Tag Archives: Fraud


Technology, preparation can help prevent fraud

Jason Mabee is vice president of treasury management for UMB Bank in Arizona.

Jason Mabee is vice president of treasury management for UMB Bank in Arizona.

Fraud can come in many forms, from counterfeit checks to stolen credit cards and trusted employees to savvy hackers. For businesses, fraudulent activity is always bad news. According to the Association for Financial Professionals’ (AFP) 2015 survey, 62 percent of companies were targets of payments fraud in 2014 with financial losses that ranged anywhere from a relatively small amount to millions of dollars.

The good news for businesses is that there are numerous measures out there that can help prevent and detect fraudulent activity. In addition, advanced technology is being developed and deployed now that will help companies better protect their operations and their bottom line.

The Many Forms of Fraud

According to the AFP, the most common form of fraud businesses encounter is through checks, corporate credit/debit cards and wire transfers. Paper checks continue to be the payment type most vulnerable to fraudulent attacks and account for the largest dollar amount of financial loss, even though their use continues to decline. Credit and debit cards are the second most popular form of business fraud, although they experienced a decline in fraudulent activity, down from 43 percent in 2013 to 34 percent in 2014.  And lastly, wire fraud incidents almost doubled from 14 percent in 2013 to 27 percent last year.

The newest form of fraud is cyberfraud in which criminals create an email account for corporate executives or vendors and send emails with payment instructions to employees in the accounting department. Employees who are unaware of the fake or altered email account will follow the instructions and make payment.

Be Prepared

While it may seem daunting, businesses can take steps to protect against fraudulent activity. Positive Pay is one example of how companies can get ahead of the game. Positive Pay is an automated fraud detection tool offered by most banks. Here is how it works: Companies cut checks every month and send the bank a list of all those checks, including check numbers, amounts and payees. As checks clear against the account, the bank makes sure the checks match up, eliminating any fraudulent or altered checks.

To protect against internal fraud, business owners should implement dual control and separation of duties. Understand who is in charge of what responsibilities on the financial side and make sure there are no gaps. Implement dual control over the businesses banking transactions, meaning the same person who is running payables should not be the same person who is reconciling accounts. Also, business owners should review financial statements on a weekly or monthly basis. 

To mitigate compromise in these areas, businesses should review all areas of their operation and put the proper preventions in place to protect against fraud. For instance, businesses should ensure their employees have the proper education and training for fraud detection. They should install, maintain and update spam filters, anti-virus software and firewalls. Reducing check writing, outsourcing payroll and having dual controls are additional tips that can help prevent fraudulent activity.

New Technology on the Way

In addition to being prepared, businesses will soon be able to rely on new technology to help protect against fraud. The latest and most anticipated technology is EMV (Europay, MasterCard and Visa) chip cards, which will have a major impact on lessening credit and debit card fraud. So much so that 92 percent of financial professionals believe EMV technology will be effective in reducing fraud at the point-of-sale.

Traditional magnetic stripe cards require a signature for security purposes, whereas the new chip cards will add an additional layer of sophisticated fraud protection through an embedded microchip that turns the cardholder’s information into a unique code that is difficult to duplicate or copy when used at a chip-enabled terminal.

Merchants and retailers are currently in the process of investing in new card reading technology that will accept EMV chip cards. If they do not update their technology, they could potentially be liable for fraudulent transactions and not the user or card issuer. Visa intends to institute a liability shift in the U.S. for domestic and cross-border counterfeit transactions effective Oct. 1, 2015. This shift will encourage Visa issuing banks to begin issuing EMV chip cards and merchants to begin deploying card swipe technology that can process the chip-on-chip transaction.

While new technology and preventative measures can help businesses protect against fraud, the truth is that it will always exist in one form or another. What businesses can do is educate their employees, make sure they are using the most up-to-date technology and work with their financial partners to ensure the best practices and protective measures are in place.

Jason Mabee is vice president of treasury management for UMB Bank in Arizona. He can be reached at Jason.Mabee@umb.com.


Wells Fargo Startup Accelerator Helps Tech Innovators

Wells Fargo began accepting applications through October 1 from young companies interested in joining the new Wells Fargo Startup Accelerator, a semiannual boot camp for innovators whose technology ideas in payments, deposits, fraud, operations and other fields could shape future customer experiences in financial services.

