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Payments Fraud: The Battle Continues

Constant vigilance has never been more key to payments fraud protection.

In a somewhat surprising turn of events, the incidence of payments fraud abated slightly in 2011, according to the Association for Financial Professionals (AFP).1 Sixty-six percent of organizations polled experienced attempted or actual payments fraud in 2011, a 7 percent decrease from 2010. Nevertheless, no organization can afford to let its guard down.

Once again, larger organizations with more than $1 billion in revenue were significantly more likely to be attacked than smaller organizations with revenues under $1 billion: For example, in 2011, 81 percent of organizations with annual revenues over $1 billion was subject to actual or attempted fraud, whereas only 55 percent of those with revenues under $1 billion were subject to actual or attempted fraud.2 Losses from fraud remain high, with 26 percent of institutions that were attacked reporting actual financial loss. Nearly the same percentage (28 percent) said the incidence of fraud increased in 2011, year over year.3

No Payment Type is Immune

Remarkably, even as their use dramatically declines, checks remain fraudsters' number one payment target. Survey respondents testified that more fraud attempts are made on checks than on any other payment type, by nearly four to one. Sophisticated desktop tools make them easier to alter and the alterations more difficult to detect. While several payment methods experienced a decrease in fraud prevalence, certain types of electronic fraud increased. Both ACH debit and wire transfer fraud attacks rose by 25 percent in 2011 compared to 2010 (5 percent to 4 percent).4

Interestingly, the sources of payments fraud in general reflect a significant shift, one that echoes a changing marketplace and more insidious types of fraudster activities. For example, in 2011, 16 percent of organizations that suffered financial loss from payments fraud were attacked by an organized crime ring, a 60 percent increase over 2010's 10 percent of respondents. And, 7 percent of the same group said they experienced account takeovers, such as a hacked system or spyware/malware, up from only 3 percent in 2010 – a 133 percent increase.5

Read the full report to explore the latest developments in types of payments fraud and to learn about best practices you can follow to help protect your organization

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