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Attention Franchisees: Payments Fraud at All Time High

Posted by Laura Gaythwaite on Tue, Sep 4, 2018

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Modern Workplace with Laptop showing Landing Page with Payment Options Concept. Toned Image with Selective Focus. 3D Render.Payments fraud is at an all-time high, according to the latest Association of Finance Professionals Payments Fraud and Control Survey.

A new record was set in 2017 with 78% of all organizations surveyed being touched by some type of payments fraud. So, how does that break out by payment category?

  • Checks 74%
  • Wire transfers 48%
  • Commercial credit cards 30%
  • ACH debits 28%
  • ACH credits 13%


It is no surprise that check fraud continues to lead the way as checks are still the top method of business-to-business (B2B) payments. In addition, improved imagining technology allows for more authentic and easier check forgeries. 38% of the survey respondents reported that they experienced check fraud more than 15 times in 2017. Now, more than ever, it is important for franchisees to ensure you are taking steps to mitigate check fraud by using positive pay and other secure check handling processes.

In other fraud trends, business email compromise (BEC) is on the rise which contributed to the 48% wire fraud statistic. 77% of businesses experienced some type of BEC in 2017 with 54% of those BEC scams targeting wire fraud.

The good news is that there is more awareness around BEC scams and businesses are now implementing controls to help prevent BEC scams. The bad news is that fraudsters are becoming more sophisticated which makes BEC harder to detect. The best prevention for BEC is employee education and training on what to look for in regards to suspicious emails and messages.

READ MORE: Mobile Payment Apps: How Business Owners can be Protected from Electronic Fraud

A good best practice is for franchisees to take a pro-active approach to managing their bank accounts and payment methods. Reconcile your bank accounts on a regular basis and be sure to match payments to invoices so you can quickly spot any potentially fraudulent transactions. Create a robust IT/email training program and be diligent in looking for exposure of your company’s financial information.

Talk with your banker about solutions for protecting your business bank accounts and to setup alerts to notify you of unusual activity.

Talk with your business insurance agent about adding additional insurance protections for your accounts. Three helpful hints from our friends at Besnard Insurance:

  1. Check your package policy to see if you have any coverage for money transferred from your bank. If covered, are the limits high enough based on your typical bank balance.
  2. If you have network security coverage (some call this “cyber” coverage), check to see if that coverage affords any protection in the event money is transferred from your bank account. You will find that most policies only offer third third-party liability coverage associated with customer credit cards, employee files, and other private data being stolen when assumed safe. The main purpose of this type of policy is to make the third-party (your customer or employee’s) whole, not you.
  3. Buy coverage for funds transfer fraud and excess crime. This policy offers much higher limits for general crime while giving you protection in case your bank account is accessed and the money is transferred (wired) offshore.


Both Concannon Miller and Besnard Insurance have decades of experience advising franchisees. Contact me at lgaythwaite@concannonmiller.com for additional advice or with any questions.

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Topics: Fraud, Business consulting

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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