Wells Fargo will make a direct equity investment of $50,000 to $500,000 in each selected start-up. The Startup Accelerator also will provide business planning expertise to firms in the six-month program, which is designed to continuously attract innovative ideas and stoke innovation across the Wells Fargo enterprise. Company subject matter experts and purchasing managers will offer workshops and individual coaching to the firms. Successful companies may become vendors to the bank.

“For Wells Fargo to work on big ideas and spark innovators inside our organization, we need to expand our access to new ideas at the edges of our industry,” said Steve Ellis, executive vice president and head of Wholesale Services at Wells Fargo, who noted that in 1995, Wells Fargo was the first major financial services company in the U.S. to give customers free Internet access to account balances. Wells Fargo also was first to offer a mobile service for businesses in 2007, he added.

“The Startup Accelerator adds a new cylinder to our corporate innovation engine,” said Ellis. “We’re taking a proven business model from the venture capital community and repurposing it as a strategy for connecting with start-ups whose ideas and growth prospects could add value to our business and our customers.”

Three innovative companies already have been selected and funded to pilot the Wells Fargo Startup Accelerator. They are:

• Zumigo, San Jose, California: A developer of mobile services using a unique combination of location and mobile identity technologies to secure commerce and enable mobile marketing.
• EyeVerify, Kansas City, Kansas: The creator of EyePrint ID™ that transforms a picture of your eye into a key that protects your digital life.
• Kasisto, New York: The builder of state-of-the-art artificial intelligence technology that improves the consumer experience on mobile devices through intelligent conversation.

In addition to these three firms, the Startup Accelerator will give 10 to 20 young companies each year the opportunity to develop and refine products in a collaborative environment. Applications will be accepted twice per year, with a deadline of October 1 for this fall’s program. A Wells Fargo investment committee comprised of senior technology, venture banking, and innovation leaders will evaluate candidates and select participants. Prospects can learn more and apply online at https://accelerator.wellsfargo.com.

“We’re interested in any technology that could be used by an institution like Wells Fargo to better serve our customers or operate our business,” Ellis said. “Analytics, big data, mobile, security, and infrastructure are all important to us. We’re looking to engage with innovators beyond the edge of our own creative enterprise.”


APS, SRP Warn Customers of Fraud Attempts

APS and SRP want customers to stay safe this holiday season and be aware of potential fraud attempts. Both companies have received reports of individuals falsely claiming to represent APS or SRP to collect payment for electric service.

Several customers in the Phoenix metropolitan area have received telephone call from an individual who claims to represent the utility providers or makes a generic reference to the “electric or power company.”

The fraudulent caller claims the customer has an overdue bill and service will be disconnected if payment isn’t made immediately. The scam artist then asks the customer to take one of three actions:

  • Make the payment over the phone via credit card
  • Visit a payment kiosk where the caller will provide an account number to use for payment
  • Wire the money to an account via Western Union.

As a reminder, APS or SRP customer service representatives never call customers to ask for credit card numbers or personal information or to remind them of a delinquent balance. Customers are notified of delinquent balances and shut-off dates via the APS/SRP bill. Some customers also may receive text messaging, an automated dialer message and/or a door hanger.

Customers should always use their personal APS or SRP account number when using the various payment options available to them. Payments are not accepted by field personnel.
Utility representatives may not always wear uniforms with the APS or SRP logo.  However, all permanent employees are required to carry identification. On occasion, the companies use contract workers who are required to carry a letter of introduction from APS or SRP. If there ever is a question about the validity of a person claiming to be an APS or SRP representative, customers are urged to ask for an employee identification number and to call the APS Customer Care Center at (602) 371-7171 or the SRP Customer Services at 602-236-8888 to verify employee status.

If a person is misrepresenting himself/herself as a utility employee, customers should immediately call local law enforcement and the FTC at 1-877-382-4357, using reference number 401625543, if they are a victim of this fraudulent activity or receive a similar call from a scam artist.

The fake calls are being made to both English- and Spanish-speaking customers.  SRP has reported the activity to the Federal Trade Commission (FTC).

APS, Arizona’s largest and longest-serving electric utility, serves more than 1.1 million customers in 11 of the state’s 15 counties. With headquarters in Phoenix, APS is the largest subsidiary of Pinnacle West Capital Corporation (NYSE:PNW).

SRP is the largest provider of electricity to the greater Phoenix metropolitan area, serving more than 950,000 customers in Maricopa and Pinal counties. SRP is also the largest supplier of raw water in the great Phoenix metropolitan area.