Safe ACH and Wire Transfer Procedures To Prevent Fraud

ACH and wire transfers are common and time-tested methods of moving funds between different parties. Although similar in function and process, they are different in significant ways. ACH and wire transfers are some of the most secure methods of transferring funds and making payments; however, their popularity guarantees they will be targeted by malicious players.

In a 2020 Payment Fraud and Control Survey conducted by the Association for Financial Professionals (AFP), 81% of companies were targets of payment fraud in the previous year. Since ACH transfers alone accounted for financial transactions worth more than $61 trillion in 2020 (an increase of almost 11% over 2019), there is no reason to wonder why these payment methods are popular targets.

What Are ACH and Wire Transfers?

ACH (which is short for Automated Clearing House) is a network operated by Nacha (previously NACHA – National Automated Clearing House Association) that is primarily engaged in the electronic transfer of funds between US bank accounts. Most ACH transfers are used for frequent or recurring transfers, like employee direct-deposit paychecks and automated monthly installment loans.

Wire transfers are also used to transfer funds from one account to another, but banks act as the transferring entity instead of the ACH. They are more commonly used for larger business transactions, overseas transactions and one-time-only transactions.

How Can I Prevent Fraud With ACH and Wire Transfers?

With so much money at stake, every business and organization should take careful precautions to safeguard ACH and wire transfers. Malicious actors are continually devising new ways to penetrate security measures and access your funds – you must also be proactive in keeping your financial information safe. Here are six recommendations to prevent fraud with your ACH and wire transfers:

1. Establish a credit account with the sole purpose of issuing ACH and wire transactions. Do not use this account for any debit transactions.
2. Become familiar with your vendors and their financial policies; this can help you be aware of any suspicious activity on their account.
3. Establish limits on your designated ACH/wire transfer accounts and review their activities regularly.
4. Install and regularly update the most advanced malware and anti-virus software protection on all computers and devices that are used to process ACH payments and wire transfers.
5. Educate your workforce about the dangers of responding to suspicious emails, clicking on strange links, downloading or opening attachments, or using their work devices on unsecured networks.
6. Make sure your employees stay up-to-date on ACH and wire transfer fraud news and best practices. Keep this before them as a priority.

ACH and wire transfer payment fraud could cost your business or organization financially and damage your reputation. While the money can often eventually be recovered, damage to your integrity and reputation will be much harder to repair. As perpetrators of fraud get smarter and use more advanced techniques, taking the appropriate preventive measures can help ensure your company’s finances stay secure.

At AlphaVets, Inc., we take every physical and digital precaution to safeguard crucial financial information for our company and our clients. As a preferred government contractor, we adhere to the highest possible standards to guarantee integrity and security in our business financial transactions.