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Criminals are committing fraud at record rates — and at a skyrocketing cost. Getting ahead of the problem is a never-ending battle of wits pitting crooks against businesses and consumers — and often their bank accounts.

But despite advances in sophisticated monitoring technologies, your own employees may be your most important weapon against fraud. Why? Because fraud exploits human nature as much as it does technology.

Consider this real life example: A company received an email from a client requesting payment for an invoice be sent to a new bank account. After a quick call to the number provided verifying the payment instructions were authorized, the accounting department paid the invoice for $54,625.34. Two weeks later the client called asking where the funds were. The initial request for payment, payment instructions and call-back number were all fraudulent. The company had fallen victim to invoice fraud, leaving it responsible for the loss.

Such instances of human error suggest increased vigilance is key to identifying and reacting to red flags before conducting transactions. The bottom line: Often fraud can be identified through common sense. “A helpful rule of thumb is, if it doesn’t feel right, don’t do it,” suggests Ken Simmons, Atlantic Capital Bank’s BSA Officer.

Here are three common sense moves that show intuition is just as important as information technology when protecting yourself from fraud.


If you think you’re safe enough from fraud, think again. Reports of fraud and identity theft have increased a whopping 800% since 2001 when the U.S. Federal Trade Commission started tracking them through its Consumer Sentinel Network.

According to the FTC, individual consumers lost at least $3.3 billion to fraud in 2020, but the damage to businesses is even graver: Nearly half of companies experienced at least one fraud in the past 24 months, costing businesses an eye-popping $42 billion. “That’s cash taken straight off companies’ bottom line,” concludes PwC’s Global Economic Crime and Fraud Survey 2020.

Just as important as understanding your risk, is being aware of the types of fraud that are on the rise, as well as those that are most likely to put your business in criminals’ crosshairs.

Businesses are most likely to be targeted by customer fraud, cybercrime and asset misappropriation, found PwC. But that doesn’t mean you’re safe from other fast-growing scams, such as identity theft, which accounted for more than 20% of complaints to the FTC in 2019. And with more businesses operating online, cyber fraud is a growing threat you ignore at your own peril.

What is often the most overlooked risk for businesses though? The threat from your own employees, contractors and vendors. According to PwC, as much as 60% of fraud targeting businesses is the result of internal perpetrators, or collusion between internal and external actors.

What these numbers make crystal clear is, if you haven’t been on the receiving end of fraud, you likely will be. Fraud is unforgiving. And financial losses and damage to your reputation may not be recoverable.


Do you really know your customers? The fact is, you might not even know who your customers are. With customer fraud at the top of the list of scams targeting businesses, it’s clear that many companies are falling far short on due diligence.

It’s important to remember that all customers are good customers until they’re not. Human nature and outdated adages like “The customer is always right” fool us into believing that trusted customers can’t change. In reality, they sometimes do. And bad customers are bad for business.

“Know your customer — and your customer’s customer — before your financial institution wants to know more about your customers,” warns Simmons. Effective customer due diligence begins when building a relationship, but continues over the life of the relationship, especially when customer activities and behavior change.

Learn how to identify fraud red flags by asking the right questions: Does your customer do what they say they do? Do they have a website and does it match what the customer described for their business? Does the contact information match the data you have in your systems? Do they have a brick and mortar storefront or are they working out of their home? Does a home-based-business make sense for the customer’s business profile? And perhaps most importantly, do they answer their phone when you call?


Do you have processes in place to identify substantive changes in your customers’ behavior or the nature of their business that might be signs of fraud?

“Monitor your customers like your financial institution would be expected to monitor their customers,” Simmons recommends. And that means keeping a watchful eye on more than just ACH returns and chargebacks.

Is your customer’s activity reasonable based on the nature of their business? Do the size and frequency of their transactions reflect their product offerings and customer base? For example, if your customer sells automobiles, does the average transaction amount reflect the expected price of a car? If they operate domestically, do you see large numbers of international transactions? If the nature of their transactional activity changes, is this consistent with a change in business strategy, product offerings or geographic market?

Most importantly, if something seems off, follow through and ask questions. Conduct adequate due diligence to understand what has changed.


The threat of fraud is growing and mutating into ever more cunning ways to part you with your hard earned cash. Yet many businesses are still not prepared to respond. According to PwC, only 56% of companies investigated even their worst case of fraud and only a third reported the incident to their board.

The never ending battle against fraud is a joint responsibility. Instead of pointing fingers, we all need to do our part — customers, businesses and banks. “Fraud red flags are often found in the details,” says Simmons. “If it sounds too good to be true, it most likely is not true, so listen to your own intuition.”

Understand your fraud risks, ask the right questions, implement effective controls and processes, train your people and empower employees to say something if they see something.   Identifying signs of fraud will go a long way toward protecting your bottom line.



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