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Smaller Businesses, Credit Services Staying Farther Ahead of Fraud?

As the recession took hold a few years back, fraud attempts surged. And some studies, like one released last week by Prolexic Security Engineering & Response Team, found that attempts still are continuing at alarming rates. The Prolexic study noted a massive jump in attempted attacks against its financial services clients during Q4 2011 and Q1 2012. However, that doesn't appear to be as much the case in the area of direct corporate payments and credit.

A March study conducted by the Association for Financial Professionals (AFP) found attempts at and successful fraud against both large and small corporate firms declined from peak levels in 2011. The study noted the lack of success in fraud attempts causing significant financial losses was because companies "took measures to mitigate exposures...and eliminated vulnerability."

AFP President/CEO Jim Kaitz noted checks remain the most vulnerable area to fraudulent behavior among payment types and said that, despite the drop from peak activity, corporate payment systems are still "prime targets." To the contrary, United TranzActions President Dean Middleton said his firm could not substantiate any talk of high fraud risk in 2012 as "our particular book of business has seen quite a decrease in fraud, frankly."

"We don't see any kind of uptick right now, even in our ACH world," Middleton said. "Our traffic seems to be incredibly clean. We're not even seeing near as many attempts. I think a lot of the dead fish that used to play games over the last few years have gone on to a different type of crime because everybody in credit got tight and started working smarter and harder. You have to know economic downturns turn hardworking people, people that don't want to be bad but are concerned about eating, into crooks. So, we all dialed up our defenses."

Middleton also noted that technological advancements have helped tremendously and will continue to do so as businesses increasingly seek secured online services for credit, collections and other financial transactions. It's all about speed and efficiency.

"The more and more that businesses engage in electronic processing, it is going to be a tremendous benefit in risk reduction, just because of the extreme increase of speed in being made aware of an issue, if nothing else." said Middleton. "When you facilitate electronic transactions, you're getting rid of mail and any of its delays. It speeds up the entire banking process. Before we introduced ACH, it was 10 to 12 days before the right people would find out about an NSF (non-sufficient funds), start to react to it and correct it. Now, the worst case scenario is three days."

Brian Shappell, CBA, NACM staff writer