Corporate account takeover is a serious fraud risk; but good resources are available

Whether you call it small business, commercial, or corporate account takeover, this form of existing account fraud has been in the headlines lately and seems to be on the rise. While account takeover happens to individual consumers quite frequently, it’s the sensational loss amounts and the legal battles between companies and their banks that are causing this form of commercial fraud to make the news. A recent BankInfoSecurity.com article, Fraud Verdict: Opinions Vary, is about a court opinion on a high profile ACH fraud case – Experi-Metal Inc. vs. Comerica Bank – that cites a number of examples of corporate account takeover cases with substantial losses:

·         Village View Escrow of Redondo Beach, Calif.:  lost $465,000 to an online hack

·         Hillary Machinery: settled with its bank for undisclosed terms in 2010.

·         The Catholic Diocese of Des Moines, Iowa:  lost $600,000 in fraudulent ACH transactions.

I was curious what information was out there and publicly available to help businesses protect themselves and minimize fraud losses / risk. NACHA, the electronics payment association, had some of the best resources on their website.  Labeled the  “Corporate Account Takeover Resource Center”, it has a wide variety of briefs, papers, and recommendations documents including prevention practices for companies, financial institutions, and third-party service providers. There’s even a podcast on how to fight ACH fraud!  One thing was interesting to note, though. NACHA makes a point to distinguish between ACH fraud and corporate account takeover in this statement at the top of the web page:

Corporate Account Takeover is a form of corporate identity theft where a business’ online credentials are stolen by malware. Criminal entities can then initiate fraudulent banking activity. Corporate Account Takeover involves compromised identity credentials and is not about compromises to the wire system or ACH Network. ACH fraud and wire fraud, terms mistakenly used to describe this type of criminal activity, are a misnomer. The ACH Network is safe and secure.

Mostly I agree –the ACH Network is safe and secure. But from an F.I.’s or company’s perspective, corporate account takeover and ACH Fraud often go hand in hand.