Best Cyber Theft Protection Protocols for ACH Transactions

Digital payment fraud has been on the rise since the start of the COVID-19 pandemic. Find out how you can mitigate risk in your ACH transactions.

Although automated clearing house (ACH) transactions are generally considered difficult to breach and safer than check or cash payments, evidence shows that fraudsters increasingly target ACH transactions. Ignoring the consequences of this potential threat can have major implications for your business.

A global study on occupational fraud and abuse found that typical fraud cases last 14 months before detection, causing an average monthly loss of $8,300. Certified fraud examiners estimate that companies lose 5% of revenue to fraud annually.

And nearly one-third of fraud cases occur in part because of a lack of internal control. However, employee fraud awareness training and the use of targeted anti-fraud controls are on the rise. To further mitigate risk, businesses can implement structures and processes for detection and prevention.

In every company, fraud prevention should start with management. Your business must commit to a culture of integrity and honesty, implementing a formal code of conduct. Studies show that companies conducting fraud awareness training for employees are more likely to receive tipoffs through formal reporting means, such as an anonymous whistleblower hotline.

Management can also discourage fraud internally by establishing a positive environment, reasonable expectations, and incentive programs to ease temptations of abusing the system. Finally, considering the size and quantity of ACH transactions in general, businesses need to ensure that they—and their third-party partners—have strong anti-cyber theft strategies in place.

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Multi-Layered Fraud Prevention Measures

There is no one cure-all to prevent fraud in your business. The most effective fraud prevention strategy will layer a number of different solutions. Process controls, screening engines, flexible analytics—all of these combine to form a comprehensive barrier against fraud.

Considering the increase of fraud attacks since the start of the COVID-19 pandemic, a robust, multi-layered prevention strategy is a must for businesses. An increase in remote work and shopping throughout the pandemic multiplied opportunities for digital fraud. Many businesses relaxed security protocols to enable employees to work from home and adjust to new technologies on short notice. This presented an opportunity for both external hackers and internal fraud. In addition, multiple billion-dollar relief measures implemented hurriedly, with low oversight, created abundant fraud opportunities.

To enhance cyberattack resilience, strict password protocols should form the basis of any company’s digital operations. Proper credential management and regular password changes can also limit potential exposures. Keeping a dedicated computer for banking prevents insiders from accessing funds and data without authorization. In addition, all information should be backed up and stored off-site.

You should assess the legitimacy of all online requests—including internal communication, partners, and vendors requesting sensitive information—regardless of how authentic they seem. This especially applies to time-sensitive or urgent requests.

ACH payment security allows for more digital security measures than check or cash transactions. For example, ACH transitions hinge on unique Payer Unit Numbers (PUN) for processing, and transfer only happens once authorized by the user. Some processes also feature end-to-end encryption, using a locked algorithm, and two-factor authentication. This ensures the data is undecipherable if intercepted during transmission. While ACH payments, like any system, have their pros and cons, they are undeniably the safest transaction method available.

Establish a Strict Fraud Prevention Policy

Every organization should implement a strict fraud policy demonstrating the company’s commitment to an anti-fraud culture. A policy that establishes clear post-discovery procedures can ensure that fraud attempts are dealt with effectively, every time. By explicitly defining fraudulent actions and consequences, companies ensure that all staff and third parties are clear about unacceptable behavior.

A company fraud policy should include:

Clear definitions of fraudulent actions, as well as the responsibilities expected for fraud management
Formal procedures in the case of suspected fraud
Statements clarifying explicit investigation, prosecution, and reporting to the appropriate authorities in any case of fraudulent activity
Options for employees to report any suspicion of fraud, and procedures to follow in such cases

Review your fraud policies regularly, and confirm that your whole staff is aware of any updates. Fraud prevention starts at the top, but it is a team effort.

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Secure an SSAE 18 Audit Certification

With increasing fraud, insider scandals, and external hacks, the demand for third-party regulation, protection, and proof of security compliance is high. Accordingly, the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board issues SSAE 18 audits, to verify compliance with financial reporting security protocols.

An SSAE 18 audit certification helps financial institutions establish trust with their clients. Considering the high level of sensitive information financial institutions traffic in, an independent audit proves to clients that systems and controls are secure and effective. A third-party auditor will also spot inefficiencies or areas for improvement within your service organization that you may not have picked up on. Although the initial audit is lengthy, obtaining a regular SSAE 18 certification will save time and money in the long run.

Process ACH Transactions Securely

As online payment opportunities continue to grow, so do fraudulent opportunities. Payment fraud not only costs businesses monetarily. It can also damage a solid reputation in an instant, affect your business’s operating ability, and influence regulatory compliance. All these dangers considered, it makes sense to pair with a third-party ACH processor you can trust.

NatPay has been a leader in the payment processing industry for decades. With secure distribution solutions that cover everything from employee payroll to taxes to vendor transactions, NatPay can help protect all of your business’s payments.

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