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Protect Your Business by Knowing How to Prevent Bank Fraud

In the last few years, the number of people affected by bank fraud has increased significantly. Bank fraud can occur in a number of ways. Criminals may try to impersonate you, your employees or other business contacts, and they may try to trick you into divulging confidential or personal information by phone, email or text message. 

To prevent this from happening, it's important to know the signs of possible bank fraud so that you can act quickly when something doesn't seem right. In this article, we're going to give you some tips on how to avoid becoming a victim of bank fraud. 


Know the Signs of Bank Fraud

Bank fraud can occur in a variety of ways—from skimming cards, or using a card reader to get information from an ATM, stealing information from online banking sites, or hacking into databases at large banks.


And Bank fraud can take many forms, it can be committed by: 

  • insiders who have access to your accounts
  • outsiders who have access to your accounts
  • employees or contractors working for the bank


Be on alert for unusual activity on one or more of your financial accounts. Suspicious activity could include multiple withdrawals by ATM, wire transfers out of your account, and/or large purchases made with checks drawn on another account. If you see this kind of activity in one of your accounts, contact your bank immediately.


Consider Bank Alerts

To help you avoid fraud, your bank should offer you free alerts that can be set up through your online account. Banks offer a variety of free alerts, including:


  • Bank Alerts allow you to set up notifications for when certain events occur in an account, like a pending transaction, or when monthly spending limits are reached. This is great because it allows you to stay on top of how much money is actually in the account and stop any potential overdrafts from happening. If someone tries to withdraw more than what's in the account, it won't go through unless they know about the alert already set up for that particular transaction; this may be enough time for your bank not only to catch but also stop fraud before it happens.


  • Transaction Notifications help protect you against unauthorized transactions by letting users know if there are any new transactions on their accounts that weren't authorized by themselves beforehand through either signing off on them directly or giving permission/approval for someone else. 


Club Capital provides monthly accounting, tax, and CFO services for insurance agency owners. With 100% of our clients in the insurance industry, we are built to help you grow your agency faster with industry-specific accounting, tax, and CFO services.


Identify and Block Fraudulent Checks with Positive Pay

Check Positive Pay or Positive Pay is a service that allows businesses to prevent the payment of fraudulent checks. This means that if you have enabled this feature and someone tries to deposit a check that was not issued by your business, it will be returned in the mail, marked "insufficient funds." The bank or credit union then re-deposits the amount of the check into your account. This way, you won't get stuck with any unnecessary fees from processing an invalid check and you can rest easy knowing that no one is trying to fraud your business. 


Set Up Check Block for Business Accounts 

Check Block is a free service offered by banks that helps prevent fraudulent checks from being deposited into your business checking accounts before they reach your hands.


If your business regularly receives checks and deposits them, one of the easiest ways to prevent bank fraud is to set up a special account as an electronic-only checking account. With this type of account, you can avoid having to physically sign or endorse every check that comes in as long as you have a copy of the customer's driver's license when depositing it.


Prevent Unauthorized Transactions with ACH Monitor/ Positive Pay

ACH Monitor/ Positive Pay is a free service that helps you prevent unauthorized transactions from your account by requiring the participants in an ACH transaction to be identified.


With ACH Monitor/Positive Pay, you’ll know that only the right people are accessing your bank accounts and making transfers. This extra level of security can help protect against fraud, which has been on the rise lately due to growing cybercrime trends across all industries.


Club Capital is the largest accounting and advisory firm for insurance agency owners in the country providing a one-stop financial infrastructure including monthly accounting, integrated payroll, CFO services, and tax preparation.  


Make Sure Your Liability Insurance Policy Covers Bank Fraud

Liability insurance is an essential part of any business, and it can cover many different types of losses, including the costs associated with bank fraud.


  • Make sure your liability insurance policy covers bank fraud.


  • Renew your policy every year, preferably in advance so that you don’t have to pay out-of-pocket if something happens during renewal time.


  • Keep up with the changes in your industry, as well as new trends in cybersecurity and data protection laws like GDPR or PCI DSS (Payment Card Industry Data Security Standard). You may need additional coverage for these situations depending on how they affect your business model and current level of risk mitigation practices.


We hope that this article has given you some useful tips to help you prevent bank fraud. 


Club Capital Is Here To Help

For the past 5 years, Club Capital has helped insurance agents better manage their agency's finances through best-in-class monthly accounting, CFO, and tax services. Schedule a demo today!

By Club Capital | July 21, 2022 | | 0 Comments

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