The specifics about payment fraud in 2013 – along with many other payment details – were recently released in the Association for Financial Professional’s (AFP) annual Payments and Fraud Survey.
AFP surveyed 5,600 corporate practitioner members in January 2014 for a total of 449 responses. Executives that answered included those with the titles of cash manager, analyst, or director. This is the tenth year that the AFP conducted its fraud survey, and while the results showed a slight decrease in corporate payments fraud as compared to 2013, there was an increase in fraud specific to credit and debit cards in that same time frame.
However, 82 percent of the payments formats targeted by criminals were in the form of checks. Specifically, the most prevalent check fraud method – with 62 percent of survey respondents citing it as a major issue – is “counterfeiting by altering the MICR line on the check.” In terms of credit and debit card fraud, there was a 14 percent increase from 2013, the AFP reported.
According to Nancy McDonnell, J.P. Morgan Commercial Banking Sales Executive, the AFP fraud survey is an important tool for the payments industry “and should not be underestimated.”
“Knowledge of current payments fraud practices and preventive measures helps companies implement the products and processes they need to protect their corporate assets,” McDonnell explained in an AFP press release.
Another key takeaway from the survey is that with security breaches becoming more common, 63 percent of organizations have either adopted additional security measures or are planning to do so in the near future. These measures will likely include secure signature stamps, electronic signatures, payment data stored with third-party vendors and increased layers of security.
The AFP survey also found that the typical financial loss suffered by a company due to payment fraud last year was $23,100.
Looking forward though, survey respondents were optimistic that preventative measures would be able to keep pace with – if not stay ahead of – the fraudsters. For example, 72 percent of those surveyed expect the switch to EMV chip cards will result in “some reduction” in fraud, while 20 percent believe it will equate to a “major reduction.”
AFP president and CEO Jim Kaitz said in a company press release that criminals will always try and stay a step ahead.
“But with potential liability increasing for merchants, companies are taking a hard look at where their own vulnerabilities lie,” Kaitz said. “This is especially important for big companies with complex systems, which are frequent targets for fraud.”