DRIVING THE NUMBERS:
A look at the trucking industry’s financial landscape
3
Check Fraud: The
Ultimate “Bad
Check”
Forged checks are a major source of
payments fraud. In order to commit
fraud with forged checks, fraudsters only
need to know your business’s checking
account number and ABA number (the
bank’s nine-digit routing number). From
there, they can print fraudulent checks
and start writing checks from your
business to themselves.
Or a criminal might get their hands on
an actual check from your business —
such as a legitimate check that was
sent to a payee. The criminal might
replicate that check amount — along
with your business checking account
number and ABA number — onto a
fraudulent check made out to a different
(fraudulent) payee.
How to stop check fraud? Ask your
banker about “positive pay” services
for your checking account. This is an
extra level of security to flag suspicious
checks before they’re paid by the bank.
“At First Tennessee Bank, we have a
service called Check Positive Pay, where
the customer gives us a file of checks
issued that includes three or four data
points for each check, such as account
number, check number, and amount of
the check,” says Keith Kirby, SVP and
Relationship Manager in Business Credit
at First Tennessee Bank. “If one or more
of the data points do not match, we email
our customer to confirm whether or not
the check is legitimate. It’s an added
layer of review.”
ACH Fraud: Greater
Convenience,
Greater Risk
Many small businesses pay bills via ACH
(Automated Clearing House), a national
network for electronic payments that
provides a faster way to process financial
transactions. And while ACH is one of
the lowest risk payment methods, this
convenience can come with a caveat:
Should you experience a fraudulent
ACH transaction, businesses only have
two days to notify their bank, compared
to 60 days for consumers. In order to
perpetrate ACH fraud, criminals typically
set up their own shell bank account, and
then use a legitimate business’s checking
account number and ABA number to
simply steal money via ACH transfers.
“Some fraudsters will ping an account
via ACH — by making a small deposit,
say 50 cents, and an immediate debit of
the same amount — so they can make
sure that the ABA and checking account
number are valid numbers and they know
they have a good account to attack,”
says Kirby. “Then they’ll come back and
do a $1,000 or $5,000 ACH transaction
— simply taking your business’s money
right out of your account. And by the
time it gets noticed, the money might be
gone. It’s very hard to recover the money
in these situations.”
To prevent ACH fraud, your business needs
to work with your bank to set up some
controls to make sure that only authorized
individuals and/or businesses initiate ACH
transactions against your accounts.
“We call this service ACH Positive Pay,
and for each new ACH transaction, our
system reviews the transaction and
compares it against your predefined
parameters,” Kirby says. “If, for example,
the individual/business is not authorized
for ACH, or the amount exceeds the
authorized level, the transaction is sent
to the customer for decisioning before it
can go forward.”
For more information, contact Keith Kirby
by email at rkkirby@firsttennessee.com
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