Don’t Be a Victim of ACH Fraud

In the previous blog, I shared some disturbing information with our readers concerning how businesses are potential victims of check fraud.  We share that knowledge with the hope of alerting others to consider proactive measures of protection offered by their bank.

In this blog we continue with an exposition of another form of theft that can raid your bank account unexpectedly.  Automated Clearing House (ACH) transactions are a legitimate and widely used form of electronic funds transfer.  These transfers can be performed by the payer pushing payment out of their bank account to credit the bank account of a vendor.  It is also possible for the vendor, as ACH originator, to pull payment out of the payer’s account into the vendor’s bank account.

In the push or credit method of ACH transfer, the payer knows the vendor’s bank routing and account numbers.  The payer has full control of when and how much is transferred to the vendor’s account.  This is an extremely safe way to make payment.  The payer does not run the risk of having a check stolen in the mail or misdirected. Digital verifications throughout the ACH process ensure accuracy for billions of ACH transactions annually.  There is no postage, and the vendor typically will receive payment within one business day. Money can stay in the payer’s account for longer periods of time.

In the pull or debit method of ACH transfer the payer provides the vendor with bank routing and account information from where payment will be extracted.  The payer gives control to the vendor.  There is no postage expense or risk of losing a check in the mail. Digital ACH system verifications are in effect.  Credible vendors, who act as an ACH originator, will require a written authorization from the payer before initiating any debit ACH transaction.  Such authorization may be a blanket for recurring payments or restricted to a specific transaction.

If there is a problem with a commercial ACH transfer, it can sometimes be reversed within 5 days under limited circumstances; wrong amount, incorrect account number or duplicated transaction.  Consumers, on the other hand, normally have 60 days to report an ACH gone bad.  Whatever the reason, getting your money back from an unapproved or inaccurate ACH transaction is a major pain, perhaps even impossible, especially if there is malicious intent.

The necessary information to perpetrate ACH fraud is simply a valid routing number and bank account number.  The MICR encoding on every paper check issued is in plain view of anyone handling the check.  Sophisticated hackers scour unprotected emails and vulnerable systems for bank information.  Stealing, scouring and hacking all point to one thing.  Check fraud and ACH fraud can be lucrative.

Your bank may offer an ACH Debit Filter to help guard your account.  You specify the vendors, who are authorized to be paid.  Each has a unique originator ID number registered with the ACH system.  Then you set limits for each vendor separately.  Any ACH debit not meeting these criteria will be blocked by your bank.  Blocked ACH transactions can only be released by the payer through the bank’s approval protocol.

Whether ACH transfers are for recurring payments or restricted to a specific transaction, AMS Pro software has the robust capability to record and manage electronic payments and purchases.

You carry insurance to protect your hard assets.  Consider an ACH Debit Filter as an insurance policy to protect your cash in the bank.  Call you bank today to see how easy it is to get started.  Then call us at Alarm Management Software to learn how we can help you grow your business, safely and with confidence.

Click here for a short video.  This is not an endorsement of Fulton Financial Corporation nor are we associated with them. The video is presented for educational purposes only.

 

Bob

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