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Using ACH cards? Beef up security

Aug 26, 2013 Dave King

ACH cards and other automated electronic payments have become wildly popular among companies and organizations of all kinds, especially because the convenience and efficiency of such transaction methods are unmatched in the current market. However, ACH and wire fraud have become substantial issues for consumers and businesses alike, with hackers increasingly targeting the payments to capitalize.

Any organization that distributes ACH cards for payroll or other regular payments needs to ensure that accounts payable and receivable are kept in check and that data security standards are up to par with federal regulations and industry-recognized best practices. Failure to secure ACH and wire transfers could result in massive financial losses and hurt reputations.

Though some studies have indicated the number of data breaches of ACH-related information has decreased, the threat remains ever-present and just as dangerous. Additionally, one new study revealed that ACH fraud is increasing in both frequency and the average amount of damages, illustrating the importance of maintaining stringent oversight for all accounts.

Not fade away
ATM Marketplace recently reported that a new survey from the Information Security Media Group found that fraudulent payment card activity, phishing, wire fraud and account takeovers are among the most threatening types of crime facing businesses today. According to the report, titled the 2013 Faces of Fraud study, organizations should be especially careful when it comes to payment card fraud, phishing attacks and check fraud, as these are the three most prevalent crimes.

According to the news provider, financial services firms appear to be at the greatest risk, while insider threats have been one of the main sources of the issue. A lack of oversight when it comes to automated payments is often the source of these types of fraud, especially when the accounts in question have not been reviewed for months at a time.

The source explained that the Faces of Fraud study revealed nearly half of the respondents continue to see the same rates of losses due to account takeovers, while 43 percent said existing security protocols do not seem to be working.

The survey also substantiated several beliefs of experts, including the fact that many organizations will find out about an instance of fraud in somewhat of a inadvertent fashion. For example, almost two-thirds of the respondents said that they had discovered fraudulent account activity following a communication from a customer.

Comprehensive records and information management have never been so important, with thieves targeting both digital data and physical paperwork to steal sensitive account numbers. ATM Marketplace cited the finding in the study that check fraud continues to be one of the most dramatic causes of loss for financial services providers.

Finally, the Security Media Group noted that security software and services investments are beginning to increase across the sector, though customers have largely fought against higher costs for fraud prevention options.

Organizations should consider training all employees in the best practices of records management, ACH card use and other risky functions within accounts payable and receivable to avoid the threats of fraud.

Look out for abnormalities
GoLocalProv recently suggested that unapproved automatic bank withdrawals have started to become more common issues for consumers and organizations alike. According to the source, the first step toward minimizing this risk is to manage all documents - including checks - that have any type of banking information.

The news provider asserted that thieves need nothing more than a routing code and an account number to begin stealing under the radar. By assigning a trusted member of staff to overseeing all automated payments on a weekly or monthly basis, organizations can avoid the serious financial losses that come with long-term ACH and wire fraud.