Small- and medium-sized businesses (SMBs) are in the dark when it comes to the impact payments fraud can have on their company, a new report from Vocalink Analytics found.
According to a press release highlighting the results of the report, Vocalink said that 50 percent of small and medium-sized enterprises located in the U.S. think the impact from payment fraud will be minimal and that they will lose only a small fraction of their money as a result. That stance comes despite a warning from the FBI last year that business email compromise fraud is now a $5.3 billion industry.
Vocalink discovered that fraud has become so complex that more than one-third of small- and medium-sized business owners in the U.S. haven’t even heard of all the types of payment-related fraud out there, such as business email compromise, invoice redirection and mandate fraud — all of which involve sending business orders or payments to fake recipients, noted Vocalink.
“No business is too large or too small to avoid being targeted by potential payment fraud. Owners are occupied doing the things they love, which is why they started their own companies. However, there are actions they could take to protect themselves,” said Gary Kearns, EVP of Vocalink Analytics, in the press release. “Our report shows the potential impact and new insights to effectively help tackle fraud.”
The company noted that with payment fraud, the money small- and medium-sized businesses pay to fake recipients is quickly laundered and is rarely recovered. “Business email compromise attacks are projected to exceed $9 billion in 2018, less than one year since the FBI reported that these attacks had reached $5.3 billion,” noted Kearns.
While small and medium-sized businesses may not be concerned with payment fraud, financial institutions definitely are. A new survey of close to 300 financial institutions conducted by the Federal Reserve Bank of Minneapolis found that payment fraud losses is an issue for most survey respondents. Additionally, the survey revealed that engaging in due diligence, such as analyzing transaction activity and online statements to report any suspicious activity, was effective in stopping fraud across all payment types, including cards, checks and Automated Clearing House and wire transfers.