgo rigorous checks so they can get customers. 

Prevention comes mainly from the banks themselves. They must research alternative data and implement transaction monitoring. 

Technical Support Scam

Remote work is now a given in most companies and businesses. This has allowed spurred a proliferation of bank account fraud in which people pretend to be technical support.

A fraudster will call and tell people they are from a reputable company. Once they explain a problem has been noticed on the system, they will attempt to gain remote access. Another method is to deploy a pop-up on the computer that prevents its use and asks them to call a fraudulent phone number. 

Bank Impersonation

This happens when a fraudster calls a customer pretending to be a representative from the bank. They will phish for personal information, particularly login details for online portals. 

For a business, this can be disastrous. Not only can you lose money but customer confidence and reputation can also suffer. Unfortunately, there are tools available online to buy online which make conducting this type of fraud easier than ever. 

Avoiding Bank Fraud

Now you know these bank fraud methods, you can improve your vigilance. Never give away details and always double-check where you are sending payments. With the right tactics in place, your money will be protected. 

If you found this article helpful, check out our other similar blogs. From fraud to finance, we can help safeguard your money in the coming year.