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The 10-4 on fraud schemes: Do you know them when you see them?

The 10-4 on fraud schemes: Do you know them when you see them?

by Lauren Hess
October 30, 2020

The 10-4 on fraud schemes: Do you know them when you see them?

The 10-4 on fraud schemes: Do you know them when you see them?

by Lauren Hess
October 30, 2020


By now, we all recognize that the internet is a great resource and convenience for businesses. At the same time, it’s created opportunities for a new breed of criminal: the cyber thief. Education and proactive measures are the best defense against an attack on your company’s online security. In short, preventing fraud is now more important than ever. With the COVID-19 pandemic, we’ve seen an increase in fraudulent attempts and attacks against businesses. Criminals are trying to take advantage of the situation, gain your trust, and, in turn, gain access to your data or funds. Could you pick these common schemes out of a lineup?

Suspect #1: Supplier impersonation

Here’s what it looks like: One of your suppliers emails the accounts payable department to say that its bank information and payment remittance has changed. Your team has been educated on fraud prevention, and your employee takes all the right precautions: They look at the letter, the signature, the email, and it all looks legitimate. They change the payment instructions in your NACHA file and send you the file for payment. You see that the amounts are good and you send the file. Days or weeks later, the supplier calls you about not receiving the payment. You’ve been duped and paid a criminal.

Payment fraud through supplier impersonation continues to increase with no signs of abating. Encourage your accounts payable department to:

  1. Recognize this type of request is highly susceptible to fraud.
  2. Question the motives and know that intentions may be dishonest.
  3. Authenticate the request through out-of-band methods such as phone, email, text, or letter.

Suspect #2: Email impersonation

Here’s how it goes down: You receive an email. It seems legit. It looks like a credible source. It turns out, there’s a criminal on the other end attempting to capture personal and financial information from unsuspecting individuals and businesses.

Phishing emails can appear with a detailed description, or can be displayed as a receiving error, requiring the recipient to click on a link to view the message. Accessing these corrupted files or links can have serious consequences leaving your private information in the hands of a hacker.

Whaling, a new term for a more specific type of phishing, is the targeting higher level C-suite executives, and trying to trick them into clicking on Malware found in emails. That will then track the executive’s communication through email and may enhance the fraudster’s ability to persuade someone to make a transfer.

If you receive a phishing or whaling email, or suspect you may have, it’s important not to click on any links and to report it to your information security department right away. They can make others aware so they don’t fall for the same scam and can place the sender on a “watch list.”

Suspect #3: Counterfeit checks

This one might be familiar. This scheme can involve a fraudster stealing account information in order to duplicate check stock. Checks are then cashed and used to pay bills or make purchases across the country.

You’ll also see check schemes associated with Craigslist or random household mailings. Often times, a criminal will use a fraudulent cashier’s check for a large amount, send it to the recipient, and then ask that they pay a third party and then they can “keep the rest.” By the time the check clears, the recipient has put up their own money against a fake check. It seems like it would be obvious, but these schemers cook up some pretty convincing stories to get what they want.

In other cases, checks aren’t just duplicated. Sometimes the original copies of the checks are altered. Here are the two common ways:

  1. Check washing (Use high security checks that are reactive to many chemicals.)
  2. Forgers can easily erase small print and cover it with larger font.

Remember us mentioning the Payee Name Verification on Positive Pay in our last blog post? This is key to protecting your account against counterfeit checks!

Suspect #4: Fraudulent deposits and inbound wires

Rising in popularity, this scheme is definitely one for businesses to be on the lookout for. Your business receives an incoming wire from an unknown third party. They then tell you it was sent in error and ask for the money back. Shortly after, the initial wire is rescinded by the issuing bank. It’s simple, but effective.

Similar to supplier impersonation, this scheme particularly targets your accounts payable and accounts receivable department Recall the three steps for your team: recognize, question, and authenticate.

Now that you can spot them coming a mile away, get in front of these perps. The best way to deal with fraud, is to stop it before it happens. Ask your bank about the tools you need to keep your business protected.

Is your business looking for a true banking partner? Check out the solutions we offer that can help you reach your goals.


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